Bloodbath – From Triumphant Truce To Deal Dysphoria In 36 Hours

Trump and Xi were the powdered sugar awesomeness on the top of the Powell vanilla latte yumminess from last week… and then this happens…

China stocks held up overnight…

European Stocks continued to give back Sunday night gains…

US Equity indices rapidly erased not just Sunday night gains but Friday afternoon’s pre-emptive push and Wednesday’s Powell Put levels…

“The Dow vigilantes have managed to get both a Powell put and a Trump put for the market,” said Ed Yardeni, lead strategist at his namesake research firm. “Jerome Powell turned into Santa Claus last Wednesday, markets certainly reacted joyously to his hints that Fed tightening would occur at an even more gradual pace. So if Jerome Powell is Santa Claus, then the two elves are President Trump and President Xi.”

But the Grinch just took that all away… From Friday’s close…

On the day, Trannies worst day since Brexit, but it was all a disaster…

Dow down 800 points!

The S&P stalled at 2800 once again and completed a triple top of lower highs…

All major indices crashed back below their key technical support levels…

TICK shows the massive sell programs hitting as stocks broke key technical levels. Momentum stocks collapsed…

Trannies and Small Caps are back in the red for 2018.

Bank stocks have been battered, tracking the curve lower…

For some context:

Global Systemically Important Banks are down 30% from 52-week highs.
US Financials down 14.5% from 52-week highs.
Goldman Sachs is down 33% from 52-week highs.

And regional banks crashed most since Brexit…

But while banks were busted, FANG stocks got monkey-hammered… back into bear market (down 22% from 52-week highs)

(FB -36%, AMZN -17%, NFLX 34%, GOOGL -17%. AAPL -24%)

Stocks plunged back to bond’s reality…

Treasury yields tumbled today with the long-end dramatically outperforming and collapsing the yield curve…

The 10Y TSY yield plunged below 2.90% intraday…

But if Cyclicals (rel to Defensives) are right, 30Y Yields have a long way to go…

And Long Bond futures broke back above their 200DMA…

The yield curve collapsed too with 2s5s, 3s5s inverted and 2s10s into single-digits…

All of which brought out a herd of asset-gatherers and commission-takers to explain how this is a dip, not an inversion… or that it’s different this time because of central bank intervention… not it is not!!

And the Eurodollar curves are now pricing in an extremely dovish trajectory…

Massively decoupled from The Fed’s guess…

Credit markets smashed wider today and equity protection soared (VIX>21) playing catch up…

The dollar repeated yesterday’s fund by diving overnight and ramping from the European open… (note it remains lower from Powell’s Put last Wednesday)…