Bitcoin, Banks, & Small Caps Surge On Stimmies; Bonds & The Buck Battered

Bitcoin, Banks, & Small Caps Surge On Stimmies; Bonds & The Buck Battered

Yeah that happened…Small Caps are up a stunning 12.5% from last Friday’s PPT rescue lows and while big-tech underperformed, all the major indices soared…

Sending Small Caps back to pre-COVID levels relative to Nasdaq…

Source: Bloomberg

…everything was up this week in stock land on the back of a massive short squeeze (“most shorted” stocks are up 19% from Friday’s lows…

Source: Bloomberg

Because…

“You’re welcome”.

Chinese stocks ended the week lower – despite Monday’s National Team rescue…

Source: Bloomberg

And despite renewed lockdowns and a failed vaccine strategy, European stocks also surged??? Itally FFS! was up 5% as the country is set for nationwide lockdowns once again!

Source: Bloomberg

Nasdaq was unable to break back above its 50DMA…

After 3 down weeks, ARKK surged but the dead cat bounce stalled at the Fib 38.2% retracement…

Source: Bloomberg

TSLA was unable to hold above $700 on its rebound…

Meanwhile, meme stocks surged this week…

Source: Bloomberg

US Bank stocks soared to a new record high, taking out the 2007 financial crisis highs…

Source: Bloomberg

Will Cyclicals break out this time or is the 4th time not the charm again…

Source: Bloomberg

HY Credit was actually wider (in spreads) on the week, after a wild ride. But credit in general remains notably compressed as equity risk slides…

Source: Bloomberg

“Credit spreads are extraordinarily calm given what going on in rates/elsewhere,” said one Investment Grade fund manager. “It’s all a bit ominous.”

Bonds and stocks (Nasdaq) have hardly ever been this correlated for so long.

Source: Bloomberg

Remember norm is negatively correlated price movements.

And while equity risk is ‘normalizing’ back to pre-COVID levels, rate risk is exploding…

Source: Bloomberg

Yields surged in the last two days of this week, amid a heavy calendar…

Source: Bloomberg

Sending UST yields to pre-COVID levels…

Source: Bloomberg

And if the forward curve is right, there’s a lot more pain to come…

Source: Bloomberg

The dollar rollercoastered this week, dumping after the stimmy bill was confirmed…

Source: Bloomberg

Crypto was mixed this week amid the NFT craziness.

Source: Bloomberg

Bitcoin rallied back to its record highs above $58,000…

Source: Bloomberg

BTC’s gains have erased ETH’s recent outperformance…

Source: Bloomberg

Gold found support at $1700 once again this week…

Oil was up on the week but WTI faded today, falling back below $66…

 

Finally, after the big stimmy vote week, Jim Kunstler expounded earlier, the federal government is one system visibly working to destroy itself with epic giveaways of money it pretends to command and the Covid-19 Stimulus bill will only accelerate its loss of credibility. A $1,400 check won’t “solve” the problem of someone a year behind on mortgage payments or rent. It sure won’t solve the problems of their creditors and landlords.

And if you think shortchanging that class of people is a good idea, you’re beating a path straight to the death of credit per se, and then of our money, the dollar, which is based on credit.

Taxpayers are not so stupid that they’ll fail to notice who is being asked to bail out bankrupt states, irresponsible cities, and pension funds and there’s going to be trouble over that. The trouble will express itself both in political strife and in the further decay of the relationship between work and wealth. It means a collapsing standard of living for most people. Turning the one-shot $1,400 into a monthly Guaranteed Basic Income can only be a short-term shuck-and-jive when a loaf of bread goes from $5 to $15 to $50 – which can happen easily, and quickly, too, as lots of “free” money chases crashing productivity. Wait for it.

All of which perhaps explains why the fist price of bitcoin – for now not as systemically manipulated as bullion – has been soaring…

Source: Bloomberg

In the meantime, Gawd knows what will be happening in financial markets and banks as all that new money floods an economy that can’t produce enough to absorb it. Racial war (Chauvin trial) and runaway inflation (Fed/Washington double-team)… not a good recipe for political continuity.

Tyler Durden
Fri, 03/12/2021 – 16:01

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