Thread by @MacroTechnicals

MT GLOBAL MARKETS Momentum & Sentiment Recap as of 17Apr20 wk16 thread 1/n

• volatile semi RiskOn week
• US banks earnings showed huge write downs, volatile week
• Overall, are mkts pricing in "don't fight the FED" or "what COVID" ?

2/n ok, first big bazookas announced mid March, then 23rd, and obviously Apr9th "all-in"... here is a performance overview since Mar23rd. "Don't fight the FED". ZIRP + QQE is what markets want and they got it.

Biggest pot hole ever fixed? what about the real slow recovery ?

3/n I am attempting (not accurate) to assume where the Wu-Xia shadow rate is... maybe already -3% ?

FED IMHO won't cut into NIRP (which didn't help Europe or Japan anyway), meaning, MMKT and long end game could be stuck here for a while, little room left. I could be wrong tho

4/n US IR slopes almost in perfect shape now. Perhaps the last tool of the FED will be a yield curve control.

5/n small filtered selection of USD new issuance, and although not as big as last each 2 weeks, primary mkt is alive. And look at the "performance" of the long duration stuff. NEW ISSUES !

6/n perhaps RT retail version is not the best and some data might be incorrect, but if this is true, the new NOC 20Y issued Mar23rd is already +34% ? blimey, duration monster trades like a growth stock

7/n FAANG basket (simple summation) actually traded at new intraday ATH... driven by AMZN and NFLX.

8/n NDX beadth !

9/n ...vs broad market NYA breadth, adv/decl and new high/new lows

10/n this is an absolute corker chart. useless, but funny.

SPY - besides these gigantic swings - actually didn't move a fucking tic in 2 years ! pfff amazing.

11/n how much juice is left for 10Y bonds ? Deflation has been priced in now, countries will slowly come out of lockdown, and the enormous debt issuance will partly absorbed by QE.

12/n global stocks on the other hand bounced right off another huge central bank intervention. Which to be honest, NOW with a forced standstill economy, was important. You can't let MMKT, funding,liquidity,credits totally freeze up.

But, was it enough for a super slow recovery?

13/n this is still an amazing chart. CL YoY. Not enough cuts vs ongoing demand shock, not enough storage for Apr delivery, huge steep contango curve 1-3-6M,

14/n vs CL, ISM could easily fall to low 40s

15/n but let's face it... these are basically lagging indicators now and really honestly unpredictable to estimate. same like jobless claims. last week's NY empire and Philly Fed dropped like a stone. ISM new orders could go wherever. sad, but at this moment almost meaningless

16/n so, looking at next week data, I could say "what's the point ?". It has been priced in, FED and Govt reacted with large rescue package and they start to formulate COVID lockdown exit strategies. And this recovery will be like a slow motion runner with a face mask.

17/n London, Paris, etc:

Feb: Asian with a face mask walks into a bus/train, people thinking "GET OUT WE DONT WANT TO GET INFECTED!"

Apr: White Western person without a face mask steps into a bus/train, people thinking "GET OUT WE DONT WANT TO GET INFECTED!"

game changer

18/n last but not least... I added some overlays (yeah, I love them) onto @TeddyVallee "real time Global PMI" ... most prominent is the current "divergence" between bonds and stocks YoY.

19/end

stay save
wash your hands
don't be too complacent

We have 3 friends going through serious COVID respiratory issues. 2 of them in hospital. a teenager and a 45yr old husband (not same family)

have a good week , folks.

x

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