* The notable fall finally came. Dow fell -406pts off the lows of >-500pts, S&P500 -1.01% to 5,079 and Nasdaq -1.65%
* What caused the selloff? Ed Yardeni reckons the market recognises a recession, not in US but in China. Which is absurd, Apple may have suffered an almost -3% loss due to concerns over flagging sales of iPhone in China, but China is nowhere near recession yet. In the US, economic data came in much weaker with weaker factory orders and durables, reflecting a weakening economy which may be the immediate factor raising bets on a Fed pivot and a US recession that prompted money flows into Gold. But it was BTC's sudden turnaround that saw it hit all time high before plunging -7.8% in the afternoon session that hit speculative money which caused a contagion of selling into stocks, an observation no Wall Streeters prepared to point. In a highly speculative charge market environment, a big loss in one asset class like bitcoin can easily spread quickly into a selling contagion across risk assets.
* Gold gained $14 to $2125 having risen to an intraday high of $2,141 on the back of weaker US 10yr yield of 4.14pc and DXY at 103.76 in response to the weaker economic data. Gold miners pared back earlier gains and followed equities cue, GDX +0.56% GDXJ flat at +0.03%
* Tesla dropped -3.93% on its poor shipment of EVs from China. Lithium stocks were savaged on ALB's huge $1.75B capital raising and concerns over falling EV sales in China; ALB plunged -17.86% at the close, wiping out all the gains made over the past month and hit a 52 week low intraday at $106.69 (close at $109.41), LIT -5.2%, SQM -7.38%, LAC -8.66%, PLL -6.21%. The question to follow is if the other lithium producers would follow ALB's lead to raise capital at a discount to prep for an extended winter hibernation for the industry.
* WTI Crude down -0.92% to $77.65 as traders disappointed over lack of stimulus in China's 2024 budget, but oil stocks marginally higher, XLE +0.73%
The big headlines for today were good (Gold bulls happy as the barbarous relic hit record highs), bad (bitcoin bulls happy then sad as the cryptocurrency broke to record highs and was then clubbed like baby seal), and ugly (Nasdaq - and MAG7 stocks - suffered their worst day since October).
Investors also faced a slew of disappointing macro releases which may be weighing on the goldilocks growth sentiment at the margin, with ISM services printing weaker than expected and factory orders plunging...
Source: Bloomberg
Interestingly, Goldman's Chris Hussey notes that the pullback in secular growers is driving a broader risk-off sentiment and likely even weighing on rates as 10-year US Treasury yields are down ~8bps (short-end down around 5bps)... Source: Bloomberg
All the 'Magnificent 7' stocks are trading 2% lower (finding support at the up-trendline)... Source: Bloomberg
As AAPL fell faster than a Vision-Pro off your forehead... Source: Bloomberg
...now trading over 7.5% below its 200DMA... Source: Bloomberg
...and even GLP1-exposed names are seeing some selling pressure on the day.... Source: Bloomberg
Goldman Sachs trader Bobby Molavi summed things up well for stocks: "It feels very much like a fomo...yolo...and momo market. Still like the quote...’long, staying long, but slightly uncomfortable’ as the best way to describe how many investors feel at the moment."
He also added on 'positioning' (which is extremely long), that "Not a problem unless it becomes a problem."
Today's 2%-plus tumble in Nasdaq was the worst day for the meg-tech index since October 2023 and makes some wonder if 'positioning is suddenly becoming a problem'. A small late-day bounce put a little lipstick on this pig
The sudden resurgence of fear prompted a decent spike in VIX, back above 15... Source: Bloomberg
The early weakness in the S&P saw 0-DTE trader pile into long-straddles, but as SPX broke below the Hedge Wall, 0-DTE put-buying was extreme... Source: SpotGamma
Bitcoin surged up to a new record high this morning... Source: Bloomberg
..., but then the stops were run and the algos monkey-hammered the cryptocurrency $8500 from its highs before some buying returned... Source: Bloomberg
BTC ETFs saw a record volume day (with major volume in BITO)... Source: Bloomberg
Ethereum followed a very similar trajectory, rallying up to $3825 at its highs before puking back down to $32,00 and catching a bid... Source: Bloomberg
And then there's gold...The spot price of the precious metal rose for the 5th straight day, taking out the prior record spike high on Dec 4th... Source: Bloomberg
Pushing the yellow metal to a new record high... Source: Bloomberg
What is gold pricing in about future Fed action? Real rates dramatically negative? As Luke Gromen noted on X:
"When gold rises in your currency DESPITE positive real rates, the gold market is saying 'Your government will have a debt spiral if real rates remain positive'." Source: Bloomberg
Silver closed lower on the day, after three big days topping $24... Source: Bloomberg
With silver looking positively cheap here with gold trading at 90x... Source: Bloomberg
Oil prices traded in a choppy range today but closed lower ahead of tonight's API data... Source: Bloomberg Finally, there's Nvidia, which has stalled the last two days...
We hand the commentary back to Goldman's Molavi for his take: "A company now worth more than AT&T, Boeing, Coca-cola, Disney, Fedex, Gen motors, IBM, MCdonalds, Nike, Starbucks, UPS and Wallmart.....COMBINED.
A company with 75% margins and 75% market share.
A company that in spite of its rally trades at 33.4x forward PE for the 4th lowest multiple of the Mag 7. One word of caution, if you plot Nvidia on a chart 2020 to today vs Cisco 1996 to 2002…and then zoom in at the year 2000…you see eerily similar graphs..." Source: Bloomberg "Cisco then was the belle of the ball and internet was the new new thing. At the moment in time…the prevailing thinking was that the whole internet would run on Cisco routers at 50% gross margins. Until it didn’t. "
