Gold Suffers Worst Week In 3 Years As Fed Balance Sheet Explodes
Remember, this is 'Not' QE...
The Fed has expanded its balance sheet for 10 straight weeks (by almost $280 billion) - the biggest such expansion since April 2013, the peak of QE3...
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Source: Bloomberg
Since The started 'NotQE' POMO...
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Stocks haven't had a down week...
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Source: Bloomberg
And that explosion in liquidity means fun-durr-mentals collapsing just don't matter...
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Source: Bloomberg
Or maybe there's another reason (stocks have soared non-stop as Warren's odds of getting the nomination have tumbled)...
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Source: Bloomberg
All of which made us think... Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"
Chinese stocks ended the week green but the late Friday session saw notable selling pressure...
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Source: Bloomberg
European markets were also higher with a notable divergence between Spain/UK and France/Germany/Italy...
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Source: Bloomberg
Most notably, European stocks are broadly back near their record highs...
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Source: Bloomberg
US equity markets were higher on the week, led by a major move in Trannies all on the back of trade-deal optimism...
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It seems, despite Trump's statement that he hasn't agreed to rollback tariffs, the market prefers to believe China/Kudlow over Trump/Navarro...
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However, optimism for a US-China trade deal seem to have stalled the last few days...
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Source: Bloomberg
Rather more notably, despite massive intraday squeezes, "most shorted" stocks fell for the second week in a row...
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Source: Bloomberg
Momentum had another ugly week (down 5 weeks in a row and this was the worst week since the September momo massacre)...
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Source: Bloomberg
VIX tumbled for the 6th week in a row (longest streak since Feb 2019) barely holding above an 11 handle...
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And as VIX tumbled, specs piled into a new record short position...
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Source: Bloomberg
Bond yields have tracked Cyclicals/Defensive Stocks almost perfectly...
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Source: Bloomberg
Bonds were a bloodbath this week with Treasury yields blowing out around 20bps (short-end outperformed)...
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Source: Bloomberg
Pushing the longer-end of the curve to 3-month highs...
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Source: Bloomberg
The yield curve exploded this week: 3m10y curve steepened for 5 straight weeks but 2y10y biggest weekly steepening since Feb 2018...
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Source: Bloomberg
Rates markets are now pricing in less than one rate-cut by the end of 2020...
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Source: Bloomberg
German bond yields have also soared, back near their highest of the year...
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Source: Bloomberg
As European issuance has broken the full-year issuance record with more than seven weeks to spare after borrowers including Apple Inc., Bayer AG and the People’s Republic of China piled into the market this week.
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Source: Bloomberg
And Japanese bond yields saw the biggest weekly rise since 2013...
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Source: Bloomberg
The dollar soared by the most since August 2018 this week...
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Source: Bloomberg
Offshore Yuan rallied for the sixth straight week (longest run sine 2018), but trade-deal optimism gains rolled over in the last 24 hours...
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Source: Bloomberg
Cryptos had a tough week, tumbling in the last 48 hours...
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Source: Bloomberg
Bitcoin broke back below $9,000...
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Source: Bloomberg
Commodities were extremely mixed this week with PMs pummeled and crude and copper bid...
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Source: Bloomberg
WTI ended back above $57, but could not top $58 at the upper edge of its medium-term range...
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Source: Bloomberg
This was Gold's worst week since Nov 2016 (Trump Election)...
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...and Silver's worst week since Oct 2016...
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Despite gold's tumble on the week, silver was considerably worse, driving the gold/silver ratio to its highest since mid-August...
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Source: Bloomberg
Gold also tumbled against yuan, back to its lowest since early August...
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Source: Bloomberg
And as global negative-yielding debt drops below $12 trillion, one wonders if gold has further to fall...
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Source: Bloomberg
Finally, here a few scary things for melt-up fans to watch...
The surge in yields - we note that despite all the excitement about bond yields rising, signaling to some that growth is back and everything with record-high stocks is awesome again, the last two times that rates accelerate at this pace, things did not end well for stocks...
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Source: Bloomberg
Additionally, the steepness of VIX term structure is extreme - a level at which stocks have generally stalled in the past two years...
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Source: Bloomberg
And investors are at an "Extreme Greed" level of complacency across multiple asset classes...
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And then there's this...
Enough’s enough.
— Otavio (Tavi) Costa (@TaviCosta) November 8, 2019
Fresh 50-year low in the commodities-to-equities ratio.
The next monetary & fiscal experiment will come at a cost.
Major cyclical turn in this ratio likely ahead. pic.twitter.com/gIKtpdp1KB
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