Crude Crashes, Gold Gains As Defensives Dominate Stocks

Who drank the oil bulls’ milkshake?

 

Weak China PMI was greeted with a buying panic early on but by the close, Chinese stocks were lower on the day (with the tech-heavy indices leading the drop)…

 

European stocks finally slowed their manic buying spree (but ended higher)…

 

US equity markets extended yesterday’s gains…Trannies – green – continue to lead the week (Nasdaq – blue – flatlined from the gap open today)…

But Small Caps closed red…

As the short-squeeze seems to be running out of juice…

 

Today’s gains were dominated by Defensive stocks, with Cyclicals notably underperforming…

 

Stocks saw a notable sell program hit around 3pmET (same as we saw Monday)…

BUT as one comic noted, for the third day in a row, stocks are suddenly cheaper in the last 10 minutes of trading as stocks went vertical once again. Dow futures are up almost 900 points from Sunday night lows…

 

Stocks extended their decoupling from bond yields today…

 

Very mixed day in bond-land today with the entire curve lower aside from the long-end (30Y +2bps, 2Y -4.5bps)

 

Which has sparked a massive steepening in 2s30s…

But the short-end remains dramatically inverted…

 

After 4 straight days down, the dollar index spiked today – best day in 6 weeks (back to yesterday highs only though)…

 

Yuan was weaker today…

NOTE how far from offshore yuan (market levels), the yuan fix has been held.

Cryptos managed modest (2-5%) gains today but remain lower on the week…

 

Copper and Crude were ugly today as PMs early gains leaked away as the day wore on…

 

Gold is up 6 days in a row…

Testing (and fading) at Feb highs…

Oil prices collapsed into a bear market today (down 22% from highs) after a surprise build across all products produced the biggest aggregate inventory build since 1990…

“It’s the perfect storm, in a way, of increased supply coupled with perceptions of slowing demand growth,” said Marshall Steeves, energy markets analyst at Informa Economics in New York.

WTI tested down to a $50 handle (before ramping into the close) – the lowest since January 9th…

Brent fell back below $60 for first time since Jan…

Both down around 22% from recent highs, which stocks are summarily ignoring for now…

Is oil catching down to inflation breakevens?

Judging by HY Energy credit markets, WTI has further to fall…

The recent outperformance of gold (safe haven) vs oil (growth scare) is impressive (an ounce of gold now buys almost 26 barrels of WTI – up from just 20 barrels two weeks ago)…

Finally, we give Rosie the last word:

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Author: Tyler Durden

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