'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Can't allow stocks to signal that starting a trade war is anything but 'making American great again'...

First things first, today's actions by US, China, and Russia are not a positive and Economic Policy Uncertainty has exploded to its highest since Brexit...

And 'hard' US economic data is at its weakest since Nov 2017...

For now, it seems like China is suffering the most, Russia the least and US and Europe duking it out...

If Small Caps are up 3% in a week when Trump unleashes $34 billion in tariffs on China, imagine how much it will be up when he brings the full weight of his planned $500 billion tariffs...

S&P and Nasdaq best day since June 1st.

Futures show the craziness best as we kneejerked on the US tariff hit, then tumbled when China actually responded, then was panic bid again on rising unemployment rate and disappointing earnings growth, then tumbled into the close on a big MOC for sale...

 

Of course, it was a big fucking short-squeeze again..."most shorted" stocks up 4.5% from Monday's low open...the biggest 2-day short-squeeze in a month.

 

And all you have to do is look at the bond market to know stocks are a farce...

 

The S&P 500's monthly pattern continues to hold... The last two days are the biggest jump for the S&P in 2 months!

h/t @NorthmanTrader

And in case you're wondering what the driver of that is - it's a cyclical short-squeeze...

 

The big banks surged early after trade war started but ended ugly...

 

Of course, FANG stocks were panic bid the last two days back into the green for the week...

 

While 2Y yields ended the week marginally higher, the rest of the curve fell notably (despite surging stocks)...

 

10Y yield close today was the lowest since May 29th's plunge (and lowest weekly yield close since April)...

 

Which sent 2s30s to 37bps at its intraday lows - a new low since August 2007

 

10s30s tested single-digits...

 

The Dollar Index suffered its biggest weekly loss since March, erasing all the post-Fed/ECB spike gains...

 

Emerging Markets FX had their best week since February!!?? Because trade wars are great for developing nations...

 

Offshore Yuan's freefall stalled as PBOC intervened midweek... (but this was the 4th weekly decline in a row - 10th week of last 12)

 

Crytpos managed to end the week positive (for a change) - best week for Bitcoin in 3 months

 

Ugly week for copper as PMs and crude were relatively unchanged on the week...

 

Copper has plunged to its lowest since July 2017...

 

Even CNBC anchors said "it's curious to me that stocks are up so much on this, the first day of the trade war."

But Bridgewater's Ray Dalio summed it all ominously:

Comments

AynRandObjectivist Fri, 07/06/2018 - 16:05 Permalink

China's junk bond market is literally imploding. India is fucked. Italy, Argentina, Brazil, Turkey, Mexico are on a similar path. Today was simply EM capital trying to get into safety. Not much longer before the US equity market feels pain. 

D.r. Funk Fri, 07/06/2018 - 16:06 Permalink

They used biotech

It's pretty clear when there's a standout...anomalous...biotech surge, in, a context where the impetus for things to move up is meager at best (midsummer...friday...holidayweek... lowvolume...tradewar...no significant substantial nfp narrative) And biotech surges.

The manipulators used biotech. Today.

(nothing new, fedfuck manipulator proxies know I described this quite awhile ago)

Also the uniform increase nasdaq for 2 hrs, then a hold-steady for 2 hrs. ("using biotech" means a pliable, fungible sector to lift surrounding areas of market) Particularly stands-out with biotech because (lol) it doesn't really get sector-wide broadly propelling headline occurrences. Hopefully this logic hits anyone new, the fedfucks know I'm not expressing "incredulity"

See my finger

Kaiser Sousa Fri, 07/06/2018 - 16:06 Permalink

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs..."

yeah...that's the ticket...hilarious...

DEATH TO THE MONEYCHANGERS.

bluez Fri, 07/06/2018 - 16:07 Permalink

If there was a real war with China I would know about it in about 30 minutes, and continue to know about it for 5 minutes.

But a trade war would be pretty devastating. I have already placed all my Newegg orders for cheap China-made "survival" items.

No Time for Fishing Davidduke2000 Fri, 07/06/2018 - 18:02 Permalink

Traders piled on short because of the trade war. Somebody was buying what the shorters were selling. That someone having loaded up their basket at lower prices now pushes the price up during low liquidity times then as they creep price up to those shorts stops spike vix down and bam shorts stops start getting hit forcing those shorts to buy providing the masters needed buyers to cash out. And watch they will do it again and again. 

In reply to by Davidduke2000

Sometimes Certain Fri, 07/06/2018 - 21:23 Permalink

Let us take the use of the word "war" as hyperbole.  Pardon me please if I am wrong but I don't believe Mr. Dalio has ever been to war.  If that is the case perhaps he does not have a close association with that horrendous activity.  If he has been to war I humbly offer to eat crow and apologize profusely.