Stocks, Crypto, & Bond Yields Pop As WSB Game Stopped

It appears the Reddit-Raiders Game just Stopped. Most-Shorted stocks tumbled…

Source: Bloomberg

Did it look something like this?

The guy at Robinhood who raises trading limits vs the guy at Robinhood who lowers trading limits pic.twitter.com/Vv5Fd0ZDX7

— zerohedge (@zerohedge) February 2, 2021

Led by GME and KOSS, down some 60-70% from Friday’s close (despite some insane intraday swings)…

GME crashed back into double-digits today… (what goes up, must come down?)

But the vol today probably felt something like this…

And as the shorts plunged, the most crowded longs surged…

Source: Bloomberg

Which dragged the broad market dramatically higher, led by The Nasdaq (Dow lagging but still up over 2.5% this week) – this is the biggest two-day jump in stocks since the election… markets had a weak close though again…

Another Reddit-Raider fave, Silver, was also clubbed like a baby seal today…

And Silver Miners erased yesterday’s gains…

The Value-to-Momo rotation continued…

Source: Bloomberg

But interestingly the Value/Growth trades are not rotating – like broad market flows dominated…

Source: Bloomberg

Meanwhile, bonds were sold as heavy corporate issuance (think rate-locks and rotation) weighed…

Source: Bloomberg

10Y Yields rose back up to 1.10% but were unable to break through…

Source: Bloomberg

The yield curve steepened to 3 year highs…

Source: Bloomberg

Real Yields tumbled today, decoupling from gold once again…

Source: Bloomberg

The dollar ended the day unchanged fading off earlier highs late in the day…

Source: Bloomberg

Cryptos were bid today as WSBettors were hammered. Ethereum soared to a new record high…

Source: Bloomberg

And Bitcoin surged back above $36,000

Source: Bloomberg

Someone is happy…

Bitcoin. Bitcoin. I got Bitcoin. 🎵

— Soulja Boy (Drako) (@souljaboy) February 2, 2021

Meanwhile, oil prices hit one-year highs (WTI >$ $55) ahead of tonight’s inventory data…

Source: Bloomberg

And gold tumbled back below $1850 as Silver slumped…

Finally, while the GME chaos may be receding, Bloomberg notes that there remains plenty to be anxious about, including stretched equity valuations, the pace of the U.S. economic recovery and the rollout of coronavirus vaccines. In the options market, the cost of S&P 500 Index puts relative to calls is still elevated after rising to a three-year high last week.

Source: Bloomberg

“Implied volatility was up broadly, but more so in the downside puts as investors worried about market dislocations leading to broader contagion,” Chris Murphy, Susquehanna International Group’s co-head of derivatives strategy, wrote in a note to clients Monday.

“While the SPX is pricing in more risk to the downside than the upside than usual, the opposite is happening on the single stock level. It will be hard for both to be right.”