Well that was an hour, day, week, month, quarter…
Despite recent weakness, gold wins Q1…
In equity land, The MSCI All-World Index of global stocks snapped a seven-quarter winning streak – its longest such stretch of gains since 1997 – while global bonds are set for their first decline in currency neutral terms since 2016.
This is the first quarterly drop for the S&P since Q3 2015 (China devaluation, flash crash) and this is the first back-to-back monthly losses for S&P since Oct 2016, and the biggest 2-month drop since Sept 2015.
The S&P broke its 9-quarter winning streak (biggest 2-month drop since Q1 2016), Dow also broke its 9-wtr win streak, with the biggest 2-month drop since Q3 2015 but Nasdaq managed to close green for a 7-quarter winning streak (but March was the worst month since Q1 2016).
Small Caps scrambled back into the green briefly for the quarter today (that would be the 9th quarterly gain in a row) – BUT THEN FAILED!
Despite the total bloodbath in FANG-style stocks in the last few weeks (down 8.2% in March, the biggest drop since Jan 2016), NYSE FANG+ managed to gain 8% in Q1 – its 7th quarterly advance in a row.
Financials had an ugly Q1 in Europe (2nd quarterly drop in a row, March worst month since Brexit in June 2016) and US (first quarterly drop since Q1 2016 and March was the worst month for US financials since Jan 2016)
BTFD disappeared in Q1 as the SMART money is fleeing the market…
VIX had its biggest quarterly spike since September 2011 (and is up two quarters in a row for the first time since 2015). While February was the biggest monthly spike since Aug 2015, March also rose (up 5 of the last six months) – interesting that VIX started to snap on a monthly basis when The Fed started normalizing its balance sheet…
On a normalized basis, the S&P ‘VIX’ rose the most in Q1 (even as Nasdaq ‘VIX’ spiked most this week)…
European HY credit spreads widened for the second quarter in a row (Q1 was worst since Q3 2015) and European IG credit spreads exploded wider for the first time since Q3 2015 with March the biggest IG spread spike since the crisis). HY spreads were stable in the US but IG crashed wider in Feb and March (March worst month for US IG since Jan 2016)
And perhaps most ominously, LIBOR-OIS spreads exploded for the second straight quarter, by the most since Q3 2011 (to its widest since Q1 2009).
The broad US bond market’s total return fell in Q1 – the first drop since Q4 2016 – but March was the best month for bonds since August 2017… but all yields were higher across the term structure in Q1…
March saw the biggest yield curve flattening since September 2011 (the 7th flatter month in the last 8) and closed flatter for the 15th quarter of the last 17… 2s30s plunge to a 60 handle today!! – the lowest since Oct 2007
After winning in every quarter last year, Risk Parity funds tumbled in Q1 and while March was unchanged, February was the worst month for RP funds since Nov 2016…
The Dollar Index fell for the 5th straight quarter (the longest streak since March 2008) to its weakest level since Dec 2014. The Loonie was the worst performing major against the dollar and JPY the best performer
This was the worst quarter for cryptocurrencies ever with Bitcoin down almost 50% and breaking below its 200DMA…
Crude surged almost 10% on the quarter – the 3rd quarter of gains in a row (and WTI is up for the 6th month of the last 7) and gold gained over 2% but, despite the dollar weakness, silver and copper ended Q1 notably lower..
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“I Love The Smell of Window-Dressing In The Morning”
Having got the month and quarter out of the way, this week was total chaos – a combination of horrific headlines, weak liquidity, and concentrated positions into quarter-end spark massive realized vol in many asset classes, but nowhere more than in stocks, tech stocks…
A crazy day…
Futures show the real chaos since Jay Powell hiked rates… (NOTE – did traders already forget what happened on Tuesday’s panic-bid meltup?)
And investors have AMZN to thank for today’s mega-ramp…
AMZN was desperately trying to get back to its 100DMA…
FANG Stocks closed lower on the week even with today’s meltup…
Tesla was the worst-performing stock on the Nasdaq but many of the so-called FANGMAN stocks were ugly…TSLA, AMZN, NFLX, TSLA, and NVDA ended the week red (noted FB – upper orange – tumbled into the close on some new headlines)
Bank stocks bounced today but faded into the close…
The Dow bounced back above its Fib 38.2% retrace line today…
The S&P 500 held above its 200DMA once again but ios making lower highs…
Seriously though, if today’s spike in stocks wasn’t OPEX/Window-Dressing then we don’t know what is…
Treasury yields tumbled on the day with only the 2Y yield higher on the week…
The yield curve plunged on the week… with 2s30s hitting a 69 handle for the first time since Oct 2007
The Dollar Index was up on the week (lower today)…
Copper surged in the last 36 hours to end the week green but PMs and crude are lower…
Cryptos Carnaged this week… again…
We conclude with Mark Cudmore’s comments from before the open today:
The S&P 500 has yet to really break down — the longer it holds above the 200-day moving average, the bigger the crash will likely be when it happens.
WTI has again failed to hold above $65, forming a very ominous double top that must make the near- record net longs for WTI nervous. With U.S. output surging, and sliding commodities signaling a slowdown in demand for raw materials, the stars are aligning for a big, disinflationary step down by crude.
Treasury 10-year yields have had to be dragged down kicking-and-screaming because the Fed is sticking to its dots, but the latest capitulation of the term premium forewarns of a larger collapse in rates.
When they do, that will cast doubt on the Fed’s guidance and spread a fresh wave of disruption across assets that will start out in bonds, currently less volatile than FX and stocks relative to historical norms
So, rest up and enjoy those chocolates.
But, we’ll give the last word to Rudy…
“Sobering” https://t.co/lrVMB6Wl9o pic.twitter.com/lAsNjTjGeZ
— Rudolf E. Havenstein (@RudyHavenstein) March 29, 2018
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Bonus Chart: The Analogs remain…
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