Bubble Trouble.

This month, when BofAML asked fund managers to identify the most crowded trade, survey respondents chose “Long Nasdaq” for the sixth time in seven months. The only other trade to take the top spot over that stretch: “Long Bitcoin.”


Well needless to say, those trades have panned out pretty well, but on Wednesday there was some pain in the Nasdaq and some hilarity in Bitcoin.

It was an abysmal day for FANG. Specifically, it was the worst day in 22 months. This was also the worst day for big cap tech relative to the broad market since Goldman triggered a tech rout with their FAAMG call in early June:


As noted earlier, the Nasdaq VIX spiked and the VXN / VIX ratio rose the most since Goldman’s “is FANG mispriced?” piece and the second most in at least 11 years:


You get the idea. It was a bloodbath for tech and everything else held up fine, with the Dow closing at another record high:


As tipped above, the Nasdaq wasn’t the only place where there was “bubble trouble.” Bitcoin suddenly plunged in afternoon trading after hitting an all-time high close to $11,400 in the morning:


McAfee is still bullish:

WTI fell as much as 2.1% on Wednesday ahead of the OPEC meeting in Vienna tomorrow amid conflicting signals. Asked if he was concerned about today’s price action, Saudi Oil Minister Khalid al-Falih said no. For his part, Iran’s Oil Minister Bijan Zanganeh said he “expects OPEC meeting in Vienna to go very well.” The Joint Ministerial Monitoring Committee (JMMC) recommended extending the agreement for another 6 to 9 months beyond March, with a preference for 9, according to Kuwait’s minister. As far as the EIA report, it looks like the gasoline an distillate builds (and of course rising oil output) overshadowed the crude draw. You know the story: nobody has a clue. Ultimately, WTI fell below $57 to the lowest intraday level in a week:


Retail and apparel shares are running on optimistic reports about holiday sales. The S&P 1500 Apparel Retail Index  jumped more than 3.3% to its highest intraday since May 12. It’s up 6.5% this week:


Goldman was out with an upbeat take. To wit:

  • Consumer spending had already started to pick up in early autumn, and both anecdotal evidence and hard data from Adobe, Salesforce, and Johnson-Redbook indicate that retail sales likely remained firm or accelerated further to start the holiday season. In addition to cycle-high consumer confidence and continued job growth, retail spending is likely benefiting from the convergence of several consumer electronic product cycles, with major releases including iPhone X, Nintendo Switch, and Amazon Echo.
  • We continue to see divergence online vs. offline, with sales trends likely solid in eCommerce but softer in brick and mortar categories. Nonetheless, available data suggests that November year-over-year sales growth may have improved sequentially in both channels. Taken together, we believe the information currently available is consistent with a solid but not stellar November retail sales report, with sales in the key retail control category of around +0.4% month-over-month (and +3.8% yoy). We are currently tracking real consumption growth in the fourth quarter at +3.4%, which would be its fastest pace in six quarters

This looks like it’s set to be the best month for XRT since October 2011:


And have a look at the shift:


Gold dropped and yields rose as Yellen spoke and Q3 GDP was revised up to a 3-year high:


Also notable, the pound was supported by what counts as “progress” on Brexit, but that’s a give and take because it of course weighed on U.K. stocks. Spot the FTSE:


Oh, one more thing from the U.S.: the financials are sitting at their highest levels since 2007 just in time for Jerome Powell to help Trump roll back regulations.





2 thoughts on “Bubble Trouble.

  1. Rotation from Tech to Financials and Service. The yankee are so fags: if they rotate so fast they will trigger volatility and deleveraging -> broad market correction

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