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Stocks Scream Higher On Greatest Short-Squeeze In History, Bonds & Bullion Shrug

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Stocks Scream Higher On Greatest Short-Squeeze In History, Bonds & Bullion Shrug

"Fear" is almost over according to the market's "Virus Fear" trade...





Source: Bloomberg



The Dow is up by almost 18% in the last 2 days - the biggest 2-day surge since March 1933...





Source: Bloomberg



And Dow futures are up a stunning 20% from the limit-down lows on Sunday night...





But bonds ain't buying it...





Source: Bloomberg



So, with stocks roaring higher once again, this seemed appropriate...





"Most Shorted" stocks are up a stunning 21% in the last two days - the greatest short-squeeze in history...





Source: Bloomberg



Dow futures show the insane scale of today's moves best - a 1000 point surge into yesterday's close, a failed 1000 point surge overnight (on the "deal"), another failed 1000 point surge into and through the cash open, and then a 1500 points surge that held into the close...



BUT - Things "went a little bit slightly turbo" into the close as Bernie Sanders spoiled the party by threatening to hold up the vote on the bill...





Knocking stocks lower and sending Nasdaq red on the day...





AAPL also did not help as reports came out that it may delay its 5G phone...





However, on the last two days, stocks are up strong...





Airlines, Cruise operators, and restaurants all soared massively today again...





Source: Bloomberg



Boeing was the most ridiculous of all stocks...





Source: Bloomberg



There's nothing like a government handout to make everything better! What a farce!



VIX and stocks have decoupled (are people seriously buying calls to lever-up into this rebound? Or is this hedgers?). VIX was unchanged today as stocks soared...





Source: Bloomberg



Treasury yields were mixed today - short-end bid (less than 5Y -2bps), long-end offered (30Y +2bps), belly flat but relative to stocks huge moves, bonds basically shrugged...





Source: Bloomberg



Starting at around 1400ET, someone decided to dump the long-bond hard...





Source: Bloomberg



US T-Bills have negative yields out to the end of the year...





Source: Bloomberg



Both HY and IG bonds rallied today (thogh HYG rolled over late on as LQD was bid into the close)...





Source: Bloomberg



Before we leave bond-land, it is worth pointing out that the number of bonds trading at a spread over 1,000 bps (the barometer of distress) neared 1,900 this week - the highest since 2009, data compiled by Bloomberg show. It was less than 300 at the start of March.





Source: Bloomberg



As Bloomberg noted, the spread on the entire junk bond index flipped above 1,000 bps on Friday, and strategists expect it to exceed 1,200 bps soon. In addition, there’s a whole world of grief in the $1 trillion leveraged-loan market, which is trading on average below 80 cents on the dollar, a level typically associated with distress.



But, HYG - the HY Bond ETF - has screamed higher today, back into a huge premium to underlying NAV...





Source: Bloomberg



The Dollar tumbled for the second day in a row (after 11 days straight up)...





Source: Bloomberg



Cryptos broadly slipped lower today...





Source: Bloomberg



Someone was bidding oil again during the US session...





Source: Bloomberg



Spot Gold and futures remain decoupled though the spread did compress from their extremes yesterday...





Source: Bloomberg



Palladium exploded higher today (though all PMs are notably higher since The Fed went "all-in")...





Source: Bloomberg



After surging Tuesday, Palladium futures in New York skyrocketed 26% Wednesday, the biggest gain in records dating back to 1986.



Finally, we've seen this all before... As Bloomberg details, historically expectations are low after a big rally. The 9.4% jump in the S&P 500 yesterday was the 10th largest in history. The benchmark S&P fell seven of the previous nine times with an average loss of 0.7%.





While the most intense sell-off may be behind us, there’s still room for the markets to fall. For one, the current drawdown is 34%. It is less than the peak-to-trough falls in the previous crises, including the 57% slump in 2008-2009, the 49% drop after the burst of the dot.com bubble and the 48% retreat during the 1973 oil crisis.



And for now, it appears the 1929 analog is holding up...





Source: Bloomberg



It’s certainly good news that the fiscal stimulus of more than $2 trillion is on the verge of getting passed in Congress. But the stimulus and various Fed actions are necessary but insufficient conditions for the market to bottom, and worse still, the dollar funding crisis is rapidly re-accelerating as month-end looms... having erased all of the 'improvement' offered by The Fed...





Source: Bloomberg



And don't forget - tomorrow is jobless claims and it's going to be a doozy!



If all of that doesn't scare you - this should - the sovereign credit risk of the USA is surging higher since helicopter money began to creep into reality...





Source: Bloomberg




Tyler Durden

Wed, 03/25/2020 - 16:03
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