{"id":1490932,"date":"2024-09-19T20:00:00","date_gmt":"2024-09-20T00:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1490932"},"modified":"2024-09-19T20:00:00","modified_gmt":"2024-09-20T00:00:00","slug":"delayed-gratification-post-powell-plunge-prompts-face-ripping-rick-on-rally","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/delayed-gratification-post-powell-plunge-prompts-face-ripping-rick-on-rally\/1490932\/","title":{"rendered":"Delayed Gratification: Post-Powell Plunge Prompts Face-Ripping Rick-On Rally"},"content":{"rendered":"

Delayed Gratification: Post-Powell Plunge Prompts Face-Ripping Rick-On Rally<\/span><\/p>\n

\n

Yesterday’s pump-and-dumps across most major asset-classes was met with a wall of BTFDing in Asia, Europe, and then the US which lifted stocks, gold, oil, and crypto prices (and bonds yields) in a delayed gratification day.<\/p>\n

In fact, this is first time that yields rise after a 50bps cut since Lehman (Oct 2008).<\/strong><\/p>\n

<\/a><\/strong><\/p>\n

It was ‘Risk On’ in equity-land,<\/strong> post the 50bps cut and the start of the easing cycle with Tech leading to the upside. Broad-based rally with >375 names up on the day in the S&P.<\/strong><\/p>\n

Nasdaq and Small Caps led the surge in stocks (the chart below is from 1400ET yesterday – to include the pump and dump around The Fed and Powell). The Dow is the laggard for now (up only 1%)…<\/p>\n

<\/a><\/p>\n

Goldman’s trading desk pointed out that volumes +20% today vs the 20dma and ETFs capturing close to 33% of the tape (but they highlight that top of book liquidity stands out as extremely poor, <\/strong>tracking -60% vs the 20dma).<\/p>\n

We are active across rate-sensitive pockets of the mkt, specifically Fins (REITS + large cap) and Utes.<\/p>\n

LOs are much better buys <\/strong>(1b net demand) led by Tech, Fins, Macro products, and Hcare.<\/p>\n

HFs are net for sale<\/strong>, with supply concentrated in pockets of Discretionary, Fins, and Comms Svcs.<\/p>\n

The basket of Mag7 Stocks surged back up to record highs today…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

‘Most Shorted’ Stocks squeezed higher at the open but rolled over for the rest of the day to end only marginally higher…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Interestingly, rate-cut expectations to year-end 2024 (and 2025) are lower post-Fed crisis-cut. The market still expects 3 more cuts in 2024 though<\/strong> (and four more on top of that in 2025)<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Treasury yields were mixed today with the short-end outperforming…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

…extending the bear-steepening<\/strong> in the yield curve from yesterday’s Powell comments. 2s10s is now at its steepest since June 2022 (notably disinverted)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Bloomberg’s Alyce Andres notes that comments from The Fed supported bear steepening of the US Treasury curve.\u00a0Here are 10 reasons why bond investors believe the Fed\u2019s actions telegraphed a hawkish cut:<\/strong><\/p>\n

In its statement, the Fed\u00a0said\u00a0the assessment of current conditions showed job growth slowed versus moderated previously. That means the Fed views labor market growth as now having a reduced speed. It also compares to a reduction in size, strength and force it described in June.<\/p>\n

The Fed\u2019s language around inflation was firmer<\/strong>. It eliminated the characterization about inflation easing in recent months and over the past year. Instead, the Fed emphasized it remains elevated.<\/p>\n

The Fed continued to delay the end of QT.<\/strong> This coupled with the 50-bps cut signaled that the central bank clearly sees moves in the policy rate and balance sheet as independent.<\/p>\n

Dissention<\/strong> from Governor\u00a0Michelle Bowman, a Fed hawk, in favor of a smaller cut.<\/p>\n

The dot plot\u00a0showed\u00a0a narrow majority favored lowering rates by an additional half-point this year <\/strong>over a 25-bps cut.<\/p>\n

The longer run median dot rose to 2.9% from 2.8%<\/strong>. That\u2019s the dot the Fed will use as its anchor.<\/p>\n

Forecasts were optimistic with the median dot for growth at 2% over all time frames and longer-run unemployment and inflation steady at 4.2% and 2%, respectively.<\/p>\n

Fed Chair Jerome Powell\u00a0said\u00a0the economy is basically fine, telegraphing a broadly optimistic view with a hawkish emphasis<\/strong> on the fact that the Fed isn\u2019t in a rush to lower rates.<\/p>\n

Bond investors voted with their feet — opting to\u00a0take profits\u00a0on wagers for lower rates. <\/strong>Traders also threw in the towel on bull steepeners in favor of bearish ones viewing the 50-bps rate cut as a recalibration of monetary policy rather than a sign of concern about the health of the labor market.<\/p>\n

That move continued Thursday with global investors adding to\u00a0bear steepener\u00a0positions under the notion that the Fed is likely to stick the soft landing<\/strong>.<\/p>\n

The dollar chopped around today, hitting highs in the early Asia session and lows in the early European session before bouncing back to practically unch…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Bitcoin ripped higher today,<\/strong> testing up towards one-month highs at $64,000, right at the 200DMA (after breaking above the 50- and 100-DMA)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Ethereum outperformed Bitcoin for the first time in nine days…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Gold was bid back up to record highs…<\/strong><\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

We encourage readers to use our exclusive partners JM Bullion for all your precious metals purchasing needs.<\/a><\/em><\/p>\n

Crude prices continued their sawtooth rally back from three year lows with WTI breaking above $72…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Finally, bonds and stocks remain in worlds of their own since the last FOMC meeting in July…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Which happens first?<\/strong> S&P back down to 5200, or 10Y yield up to 4.2%?<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 09\/19\/2024 – 16:00<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/delayed-reaction-buy-all-things-trade-engaged-after-fed-crisis-cut<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Delayed Gratification: Post-Powell Plunge Prompts Face-Ripping Rick-On Rally Yesterday’s pump-and-dumps across most major asset-classes was met with a wall of BTFDing in Asia, Europe, and…<\/p>\n","protected":false},"author":0,"featured_media":1490933,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1490932","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-6fRi","jetpack_featured_media_url":"https:\/\/bugaluu.com\/news\/wp-content\/uploads\/sites\/3\/2024\/09\/Untitled2028329_2-D7XS92.jpeg","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1490932","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1490932"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1490932\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1490933"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1490932"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1490932"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1490932"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}