Apocalypse Now (Again).

Last Monday, the date of the apocalypse got pushed back after Hurricane Irma “failed” to completely submerge the state of Florida and after Kim Jong-Un “failed” his ancestors by not launching an ICBM to celebrate North Korea’s founding day.

And while that wasn’t good news for everyone who had spent days preparing for the end times by barricading themselves in the basement with their assault rifles, kerosene lamps, gold eagles, Chef Boyardee, and Alex Jones DVDs, it was good news for risk assets. Stocks hit new highs while safe havens slumped as markets breathed a heavy sigh of relief and celebrated the fact that everyone was still alive by buying everything in sight and selling the hell out of Treasurys.

Well for those who had their doom bunkers all prepped and ready, there’s “good” news on Tuesday – the apocalypse is back on.

For one thing, the Fed is set to announce balance sheet normalization tomorrow. By many accounts, that in and of itself is enough to stop the world from spinning. So wave goodbye to this:

BalanceSheet2

But beyond that, Donald Trump is going to “totally destroy North Korea.” And he put on his orange clown makeup and said as much in front of the entire world on Tuesday:

Trump’s new bestie Chuck probably wouldn’t have said that:

Additionally, the natural disasters are back as a 7.2 magnitude earthquake rocked Puebla, Mexico and Hurricane Maria rips through the Caribbean as a Cat 5.

So besides being evidence that any armageddon preparations you might have made weren’t all for naught after all, everything said above is also concrete proof that the only thing to do is buy stocks. Hence record highs (there’s no point with the charts on this anymore – red flashing headlines on CNBC’s homepage are a more appropriate tribute):

Record

It was a meandering sessions for Treasurys, but just note this ahead of the Fed:

Curve

Sideways in FANG hasn’t derailed the S&P:

FANG

Of course the downside to broad-based strength in bubble times is that it means broad based overvaluations (mind the medians):

BC3

But folks are buying protection:

PutCall

And some folks who like to set money on fire are piling into TVIX and UVXY which just saw the most weekly inflows since March of last year:

VIXFlows

The peso got hit on the earthquake news:

Peso

The euro fell briefly on news that the ECB is divided on the appropriate time to announce its plans for the balance sheet:

EURUSD

USDJPY was a bit of a rollercoaster as well, quickly falling after trading close to its session high at 111.88 (the move coincided with the pop you see above in EURUSD):

USDJPY

EM stocks are sitting at 6-year highs ahead of the Fed:

EEM

Volatility there is sitting at or near multi-year lows:

VXEEM

Because nothing says “EM rally” like “DM policy normalization.”

Japanese shares had their best day in months as investors bet that Abe’s snap election gambit will pay off and ultimately mean indefinite political support for more BoJ easing (yen negative, equity positive):

Nikkei

Finally, “you are here” (orange square) – and that probably isn’t good…

SGCAPE

 

 

Advertisements

3 thoughts on “Apocalypse Now (Again).

Speak On It