Sinko De Mayo: Post-Powell Panic-Bid Hangover Prompts Panoramic Pukefest
Tl;dr: The bond market just told Powell (and the stock market), “you’re wrong!”
Remember yesterday was the best performance for a Fed rate-hike day since 1978!
And today, the Nasdaq 100 Index fell 6% at its lows, the most since March 2020…
…fully reversing yesterday’s post-FOMC gains.
Notably this 2% or so drop in the S&P 500 in the two days of a Fed hike and the next is on par with the drop that happened in Dec 2018 and prompted Powell to reverse his hawkish stance.
We note that the S&P stopped at 4099.25 – which is max negative gamma – just one giant ping-pong game.
Within a week we’ve now seen two of the biggest 24-hour turn-arounds for the index since 1985.
In the past week we have had:
Friday: biggest drop since June 2020
Wednesday: biggest surge since May 2020
Thursday: biggest drop since June 2020
As yesterday’s massive short-squeeze is unwound instantly Today was the biggest drop in ‘most-shorted’ stocks since Feb 2021’s peak after the record meltup…
As Jason Goepfert notes, there have been 2 days in the past 25 years when S&P 500 futures were down 3% and 10-year Treasury futures down 1%:
October 9, 2008
March 18, 2020
Someone is blowing up, and this is forced liquidation.
It seems the market is ‘stuffed’ full of The Fed’s bullshit…
Energy is holding gains while tech and discretionary has been hammered over the past two days…
FANG stocks puked hardest…
VIX exploded back above 32 today…
Treasuries were clubbed like a baby seal today with the long-end underperforming (30Y +13bps, 2Y +6bps), massively unwinding yesterday’s moves…
The entire curve from 4Y out is above 3% (and 1Y fwd, the entire curve is inverted)…
Like everything else, the dollar round-tripped from yesterday’s losses…
Bitcoin was a bloodbath, smashed back below $36k for the first time since Feb 22…
Gold topped $1900 overnight but as the selling pressure escalated during the day, gold plunged back below, erasing all post-Fed gains…
Oil ended higher on the day after the Biden SPR news…
The Biden admin decided it was time to start refilling the SPR that they planned to empty to bring down oil (and thus gasoline) prices… Sadly for them, pump prices are now back above their cunning SPR plan levels…
…and are due to make new highs very soon…
Who will Biden blame this time?
Finally, what happens next?
Yesterday: All puts monetized
Today: everyone rushes to buy new puts
Tomorrow: all puts cashed out again after Williams sounds a bit dovish
— zerohedge (@zerohedge) May 5, 2022
Nothing would surprise us less!