ANDIKA BULLETin 2 FEB 2024
US Stocks Soar Amid Hopes Regional Bank Crisis Will Lead To Early Rate Cut, More Fed Easing
Another rollercoaster overnight session for US stocks.
Following on the biggest drop for the S&P since September thanks to Powell unleashing Hawk Hogan during his presser, US stocks - which had managed to regain about a third of the drop overnight - started the day off on the back foot, dropping to session lows early in the session as the regional banks crisis threatened to spread out of control as multiple small banks tumbled high-single and double digits.
However, then the market quickly remembered that it was precisely the bank crisis last March that sparked a powerful Fed response (BTFP), and a violent rally, and we got the same thing today as stocks slingshot sharply higher closing 1.1% higher...
... with the meltup paradoxically also spreading to the regional bank index, as the very catalyst for the meltup reversed and also rose in an example of absurd market reflexivity.
While banks have struggled, one can't say the same for tech, which has levitated since the open, and is well on its way to erasing all the losses during Wednesday's drubbing...
... although a lot will depend on what AMZN (good news: a top- and bottom-line beat, and despite some weakness in AWS revenues (which came in just below estimates) the stock is surging after hours), AAPL and META report after the close.
Until then, however, everyone is enjoying today's relief rally (relief from what exactly?) and even though we have seen a veritable rollercoaster in March rate cut odds in the past 48 hours...
both gold and bitcoin closed the overnight near session highs as attention turns to tomorrow's jobs report, at which point we start everything from square one.
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