Stocks Shrug Off China Trade Talks Tumult, Decouple From Bonds

Overheard today in Washington and the markets...

From the moment the cash markets opened, US equity markets shot higher on a series of pumps, decoupling completely from the bond market...

Source: Bloomberg

DIS and AAPL (+80 pts) dominated The Dow's move and one look at AAPL's intraday action shows its clear a VWAP-based buyback program was responsible for the push (and Disney's NFLX-esque surge on the back of comments on users for Disney+ - considering it was given free to Verizon customers is intriguing)...

Source: Bloomberg

As the chart below shows, at 1355ET headline shit that trade talks had hit a snag - stocks tumbled. However, algos immediately bid it back on the back of absolutely nothing at all and once it has erased the drop, stocks fell again......

Source: Bloomberg

The market's view of the likelihood of a trade deal has been fading for 7 straight days...

Source: Bloomberg

Today's gains were also dominated by defensives with cyclicals ending lower...

Source: Bloomberg

And as rates have turned lower, momentum stocks are soaring again...

Source: Bloomberg

Bonds were bid again today (now that the Abbvie rate-locks from last week have been lifted) with the long-end notably outperforming...

Source: Bloomberg

30Y Yields are down 10bps from Thursday's spike highs...

Source: Bloomberg

The dollar levitated in a rather surprisingly linear manner...

Source: Bloomberg

Cryptos were relatively quiet for a second day...

Source: Bloomberg

Precious Metals diverged from copper again today as crude spiked at the US cash open...

Source: Bloomberg

Gold pushed higher today...

 

And crude suddenly found a bid at the US cash equity open...

 

Finally, as stocks reach record highs, the SMART Money flow is not following through...

Source: Bloomberg

And the last time Hong Kong stocks decoupled like this from US stocks, it was the latter that ended up catching down...

Source: Bloomberg

And, as Bloomberg reports, extremely low temperatures rivaling the chill of the “Blue Norther” in 1911 sent wholesale electricity prices surging early Wednesday across the eastern U.S. Average prices for power at a major hub in PJM, the grid stretching from New Jersey to Illinois, jumped by more than 1,700%, the biggest gain since 2017.

“Demand just really over-performed,” said Elliot Gordon, an analyst at energy data provider Genscape Inc.