Dead Cat Tech Bounce

The rebound in tech shares and other pandemic winners fizzled Wednesday, perhaps suggesting the correction in some overvalued corners of the US equity market isn’t done just yet.

Wednesday could have been dramatic for bonds, but mercifully, Treasurys cleared both hurdles. February’s CPI print was benign and so-so metrics for a closely-watched 10-year sale were written off to a pre-auction rally. The tail was trivial compared to last month’s catastrophic seven-year sale.

Given the “good” news in the rates space, it was a bit surprising that tech wasn’t able to build on what some were already calling a “dead cat bounce.” The Nasdaq 100 woefully underperformed small-caps, for example.

Meanwhile, it was back to the front (if you will) for financials. After lagging during Tuesday’s blockbuster session, banks rose 2.5% Wednesday, as reflation/pro-cyclical bets were back en vogue.

That’s a manifestation of the “churn” discussed here at length on Wednesday — you’re likely to witness an incessant tug of war as investors struggle with the cognitive dissonance inherent in a desire to participate in the reflation boom but an instinctual penchant for buying dips in secular growth.

Energy shares recovered all of Tuesday’s drop — and then some.

The Dow closed at a new record. If Donald Trump were still president and was still allowed to have a Twitter account, you can be sure today would have featured an all-caps celebration complete with superfluous punctuation. Then again, if Trump were still president and still had a Twitter account, it’s not clear the Dow would be at 32,000 right now.

The dollar retreated in another boon for risk assets Wednesday. Gold managed a second daily gain, no small feat for the beaten-down haven, which is the subject of daily ridicule not just from traditional detractors, but now from some in the crypto crowd, who point to Bitcoin’s meteoric rise as evidence that “barbarous relics” really are barbarous.

Bitcoin climbed above $57,000 on Wednesday.

There were no thumb drives when Hernán Cortés (allegedly) told the Aztecs “I and my companions suffer from a disease of the heart which can be cured only with gold.”