Screw It Dude, Let’s Go Bowling.

It looks like European equities are going to try to close out the week on a positive note and futures pointed to higher open on Wall Street, but at this point, everyone would probably be just fine with calling it quits on 2018 and starting “fresh” in the new year.

There are a ton of “what the hell is going on?” articles floating around on Friday. I spent my morning coffee/cigar time perusing as many of them as I could stomach and I guess what’s so amusing about the current state of affairs is that nobody ever really knows what’s going on. This sums it up best:

When you start from that and then take into account the fact that Donald Trump is the President of the United States and that both bottom-up (e.g., diminishing market depth) and top-down (e.g., QT) liquidity is disappearing, the current nonsensical environment actually makes perfect sense.

Still, it’s easy to sympathize with anyone who’s feeling whipsawed. Similarly, it’s easy to see why some folks have just given up for the time being. Take Stephen Innes, head of trading for Asia Pacific at Oanda, for instance. Here’s what he told Bloomberg on Friday:

I’m on the golf course. As I have been most of the week.

Channeling his inner Walter Sobchak, apparently. “Ehh, f*** it Dude, let’s go bowling.”


Just a couple of quick charts to round out and otherwise underscore the insanity. 10-day realized vol. is now the highest since the yuan devaluation.



Although stocks managed their best day since 2009 on Wednesday and rode some last-minute rebalancing flows (which catalyzed the biggest reversal since 2010) to a green close on Thursday, it’s been a truly abysmal month, capped off by Fed jitters and some of the more absurd moments in the short history of Trump’s presidency.



On Friday morning, the President was on the Twitter warpath. As of 8:00 AM, there were so many “wall”/”caravan”/”border” tweets that trying to catalogue them or otherwise make sense of what he’s trying to communicate is impossible. The bottom line is that the shutdown will drag into 2019.

Meanwhile – and I keep saying this – USDJPY is probably going to have to sustain some kind of meaningful bounce if stocks (especially Japanese stocks) are going to have any hope of staging anything other than these wild, knee-jerk rallies predicated on God knows what.

The dollar’s recent trials and tribulations are not the kind of greenback weakness you want. You don’t want a dollar that’s on the back foot due to outright political turmoil in the U.S. Ideally, dollar weakness would accompany a dovish Fed and a soft landing for the U.S. economy, giving EM a reprieve and allowing for a “benign” convergence of global growth outcomes.

Right now, by contrast, you’ve got politically-driven dollar weakness colliding with palpable jitters about the broader market (creating a stealth safe-haven bid despite the Wednesday/Thursday U.S. equity euphoria) and this is the result:



Additionally, 10-year yields in Japan pushed below zero again on Friday. Long story short, that probably doesn’t bode well for Japanese equities (persistent “the worst is over for the Topix/Nikkei” calls notwithstanding).



Finally, below is a chart that gives you some perspective on what kind of year it’s been for U.S., Japanese and European stocks. We’ll present it without further comment.



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One thought on “Screw It Dude, Let’s Go Bowling.

  1. “Does anybody really know what time it is? Does anybody really care? And so I can’t imagine why, we all have time enough to die.”

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