Look, it’s great that stocks have recouped losses after careening lower in one of the most harrowing bouts of volatility and flash-crashing madness anyone has ever seen and it’s equally great (if you’re long) that everyone seems to be ignoring incipient inflation and the likely implications for the Fed’s “plan” (scare quotes there to underscore the fact that there’s considerable doubt about whether they actually have a “plan”).

On the other hand, you almost get the impression that all of the people who were responsible for plowing $40 billion into U.S. equity funds in January only to pull (nearly) all of it right back out during the February rout are now actually proud of this roundtrip insanity.

It reminds me a bit of Clark Griswold standing on top of the wrecked station wagon in Vacation and pretending like he’s not impressed with himself.

Rusty: Wow dad you must have jumped this thing like 50 yards!

Clark: Well, that’s nothing to be proud of Rusty….

… 50 yaaaaards.


But hey, fuck it. If you like wild swings and you’ve got the stomach for it, there’s nothing quite like riding out an epic plunge and marveling at the sheer magnitude and scope of the insanity a week later after having recouped the losses. As Eric notes, “what a reversal”…

Fifth straight day of gains for stocks:


Best streak of the year for the Dow:


Info tech retracing fast:


I don’t know what this says for breadth:


There was more evidence of upward pressure on prices today, as the Empire State Manufacturing prices-paid index jumped to its highest since 2012 in February:


Core PPI beat and the prices paid component of the Philadelphia Fed index rose to its highest level since 2011 in February.

But stocks are seemingly prepared to ignore all of this in a complete break with the reaction to the above-consensus AHE print that sent equities spiraling downward earlier this month. And to be sure, folks are trying hard to shift the narrative. Take Jodie Gunzberg, managing director and head of U.S. equities at S&P Dow Jones Indices, who wrote the following on Wednesday in a blog post:

Equities haven’t been the most lovable asset class lately but there are reasons to love them despite these prickly times.  The first reason to love equities in rising rate times is that they have gained significantly. Since 1971, the S&P 500 (TR) has gained about 20% on average in rising rate periods, has gained 8 of 9 times and has gained nearly 40% twice with less than a 4% loss for its worst rising rate period.


“While this is less upside than equities have enjoyed in falling rate environments, and some of the equity duration models result in falling asset prices as the discount rate rises, the reality is results can vary,” Jodie goes on to note. Thanks for that, Jodie.

Another mixed day for Treasurys with a flattening bias. Here’s 10y yields since CPI:


The dollar was down again. It’s just “sell the rallies” mode at this point. The fiscal outlook is for shit and concerns about that are apparently overwhelming any help the greenback might otherwise get from rising yields. Additionally, there is no indication whatsoever that the Trump administration wants the “stronger dollar” they’ve spent so much time talking about since Steve Mnuchin intentionally jawboned it lower in Davos just hours after Trump started a trade war by slapping tariffs on residential washing machines and solar equipment. We’re right back near the 2018 lows on DXY:


USDJPY continues to fall. This is becoming extremely notable. Last night, Aso indicated they’re not yet ready to step in:

This afternoon:

  • USD/JPY NEW 15-MONTH LOW AT 106.07, EYES 200-MMA AT 105.72

We’re sitting at fresh “since November 2016” lows:


Oil was higher again, supported by the weaker dollar and ostensibly bullish commentary out of al-Falih:


Weaker dollar, rising oil, generalized risk-on has led EEM to recover quickly:


EMFX (MSCI’s index) has basically erased this month’s drop. Oh, and speaking of EM, EM HY now yields less than USHY:


European shares rose for a second day, but as noted previously, it’s an uphill battle over there right now:


The VIX is back in the teens which means we’re pretty well on our way to making this yet another example of rapid “mean” reversion:




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