Stocks, Bonds, & Dollar Stumble As Traders Reach ‘Peak FOMO’

There’s no better proxy for the traders’ level of FOMO-ness, it is the beta between momo funds and the market, and as Bloomberg notes, it is sitting near its highest level in almost two years.

Source: Bloomberg

Cause or effect – Peak FOMO is occurring along with Peak Fed balance sheet expansion…

But… while hedgies are chasing the market with everything they have… others are buying extreme downside protection with both hands and feet…

Source: Bloomberg

The Other Top…

But none of that stopped China from rallying overnight…

Source: Bloomberg

And European stocks recovered most of Monday’s losses…

Source: Bloomberg

US Majors slipped lower again on the day (despite plenty of vol-creating trade headlines)…

Source: Bloomberg

But futures show the real chaos…

NOTE how VWAP (blue line) was key trend change level all day

And stocks just kept decoupling from bonds

Source: Bloomberg

Another short-squeeze was engineered off trade headlines at the open… but again it lost its mojo…

Source: Bloomberg

Bank stocks continue to relatively outperform despite the yield curve’s collapse in the last couple of days…

Source: Bloomberg

Treasury yields were higher on the day with the short-end notably underperforming…

Source: Bloomberg

Flattening the yield curve dramatically…

Source: Bloomberg

The Dollar dropped for the 7th day in the last 8 to its lowest since Nov 5th…

Source: Bloomberg

Yuan rallied off the fix on optimistic traiff delay headlines…

Source: Bloomberg

Cryptos continue to slide…

Source: Bloomberg

Commodities were all higher on the day, but copper leads on the week…

Source: Bloomberg

WTI remains in its rising channel ahead of tonight’s inventory data…

The year’s best-performing major commodity is showing no signs of slowing. Bloomberg points out that Palladium topped $1,900 an ounce for the first time ever on Tuesday after South African mining companies halted operations in response to the country’s power cuts.

Source: Bloomberg

Tight supplies and stricter vehicle-emissions rules have fueled a string of record highs for the metal used in autocatalysts, with Citi seeing prices jumping to $2,500 by mid-2020.

Palladium is up over 50% YTD…

Source: Bloomberg

Finally, as we noted previously, recession fears have disappeared from the headlines… in a rather ominous way…as the last time this happened was the summer of 2008…

Source: Bloomberg

And as we all anxiously await Powell’s prognostications tomorrow, the market is pricing just a 0.2% chance of a rate-cut…

Source: Bloomberg

As stocks rallied in the last week, the market priced out more and more dovishness…

Source: Bloomberg

But most importantly, the cost of balance sheet across the turn is soaring – just as we warned it would…

Something is breaking in leveraged balance-sheet-land.