* It now appears that US economy is trending towards stagflation, i.e weakening economic growth amidst persistent high inflation
* Bad news is becoming less of a good news; the Fed should be ready to cut but is unlikely to cut soon unless inflation reaches 2% target or when something breaks; when you look at the BoE, UK suffered a shallow technical recession and has come off it marginally this quarter, and its central bank boss Andrew Bailey is just saying easing is near (not yet but near).
* Dow managed a +125pts gain to 39,512, up +1.94% on the week, S&P500 +0.16% posting +1.36% on the week, while Nasdaq -0.03%, +0.81% on the week
* With exception of NVIDIA +1.27%, Mag7 didn't do much, falling modestly, Novavax the 3rd Covid vaccine maker skyrocketed +98.66% on deal with Sanofi https://x.com/unusual_whales/status/1789022704172966182
* Gold's big move to $2378 moderated to $2360 at the close while Silver eased to $28.17 from an intraday high of $28.76; GDX and GDXJ were slightly off by -031% and -0.52% respectively
* BTC edges closer to the $60k mark at $60,896
* WTI Crude eased -1.71% to $77.71, back below where it was a week ago, oil stocks were broadly lower, XLE -0.57%
* Tesla fell -2.04% despite the positive tone across larger cap techs, reflecting concerns over its recent developments, which I believe may have rubbed negatively on lithium stocks as they broadly suffered disproportionate losses on the day (relative to indices) : LIT -3.29%, ALB -2.96%, SQM -3.19%, LAC -1.8%, ALTM (Arcadium) -2.52%, PLL -1.425, Patriot Battery -5.85%.
Stocks End Week On Muted Note As Stagflation Fears Mount
BY Zero Hedge
SATURDAY, MAY 11, 2024 - 06:01 AM
Late Friday afternoon, US main equity indexes showed little change, with the S&P 500 on track for a 2% weekly gain after investors digested new concerns about a slowing economy and elevated inflation, rekindling fears of stagflation.
During the session, Treasury yields increased due to persistent inflationary pressures, complicating Federal Reserve Chairman Jerome Powell's plan to cut interest rates later this year. Although most of the earnings season has concluded (prepare for Nvidia ER later this month), the continued strength from Corporate America remains a positive highlight. However, companies are increasingly signaling that low-income consumers are starting to crack.
Let's begin with the biggest macro news in the session: This morning's consumer confidence survey from the University of Michigan pointed to an implosion of Bidenomics. The report was a total disaster. The index "unexpectedly" plunged from 77.2 to 67.4, a 9.8-point drop, the biggest since August 2021.
... and was only a 7-sigma miss to expectations of a 76.2 print...
... but it was the biggest miss on record!
The consumer confidence report was released at 10:00 AM ET. Immediately afterward, US equity indexes gave up most of the gains and fell, moving sideways in afternoon trading.
Among the US main equity indexes, the Russel 2000 was the biggest loser in the session. This is mainly because of economic weakness.
There was little notable sector performance across the S&P500 besides tech, which was marginally higher, and energy, down half a percent.
NYSE TICK showed selling pressure after 10:00 AM and persisted into early afternoon.
Most shorted stocks are running out of steam to end the week.
Treasury yields extended gains after the report as stubborn inflationary pressures reminded traders of the higher-for-longer theme. 2-year yields reached weekly highs while Fed-dated OIS adjusted to price out rate cut expectations for this year.
The Treasury 10-year Yield climbed above 4.5%.
Today's stagflationary warning is a new challenge to the outlook of the Fed's interest rate cutting cycle. Fed swaps for '24 immediately sank from 1.77 cuts to about 1.63 cuts by late afternoon. Nasdaq futures tracked lower on fewer rate cuts.
"Our economists continue to forecast two rate cuts from the Fed this year beginning with the July meeting. And yields on 10-year Treasuries have come off recent highs following last week's soft Payrolls report," Goldman's Chris Hussey wrote in a note this afternoon.
Citi's US Economic Suprise Index slides to the lowest since January 2023.
Whoops.
Entire dovish move from huge jobs report miss has been reversed on catastrophic UMich print (which signals even more economic weakness) pic.twitter.com/xbjLTsa24e
— zerohedge (@zerohedge) May 10, 2024
What to expect next week.
Which will reverse again next week when CPI is a huge miss https://t.co/8rjS34FLYL
— zerohedge (@zerohedge) May 10, 2024
Bitcoin and Ethereum were clubbed like a baby seal after the report, sending the dollar soaring in a more hawkish environment.
Meanwhile, JPM gets bullish on ETH.
JPMorgan now just as bullish on ethereum as Larry Fink. Good luck @GaryGenslerpic.twitter.com/tdQFKUvsKI
— zerohedge (@zerohedge) May 10, 2024
In commodities, WTI was whacked from the near $80bbl handle, tumbling down to a low $78 after the report. Gold and silver slid on a strong dollar.
Looking ahead, next week will be packed with macro data points, including the release of CPI, PPI, retail sales, and industrial production in the US.
