Chinese Trade War Retaliation Sparks Buying Panic In Stocks

Almost 1000 points off the lows on the heels of Larry Kudlow's comments after China escalates the global trade war?

On dwindling volume...

The stench of The PPT was rife today...

 

Chinese stocks went out weak after the trade tariff headlines...

 

And US equity futures were monkeyhammered overnight and through the open. But some sickly-sweet words from Larry Kudlow was enough ignite some momentum and rap stocks all the way back to green... and back to the opening ledge on Monday... and then to last Thursday's highs...

For some context, that is almost a 1000-point bounce in The Dow...

The cash markets all tracked each other perfectly...

All on one big mega short squeeze...

 

S&P bounced back above its 200DMA...

 

Nasdaq futures perfectly bounced off their 200DMA...

 

VIX crashed back below 20...

 

FANGMAN stocks were panic-bid - MSFT and AAPL green on week...

 

There was one stock that did not benefit from the panic dip buyers...

 

Bank stocks ripped into the green for the week...

 

But bank credit risk continues to break out...

 

More disappointing macro data today and stocks have finally caught down to that reality...

 

And the probability of a 4th rate hike in 2018 (so 3 more) has tumbled to less than 20%...

 

Treasury yields rose on the day and are higher on the week...

 

The Dollar Index continued its tight-range-bounce going nowhere fast action...

 

Late in the day, the Loonie and Peso ramped after a headline claiming Trump was softening on NAFTA demands...

 

Cryptos had an ugly day, dragging them all red on the week...

 

Gold ended unchanged (but off its $1350-plus highs), silver dropped when crude ramped and copper dumped on trade (then pumped)...

 

Bonus Chart: Traders are starting to bet on Fed rate-cuts in 2022 as Trade War anxiety ripples through sentiment. As Bloomberg notes, if you take the numbers literally, it seems investors now think there's a chance that the tightening cycle could come to an end -- in 2022.  The one-month U.S. overnight index swap rate five years forward has fallen below the three-year forward one-month rate, as the chart below, which gives us a rough proxy of the market's projection of the Fed's rate path going forward, shows.

That's a significant change, at least qualitatively, from a month ago, when the forward curve was continuously upward-sloping out to 10 years.

Bonus Bonus Chart: Global Hedge Funds are unchanged in three years...