Bitcoin, Bullion, Big-Tech, & Bond Yields Rise As Crude Crumbles

Some early hope-filled reports of “careful optimism” about a ceasefire – which were entirely ignored by anyone in Brussels, from NATO or the G-7, ignited momentum right in time and lifted stocks today, Led by growthy-stuff (Nasdaq), it appears the ‘QE trade’ is back on as traders look through the imminent recession and bathe in the hope of rate-cuts to come and of course, more QE…

On the week, Nasdaq is leading the way (along with the S&P). The Dow scrambled up to unchanged on the week this afternoon, while Small Caps are still in the red…

The initial weakness in stocks (at the cash open) was instantly met – like yesterday – with a wall of short-squeezing (although today’s magnitude was considerably less than yesterday’s)…

Source: Bloomberg

The sudden reversal of fortune for growth – long duration – over value stocks continues…

Source: Bloomberg

Bonds were correspondingly dumped again today, with the belly underperforming (5Y +5bps, 2Y and 30Y +2.5bps), and on the week, the long-end is outperforming (though all yields are higher)…

Source: Bloomberg

Global bonds are currently suffering the largest drawdown on record – a deeper correction than during the Lehman crisis (h/t @Schuldensuehner)…

Source: Bloomberg

And Germany’s bond benchmark has also suffered its biggest drawdown in history…

#Germany‘s bond benchmark Rex10yP has suffered the biggest drawdown in its history. Has dropped 13.3% from ATH. pic.twitter.com/zPdmFPGoFL

— Holger Zschaepitz (@Schuldensuehner) March 24, 2022

And consider the fact that the forward Treasury curve is deeply inverted, now at its most ‘recessionary’ since 2000 (right ahead of the recession)…

Source: Bloomberg

But no one in public sees a recession coming… “consumer too strong” etc… because – unlike every other time ever, The Fed will nail a ‘soft landing’ this time…

Spot the soft landing pic.twitter.com/wyQ97oalvP

— zerohedge (@zerohedge) March 24, 2022

Is it time to buy bonds? Is that a contrarian view?

A contrarian is often misunderstood as someone with heterodox views. In reality, it’s a person with deep conviction in an apathetic society.

Peter Thiel: “To be contrarian, in a world where people don’t believe in anything, is to have well-defined beliefs and to anchor them.” pic.twitter.com/5nPZt1sXfX

— BUILD OR DIE (@buildordie_) March 24, 2022

Cryptos rallied today with Bitcoin back above $44,000, near post-Putin invasion highs…

Source: Bloomberg

And Ethereum outperforming, back above $3100, highest since Putin invaded Ukraine…

Source: Bloomberg

The dollar continues to limp higher (up 4 of the last 5 days)…

Source: Bloomberg

Crude was clubbed like a baby seal today with WTI back to a $110 handle…

Notably, as oil prices dip, European Diesel premiums are exploding higher amid fears of shortages…

Source: Bloomberg

Gold continues to appreciate today, after bouncing off the pre-Putin-invasion level…

Finally, it’s time to hedge. During the past few days’ rally, implied volatility has fallen so quickly that by many metrics it is below recent realized volatility. In fact, current VIX is now at its ‘cheapest’ to realized vol since the COVID collapse in 2020)…

Source: Bloomberg

As Goldman notes, falling short-dated skew and a lower VVIX also leave hedges more viable. This sets up an attractive entry point for short-dated hedges, especially if the alternative to hedging is reducing the size of long positions.