Its Over, page-15752

Recession fears rocked Wall St as Jamie Dimon said he sees a “mild to more pronounced recession” ahead and Morgan Stanley embarks on a plan to reduce its global workforce by about 2000, amounting to roughly 2 per cent of the total while Goldman Sachs CEO David Solomon warned about job cuts and much lower bonuses and Bank of America’s Brian Moynihan said the bank has slowed new hiring. I did indicate on this thread that the deflation narrative is likely to grow louder over time.

Late buying saw Dow clawed back from a -500pt loss to close down -350pts at 33,596, S&P500 edged closer to the 3900 mark, lower by -1.44% to 3941 and Nasdaq fell -2% to 11015. Major heavyweights were down, Apple -2.54%, Amazon -3.03%, NVIDIA -3.75%, Meta -6.79%, AMD -4.55%. Financials continued their decline on looming recession, Bank of America fell -4.32%, Morgan Stanley -2.52%, Goldman Sachs -2.31% and Citigroup -1.4%.

Demand destruction concerns from recession fears knocked -3.72% off the WTI crude price to $74.5 and energy stocks and vehicle stocks suffered across the board. XLE was down -2.62%, Exxon -2.83%, Chevron -2.57%, Occidental -3.39%, ConocoPhillips -3.28%, Marathon Oil -3.82%, auto stocks Ford -1.83%, Lucid Motors -8.74%, Nikola -5.8%, Rivian -6.55%. Lithium stocks were also off, ALB -2.69%, SQM -1.15%, LAC -2.76% and PLL -3.41%.

Gold was up slightly by $3 to $1772 and gold stocks flat, GDX unchanged while GDXJ -0.62%.

The dollar extended gains, back above its 200DMA...is making a comeback.



... and watch this, the big fall is close if the 2008 analog continues to be followed.


Stocks Puke Back All Post-Powell Gains As Yield Curve Inversion Deepens

BY Zero Hedge
WEDNESDAY, DEC 07, 2022 - 08:00 AM

Weakening exports prompted a wider trade deficit in the US, but aside from that, there was little of note to driven today's significant market moves - aside from a realization that Powell really didn't say anything new last week and FOMO is all we have left to rely to ignite momentum and allow 0DTE traders to earn a buck (or lose $10).
Most notably today was the pessimism from several bank CEOs who all suggested varying levels of recession in 2023 (and a weakening consumer).

The yield curve continues to flatten deeper and deeper into inversion with The Fed's most proven recessionary signal (3m10y) now is most inverted since 1981...


Source: Bloomberg
NOTE - it's never inverted without a subsequent recession.
Even more specifically, Jay Powell's favorite curve indicator - 18m fwd 3m bill yield spread to spot 3m bill yield is now notably inverted...

Source: Bloomberg
All the US majors puked hard today with Nasdaq down 2.5% at its worst (Dow was the prettiest horse in today's glue factory). A late day profit-taking snatch put some lipstick on the ugly pig of a day...

The US majors are down in 7 of the last 8 days - the only up-day was during Powell's address last Wednesday.
All of the post-Powell gains have been wiped out rather aggressively...

The S&P tumbled back to its 100DMA and found some support...

At the sector level, Energy and Financials are down the most since before Powell while Utes are holding gains...

Source: Bloomberg
Treasury yields were lower across the curve with the long-end outperforming (30Y -6bps, 2Y -3bps). Since Powell's speech, the long-end is outperforming (30Y -27bps, 2Y -12bps)...

Source: Bloomberg
The 10Y yields is back testing down to 3.50%, the pre-payrolls levels from Friday...

Source: Bloomberg
The dollar extended gains, back above its 200DMA...

Source: Bloomberg
Bitcoin was quiet for once, hovering around $17,000...

Source: Bloomberg
The Bloomberg Commodity Index fell for a 3rd day hitting its lowest since February...

Source: Bloomberg
Brent crude fell back below $80 (for the first time since early January) despite Russia's discussions of a price floor to counter G-7's price-cap...

Source: Bloomberg
WTI crashed to a $3 handle as US boosted its 2023 oil production forecast (in what can only be seen as a politically-driven move given the previous forecast drop)...

NatGas tumbled for the 6th straight day (down almost 30% in that time)...

Source: Bloomberg
Gold was flat on the day, holding just below $1800...

Finally, the US equity market capitalization continues to track the Fed balance sheet (reserves), and Powell shows no signs of reducing QT any time soon...

Source: Bloomberg
Is this the rollover we've been waiting for?

Source: Bloomberg
Maybe that catch down will normalize financial conditions with The Fed's rate-hikes (as Goldman warns "ultimately we think the recent market moves could prove self-defeating")...

Source: Bloomberg
As painful as that maybe, it is perhaps the only thing that will allow Powell to pivot.