'Lost In Translation' Trade-Talk Sparks Stock Surge, Bond Bloodbath, Precious Metals Pounding A mis-translated story from China overnight on removing tariffs sparked a melt-up in stocks, bond yields, oil, and the dollar today (and slammed precious metals). When i translate the Chinese statement that moved the market last night it doesn't seem like there is anything new? pic.twitter.com/yKUXCyBJMq — FxMacro (@fxmacro) https://twitter.com/fxmacro/status/1192423448922001409?ref_src=twsrc%5Etfw!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+"://platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); As @simonting says, its lousy trade news masquerading as good news. But that never stopped the markets... which have now extended the recent panic-buying to "extreme greed" territory... Source: CNN Chinese stocks rallied notably in the early session with tech/small caps leading... Source: Bloomberg European stocks had another big day... Source: Bloomberg US (cash) markets gapped open and then drifted all day with Small Caps barely holding on to gains... Futures show the moves best... 0220ET *CHINA, U.S. AGREED TO LIFT TARIFFS IN PHASES AS DEAL PROGRESSES 0520ET *CHINA STUDYING REMOVAL OF CURBS ON U.S. POULTRY IMPORTS: XINHUA 1200ET *U.S. SAYS 1ST CHINA TRADE DEAL WOULD INCLUDE TARIFF ROLLBACK 1420ET *US, CHINA WANT PHASE ONE DEAL ON PAPER BY END OF NEXT WEEK: FOX 1445ET *NO U.S. DECISION ON CHINA TARIFF ROLLBACK MADE, REUTERS SAYS 1535ET *THERE'LL BE TARIFF CONCESSIONS IF THERE'S PHASE 1 DEAL: KUDLOW All thanks to an initial short-squeeze, which, however, gave it all back by the close as it appears the ammo for these pushes is running dry... Source: Bloomberg Source: Bloomberg Source: Bloomberg US Homebuilder stocks tumbled as rates soared... Some context for just WTF is happening in the stock market, the following massive stocks are up stunning YTD... AMZN +19.6% GOOG +24.8 MSFT +41.8% AAPL +63.1% That is a $450 billion addition to market cap for AAPL... Source: Bloomberg Also, Apple is the largest contributor to the Dow’s 4,165 point YTD advance, adding 908 points to the Average this year (22% of total gains). Source: Bloomberg Source: Bloomberg Source: Bloomberg It was a bloodbath in bonds today as Treasury yields exploded higher... Source: Bloomberg Yields broke mid-September highs, breaking back to their highest since Aug 1st... Source: Bloomberg Intraday, yields legged higher on the first China tariff headline then accelerated but reversed on the auction... Source: Bloomberg Notably, the yield curve (3m10Y) soared to its steepest since 2018... Source: Bloomberg But bear in mind that the un-inversion of the yield curve is the typical pattern ahead of a recession... Source: Bloomberg The odds of a Dec rate-cut have evaporated... Source: Bloomberg And the market is now pricing less than one rate-cut by the end of 2020... Source: Bloomberg The Dollar ended higher with the same buying pattern appearing as the last few days... Source: Bloomberg Notably the dollar rally stalled at the highs from FOMC day... Source: Bloomberg Yuan ended higher on the day but was pushed around by trade headlines like US stocks... Source: Bloomberg Cryptos were all down on the day... Source: Bloomberg Trade deal optimism sparked the ubiquitous dump PMs, pump crude/copper trade... Source: Bloomberg WTI surged intraday on the trade deal headlines (but faded late on after the US headlines)... Gold was monkeyhammered to 3-month lows... before rebounding Silver was clubbed like a baby seal... Finally, will gold catch down to global negative yielding debt volumes or are rates set to tumble once again? Source: Bloomberg And if the trade deal is so close... why does the market keep backing away from the surges in the odds of a deal? Source: Bloomberg And just a gentle reminder, the last two times that yields rose this aggressively did not end well for stocks. As Bloomberg details, the five-week change in the 10-year yield is now 40 bps... Source: Bloomberg ...and the last two times we reached that threshold were Oct. 8 and Feb. 2 of last year -- both bad days for stocks. Source: Bloomberg Tyler Durden Thu, 11/07/2019 - 16:00 Tags Business Finance