iFall: Beijing Batters US Tech, Bonds & Bitcoin Bid
Jobless claims at 2023 lows and an upward revision to unit labor costs both indicated strength in the labor market, which together with robust growth in the US economy, could indicate some unease that the monetary policy stance could remain tighter for a bit longer.
But it was the Semis and AAPL that ignited the pain trade after Beijing reportedly extended its iPhone ban to other state agencies.
Apple's worst 2-day drop in a year (AAPL market cap is down around $200BN) dragged it below its 100DMA...
And that weighed on the broad indices. The Dow managed modest gains on the day as Small Caps and Nasdaq lagged. The S&P ended lower
The Nasdaq dropped below its 50DMA, and Small Caps fell to the 100DMA/200DMA and found support
Did the 'Magnificent 7' just form a mega-double-top?
Source: Bloomberg
'Most Shorted' stocks were slammed for the 3rd straight day, erasing the squeeze higher that started last Tuesday...
Source: Bloomberg
Since September started, both Defensives and Cyclicals have been sold but today saw a divergence with Defensives bid and Cyclicals sold...
Source: Bloomberg
Bonds were bid today with the short-end outperforming (2Y -6bps, 30Y unch) but all yields are still higher on the week...
Source: Bloomberg
2Y Yields tumbled back below 5.00%, erasing all of yesterday's spike...
Source: Bloomberg
The yield curve steepened, erasing yesterday's flattening
Source: Bloomberg
The dollar rallied for the 5th day of the last 6, closing at new highs back to March (though the pace of acceleration has slowed)...
Source: Bloomberg
After yesterday's volatility (illiquidity), Bitcoin managed gains today, but was unable to get back tro $26,000
Source: Bloomberg
Gold dipped to $1920, erasing last week's spike higher...
Source: Bloomberg
Oil prices puked today... despite plunging inventories, production cuts, and price-hikes...
Makes you wonder, eh?
"With a largely-drained US Strategic Petroleum Reserve, if the Fed really are active in oil futures, as some whisper, they need to get busy again soon." - Rabobank
— zerohedge (@zerohedge) September 7, 2023
Finally, we note that The Fed's reverse repo facility continued its plunge this week...
Source: Bloomberg
Which has been supportive for stocks in the recent regime BUT at the same time, reserves are being drained...
Source: Bloomberg
And so putting them together, we now know what to watch for equity swings - when reserves drop faster than rev repo balances, equities are unsupported...
Source: Bloomberg
And we get the latest Fed balance sheet data after the bell today.
