It was just not meant to be ... After shedding as much as -20 points at the lows during the overnight session, the s&p500 started to crowl back, reaching unchanged levels after the first hour in US trading. From then on, momentum built on itself, ending into a sheer buyers’ panic, propelled by fangs and ... no news at all. Fang shares rallied 8% from their lows on Friday, accompanied by bitcoins which added 5% to their recent recovery despite BoE Governor Carney saying it is time to regulate them...like everything else sold or bought as investments by the general public.
D. Trump will persist to introduce tariffs, the Fed still needs to tighten, growth looks like it may be peaking, inflation is bottoming for sure and US deficits are set to explode with reduced appetite from China, Japan and the Fed to absorb them. The global investment climate is still getting dicier and that is perhaps the reason why stocks still need the hand of God, when they feel like ... puking. Momentum players and hedgers scrambled over each other in a fury of short covering.
We could leave the comment there and still cover the essence of what happened yesterday. Nothing else happened of substance in either bonds or the dollar. Perhaps one last mention about oil. The IEA informed OPEC that they should not be thinking about lifting production caps at the end of the year because shale oil will keep pumping more supply, meeting all the expected additional global demand. That was deemed to be bullish for oil which rallied 3%, contributing to jolt EM currencies, debt and equities yesterday, taking off some of their recent underperformance. Tomorrow is another day.
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