Wall Street Reaches Record Highs As Main Street Sentiment Hits 11-Year-Lows

Wall Street Reaches Record Highs As Main Street Sentiment Hits 11-Year-Lows

Since around the year 2000, Wall Street and Main Street have been decoupling. The Lehman crisis events and government response accelerated that divergence, and, most recently, policymakers’ response to the COVID crisis has driven the divided between Wall Street’s success and Main Street’s distress has never been wider…

Source: Bloomberg

Does make one wonder what exactly the world’s central bank liquidity-suppliers are really doing, because it’s not helping ’employment’ or ‘inflation’.

This divergence was highlighted even more so today, when Americans’ sentiment crashed to its lowest in 11 years (UMich) as stocks rebounded back towards record highs. Perhaps most notably is President Biden’s approval rating is tracking Main Street sentiment and not Wall Street euphoria…

Source: Bloomberg

But once again ‘soft’ survey data is leading overall economic surprise data higher and giving asset-gatherers and commission-rakers just enough ammo to urge clients to BTFD…

Source: Bloomberg

Thanks to the now ubiquitous buying-panic today, stocks almost made it back to green on the week. The S&P was the least worst horse in this week’s glue factory while Small Caps and Nasdaq were the laggards (but thanks to the late-day mania, markets ended barely lower)…

After four straight weeks of short-squeezing, “Most Shorted” stocks ended the week lower…

Source: Bloomberg

As it appears the squeezers have run out of short-ammo faces to rip-off…

Source: Bloomberg

TSLA had its worst week since March 2020 (-16%) as Musk dumped billions of dollars of stock…

Before we leave equity-land, there’s this. Since Mark Zuckerberg renamed Facebook to Meta, FB shares have made very modest gains as the market took off, but META (a metaverse ETF) has exploded higher as perhaps once again, those ever-so-smart algos just bid without thinking…

Source: Bloomberg

Though some of the fund’s initial gains may have come from ticker confusion, the switch triggered a “catalyst moment” for the metaverse market with the attention that Mark Zuckerberg brought to the theme, according to Bloomberg Intelligence senior ETF analyst Eric Balchunas.

STIRs shifted notably more hawkish this week with the market now pricing in a full rate-hike by July and over 2.5 hikes by Dec 2022…

Source: Bloomberg

Treasury yields were higher on the week, but the short-end significantly underperformed amid all the inflation chatter (5Y +18bps, 30Y +6bps). This was the biggest spike in 5Y yields since Nov 2019

Source: Bloomberg

That flattened the yield curve dramatically, prompting many to discuss the rising potential for a Fed policy error. This is the 4th weekly flattening in the last 5 weeks, and the flattest curve (5s30s) since March 2020…

Source: Bloomberg

US inflation Breakevens soared to record highs (jumping notably more this week than the rest of the world’s breakevens) …

Source: Bloomberg

And as breakevens surge, real yields crash to new record (negative) lows, providing support for gold…

Source: Bloomberg

The Turkish Lira crashed above 10/USD, a record low…

Source: Bloomberg

Cryptos ended the week higher, but off their record highs reached mid-week…

Source: Bloomberg

Bitcoin topped $68,000 (a new record high) this week, and Ethereum topped $4850 (a new record high) before both fell back. ETH then rebounded more aggressively but fell back ended the week back where they started relative to each other…

Source: Bloomberg

Gold surged to its best week since May but silver had an even bigger gain on the week, while oil ended lower again…

Gold topped $1870 this week, its highest level since mid-June…

“We see risks of further strength in CPI in early 2022, which could stoke even stronger demand for gold,” analysts at UBS Group AG including Wayne Gordon wrote in a note.

“A moderation in inflation expectations alongside higher nominal rates should see U.S. real rates push higher eventually (and weigh on gold), but this likely takes longer.”

Silver 5% gain this week (also best week since May) lifted it above $25 for the first time since August to test its 200DMA

Source: Bloomberg

Oil posted its longest stretch of weekly losses since March with U.S. President Joe Biden keeping investors guessing about whether he’ll act to tame higher energy prices that are driving a surge in inflation.

“Oil is in correction mode and the first key support is the psychologically important $80 per barrel area,” said Phil Flynn, senior market analyst at Price Futures Group Inc.

“The fear is greater than the reality of what the Biden administration can do to bring down oil and gas prices.”

We do note that someone was buying $250/$300 Brent call spreads (in modest size) this week…

Source: Bloomberg

It seems 3.5 ounces of silver is just too much to pay for a barrel of oil…

Source: Bloomberg

Finally, Gas prices – at the pump – are at their highest since 2012 for this time of year…

Source: Bloomberg

But don’t worry because Jen Psaki said The White House has “engaged OPEC on increasing oil supply” and they are “looking at options on gasoline prices.” Because price-controls have always worked so well…

Tyler Durden
Fri, 11/12/2021 – 16:00

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