‘War With China’ Sparks Surge In Stocks As Policy Uncertainty Hits ‘Brexit’ Highs

Can’t allow stocks to signal that starting a trade war is anything but ‘making American great again’…

[youtube https://www.youtube.com/watch?v=92i5m3tV5XY]

First things first, today’s actions by US, China, and Russia are not a positive and Economic Policy Uncertainty has exploded to its highest since Brexit…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

And ‘hard’ US economic data is at its weakest since Nov 2017…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

For now, it seems like China is suffering the most, Russia the least and US and Europe duking it out…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

If Small Caps are up 3% in a week when Trump unleashes $34 billion in tariffs on China, imagine how much it will be up when he brings the full weight of his planned $500 billion tariffs…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

S&P and Nasdaq best day since June 1st.

Futures show the craziness best as we kneejerked on the US tariff hit, then tumbled when China actually responded, then was panic bid again on rising unemployment rate and disappointing earnings growth, then tumbled into the close on a big MOC for sale…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Of course, it was a big fucking short-squeeze again…”most shorted” stocks up 4.5% from Monday’s low open…the biggest 2-day short-squeeze in a month.

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

And all you have to do is look at the bond market to know stocks are a farce…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

The S&P 500’s monthly pattern continues to hold… The last two days are the biggest jump for the S&P in 2 months!

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

h/t @NorthmanTrader

And in case you’re wondering what the driver of that is – it’s a cyclical short-squeeze…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

The big banks surged early after trade war started but ended ugly…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Of course, FANG stocks were panic bid the last two days back into the green for the week…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

While 2Y yields ended the week marginally higher, the rest of the curve fell notably (despite surging stocks)…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

10Y yield close today was the lowest since May 29th’s plunge (and lowest weekly yield close since April)…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Which sent 2s30s to 37bps at its intraday lows – a new low since August 2007

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

10s30s tested single-digits…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

The Dollar Index suffered its biggest weekly loss since March, erasing all the post-Fed/ECB spike gains…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Emerging Markets FX had their best week since February!!?? Because trade wars are great for developing nations…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Offshore Yuan’s freefall stalled as PBOC intervened midweek… (but this was the 4th weekly decline in a row – 10th week of last 12)

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Crytpos managed to end the week positive (for a change) – best week for Bitcoin in 3 months

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Ugly week for copper as PMs and crude were relatively unchanged on the week…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Copper has plunged to its lowest since July 2017…

'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs

Even CNBC anchors said “it’s curious to me that stocks are up so much on this, the first day of the trade war.”

But Bridgewater’s Ray Dalio summed it all ominously:

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