Stocks, Crypto, & Yield Curve Tumble As ‘Strong Consumer’ Narrative Crushed

Walmart can’t get rid of its excess inventory, MacDonald’s is seeing lower income customers ‘trade down’, Pulte Homes said that home order cancellations have doubled in the last 30-60 days, new home sales crashed and median prices plunged, and consumer confidence tumbled.

But apart from that, the consumer is strong and the economy is definitely not in recession… if you believe the politicians and elites.

The ‘r’-word is coming…

Check out this incredible avalanche footage from the Tian Shan mountains in Kyrgyzstan. Luckily, everyone survived. Account: https://t.co/amo4Bh6z8I pic.twitter.com/WQumCfelgz

— Everest Today (@EverestToday) July 10, 2022

Like the message to 10% of Shopify staff today, here’s what we say to the elites…

Nasdaq led the charge lower today but all the majors were red on the day…

We note that the rebound off the mid-June lows topped out after the S&P tagged 4,000 and since then has faded fast…

The short-squeeze is over as “most shorted” stocks are down 3 straight days…

Source: Bloomberg

This week has seen Energy (oil is down?) and Utes outperform while Discretionary and Tech are the ugliest horses in the glue factory…

Source: Bloomberg

Treasuries were higher in yield across the curve today with the short-end underperforming (2Y +5bps, 30Y +1bps). NOTE that yields reversed their overnight trend perfectly at the US cash equity open…

Source: Bloomberg

The Treasury curve flattened further today with 2s10s at its most inverted since Aug 2000…

Source: Bloomberg

The much-watched 3m10Y spread is collapsing fast – if that inverts, there will be no excuses left (apart from changing the definition of ‘recession’… oh wait…)

Source: Bloomberg

The yield curve is pricing in a 13% chance of a 100bps hike tomorrow and a 35% chance of 75bps in Sept…

Source: Bloomberg

The dollar rallied today amid Euro weakness…

Source: Bloomberg

Cryptos extended yesterday’s losses overnight after Coinbase SEC-probe headlines. Bitcoin fell back below $21k and Ethereum back below $1400…

Source: Bloomberg

Gold slipped lower today but held above $1700…

US NatGas prices surged today to 14-year highs, topping $9 once again… (NG is up from $5.22 to $9.42 in 3 weeks)

…as EU NatGas prices continued to soar…

Source: Bloomberg

WTI Crude slipped back below $95…

The WTI-Brent spread has crashed to extremes, wider than the March peak when Putin invaded (some suggest this is reflective of US domestic economic weakness)…

Source: Bloomberg

Finally, the market is now pricing in a Fed pivot in Dec 2022… and implying that rates will not be back above that terminal rate for at least a decade…

Source: Bloomberg

Does anyone think that is a sustainable situation?