..if one were to look at just the closing indices, the Dow fell...

..if one were to look at just the closing indices, the Dow fell only 60pts but may not have noticed that it was the last hour that recouped 300 pts and saved it from what would otherwise have been close to a 400pt drop. The S&P500 dipped slightly below 4500 but close at 4538 down 0.84%.

...but it was the Aussie that stole the show, closing under 70c at 69.98c and losing 1.6c since Powell did that U-turn on inflation is transitory. Since that Fed U-turn, signalling sooner and accelerated taper and probably sooner rate hikes, everything went down - equities, gold, bitcoin, and AUD's fall  is a major gauge of Risk-Off.

..last night's shocking 200k NFP (non farm payrolls) which was way below 550k market estimates indicates that all is not well with the US economy...we could be heading towards a period of stagflation and if not, a period of very low growth in GDP and employment but beset with persistently high inflation. And from a macro viewpoint, none of that is healthy for corporate earnings so at some stage someone would be looking at valuations and calling out that enough is enough and its time to exit...in fact BoA Harnett is now suggesting we are at market top.

...as they often say, when the Fed starts taking the punchbowl away, be afraid.

...where could this go? Markets are not imputing that Omicron is going to be a worse problem than Delta- the fall is largely attributable to Powell's change of tune. So if we have adverse news on Omicron, that would likely see a further leg down . Second, market participants especially the fundies would not be telling you how they intend to trade until they have exited, the question will come how they see 2022 to pan out- if they start to sell into any strength from here, any rally could be short lived. Two major unexpected things caused a change of (my) view from expecting a rally into Q1 22 - that Powell U-turn (see, he could do this after he has been appointed! ) was unexpected and of course Omicron. When facts change, you change (that is being nimble, better to take small pain than large ones). And all that can happen within a week or even days...BUT not the Big Kahuna just yet, still is likely to remove a lot of exuberance built up over the past 2 months. Indices don't matter, look out at your individual stocks , they dont have to move in tandem with indices...

...on a final note, that AUD falling below 70c is an ominous sign that Risk-Off is the order of the day.
Bubble Market Bloodbath As Powell-Put-Strike Plunges

BY Zero Hedge
FRIDAY, DEC 03, 2021 - 04:01 PM
What a shitshow! It appears that the Hindenburg Omen struck again...

Source: Bloomberg

Bubble markets busted...

Source: Bloomberg
Omicron anxiety? Good news is bad news? Taper Tantrum? Technical Default fears? It was all going so well as long as 'gurus' could rely on The Fed do support the market with the promise of moar. But sometimes, things just need to purged...
Worst 3-day start to a December for stocks in about 20 years. Since Omicron reared its ugly head, Small Caps are down over 8%, Nasdaq down over 5% and the rest of the US majors down over 4%...

The last few minutes today saw the 'standard' algo buying panic which almost managed to get The Dow (orange) back to unchanged...

This is the longest stretch of +/-1% swings for the S&P 500 since the election...

Source: Bloomberg
A very technical late-day bounce lifted Nasdaq to its 100DMA, bounced The Dow off its 200DMA, but couldn't break the S&P back above its 50DMA...

New 52-week lows are surging...

Source: Bloomberg
Within the Nasdaq (3765 stocks) 5 stocks Microsoft, Google, Apple, Nvidia, Tesla account for 71% of 19% YTD gain.
Cyclicals have been clubbed like a baby seal since the emergence of Omicron (Cyclicals were also slammed this week)..

Source: Bloomberg
China tech puked. Nasdaq Golden Dragon index crashed over 9% today, its biggest drop since 2008...

Unprofitable tech stocks suffered their biggest weekly loss since March 2020, crashing to their lowest since Oct 2020...

Source: Bloomberg
VIX soared higher this week, closing above 30 for the first time since February...

Treasuries were chaotic this week as taper tantrums broke out at the short-end and the long-end was aggressively bid. The chart below is from the start of Omicron anxiety...

Source: Bloomberg
The 30Y Yield is at its lowest of 2021 (and 2Y at its highest yield since March 2020)...

Source: Bloomberg
The yield curve imploded in a hissy fit of fear that The Fed is heading for a major policy mistake...

Source: Bloomberg
Powell's hawkish pivot sparked a surge in rate-hike odds with the market pricing a full hike by June 2022...

Source: Bloomberg
Critically, the market is pricing in rate-cuts between 2023 and 2025... In other words - The Fed policy puke...

Source: Bloomberg
The dollar ended the week slightly lower but had some wild swings on the way...

Source: Bloomberg
Cryptos were wild this week with today's liquidation-like puke dragging everything down. ETH outperformed, clinging to a modest 2% gain on the week while BTC ended down around 1.5%...

Source: Bloomberg
Bitcoin broke down to a $51k handle and below its 100DMA (lowest since early October) and Ethereum tested a $4k handle, breaking back down below its 50DMA...


Black Gold was a bloodbath this week but the barbarous relic managed to cling to unchanged since the Omicron variant emerged. Copper and Silver down hard...

Source: Bloomberg
NatGas crashed to its worst week in almost 25 years...

Finally, if you need an analogy, "you are here" in early December 2018 as the market puked 20% and forced Powell to flip-flop from his hawkish position...

Source: Bloomberg
The word 'brace' comes to mind as the market tries to find out just where the new Powell Put strike level is.