ANDIKA BULLETin 14 FEB 2024

Magnificent Selling!

ANDIKA BULLETin 14 FEB 2024

That escalated quickly...

A hot CPI print was all it took to steal the jam from this melt-up-market's donut of exuberance.

The deer is back!

Small Caps collapsed - crashing almost 5% (worst day since June 2020). The S&P was down 2% - its worst day since Dec 2020 (worse than Feb 2023's SVB crisis drop). Some late-day profit-taking painted some lipstick on this pig of a day...

The 'Magnificent 7' stocks puked at the open, dup-buyers stepped in (as they do), but were then clubbed like a baby seal. This was MAG7's 2nd worst day since October...

Who could have seen this resurgence in inflation coming?

Well, I've been warning about 'Animal Spirits 2.0' for weeks as the lagged impact of the massive loosening of financial conditions last year flows wondrously into the real economy and lifts all economic expectation boats...

CPI's hot, too damned hot! And being too hot, marked the death of hope for March rate cuts, forget May rate-cuts, at the moment the first cut is priced-in for June... and as of today's less than 4 rate-cuts for the whole of 2024 (in fact just a 50% chance of 4 cuts, conditioned on 3 cuts). As a reminder, in mid-January (a month ago), the market was pricing in 170bps of cuts in 2024, now its half that.

And rule out the same here in Australia.

USD soared, AUD puked, Gold back down to USD$2,000 while Bitcoin did well holding well above USD$49,250

Remember that new key word I introduced - Inflows!

BTC net inflows continue hot...

And US inflation is going to get a lot worse.

Messrs Biden and Powell have a problem - US gas pump prices are about to soar...

Source: Bloomberg

Welcome to the party, Pal!

Happy Wednesday!

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