'Powell Put' Sparks Buying-Panic, Dovish Dollar Dump

Seemed appropriate...

 

What did China know? Stocks in Shanghai soared overnight (after US stocks faded) ahead of today's surge in US stocks post-Powell...

 

European stocks drifted modestly lower...

 

But today was all about Powell although we note market participants seem to have missed the nuance of the "just below the policy range" - as opposed to within one hike of being done... Nevertheless, Stocks, Bonds, & Gold all rallied post-Powell as the dollar sunk...

 

Powell's flip-flop sparked the biggest buying panic since the Feb 9 VIXtermination... (and 2nd biggest uptick since Aug 2011)

But notice that the buying binge immediately faded...

 

Nasdaq led the day (up 3%!) but every market moved as one...

 

Futures show it was all Powell...

 

The Dow soared over 600 points, ramping back above its 200DMA almost tagging its 50/100 DMA...Up 1100 Points in 3 days

 

The S&P was up 2.3% - its biggest jump since March - which was followed by further pain...

 

All thanks to a giant short-squeeze... (biggest squeeze of the month)

FANG Stocks soared top fill last week's gap-down drop...

 

GM made more headlines thanks to Trump today but ended higher...

 

But Tiffany didn't...crashing 12% to 12-month lows...

 

Credit markets ripped tighter after Powell's speech...

 

The 2Y Yield is unchanged since Powell's hawkish comments, stocks are not..

 

Rate-hike expectations collapsed to a mere 25bps for next year (one hike)...

 

Treasury yields were mixed with the shorter-end falling (and longer-end rising) after Powell blinked...

 

The yield curve steepened dramatically after Powell's dovish denouement...

BUT note that we also steepened on Powell's October hawkfest

 

The dollar collapsed as Powell flip-flopped...

 

Once again, the dollar stalled its gains at a historically significant level...

 

And as the dollar sank, offshore Yuan spiked...

 

Commodities were a mixed bag with dollar weakness sending PMs and copper higher but inventory data not helping WTI...

 

WTI tumbled to fresh cycle lows...

 

Gold bounced off its 50 and 100 DMA spiking back above $1230...

 

So, did Powell "blink"? As Amherst noted:

"The markets are overreacting to what Powell said, perhaps partly because some of the newswire headlines don’t quite accurately convey the nuance of what he said..."

In fact, as the chart above shows, the market was already largely priced for this 'blink' - with barely a hike in 2019 and rate-cuts expected in 2020 and 2021.

And SMART money appears to know something major changed...