So we can debate the extent to which Tuesday’s “blip” on an otherwise rosy-looking equity radar screen qualifies as a “correction,” but one thing that isn’t debatable is the fact that the price action conveyed waning confidence in the reflation narrative.
For those who prefer to speak colloquially: “reflation narrative” = “Trump trade”
One way or another, what we saw Tuesday was someone fading that narrative/trade.
Either “regular” investors were fading it due to the indeterminacy surrounding the GOP healthcare bill or the “pros” were fading it because the plunging dollar catalyzed a “mechanical deleveraging VaR move” (to quote RBC’s Charlie McElligott).
Either way, faith in “stocks up, yields up, dollar up” meme was visibly shaken.
Well, as noted in the title, “if you believe that was a correction, then the media called it”…
big h/t @LJKawa