Hedge Funds Hammered As ‘Roaring Kitty’ Returns; Bitcoin & Black Gold Bid

The return of ‘Roaring Kitty’ sent GME soaring higher (up 110% at its highs)…

Source: Bloomberg

…and prompted squeezes/panic-covering across the ‘most shorted’ names and ‘retail favorites (memes)’ soared…

Source: Bloomberg

As John Flood noted from Goldman’s trading desk: “GS Most Short Rolling basket in focus having a top 5 move over the past 5 Years (3.3std).”

Source: Bloomberg

Volume/activity has been abysmal recently and today was no better with overall activity levels -7% vs the trailing two weeks average.

HF buy skew sticks out @ +16.6% unsurprisingly, that’s 97th %-ile & the highest level in 6wks.  Covering most acute in Info Tech with a buy skew @ +20% and short ratio of only 34%.  HCare, Consumer, REITs & Comms Svcs all net to buy; Macro Products & Energy (likely PR hedges) net for sale

LOs are 15% better for sale with just Cons Disc and Fins as small to buy.  The most concentrated selling is in Macro Products & Info Tech, with modest supply across HCare, Indust, Comms Svcs & Energy

Most notably, the weakest sleeves of the market are surging higher – Most Short Basket up +3 sigmas // YOLO basket up +3 sigmas // China Internet basket up +2 sigmas

GameStop “stonks” surged up to 119% after a cryptic post on X from Keith Gill, aka ‘Roaring Kitty’, his first since June 2021. Some investors interpreted it to mean that Gill is coming back into action (BBG).

S&P is unchanged but NOT all is calm underneath the surface. HF community under pressure on this Manic Monday. We are seeing a considerable amount of covering by the fast money community in both single stocks and macro products during the first 3 hours of trading.

Keep an eye on the following thematics as it feels like this could get worse before it gets better…

‘HF VIP Longs vs Most Short’ was down 7% – the biggest drop since June 2021 (today’s move is a 4SD over last 1 year of trading)

Source: Bloomberg

Mega Cap Tech vs Non Profitable Tech down 4% (today’s move is a 3SD over last year of trading)

Long Momentum down 4% (today’s move is a 4 SD over last year of trading)

In context, today saw half of all indicative hedge fund gains year-to-date have been cut in half…

Source: Bloomberg

Here we go again: explosion in most shorted names means worst day for hedge funds since Dec 2023. Gross unwinds, margin calls, stay puft marshmallow man all to follow pic.twitter.com/yxl8220Nau

— zerohedge (@zerohedge) May 13, 2024

The jump in inflation expectations (and household debt stress) from The New York Fed’s survey did provide some selling pressure on the day however – as well as Chevron’s decline (driven by reports that influential proxy giant ISS recommended Hess investors abstain from voting on the proposed $53 billion acquisition).

By the close, the S&P was unchanged, The Dow was the laggard (down around 0.2%), while Small Caps outperformed and Nasdaq held on to some gains (both well off the day’s highs)…

Treasuries were bid today (but traded in a narrow range), ending the day down only 1bp…

Source: Bloomberg

The dollar ended the day flat, recovering overnight losses…

Source: Bloomberg

Bitcoin ripped back up to $63,000 today, erasing Friday’s plunge losses…

Source: Bloomberg

Gold gave back more than half of last week’s gains today, back below $2340…

Source: Bloomberg

Oil bounced back off $78 (WTI) – around its 100DMA – recovering most of Friday’s losses…

Source: Bloomberg

Finally, this trend is not Powell’s (or Biden’s) friend…

Source: Bloomberg

‘Growth’ data continues to surprise to the downside, and ‘inflation’ data surprise to the upside. What do we call that Jay? Clue: it rhymes with blag-station.