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It appears the world's investors were 'over-stuffed' full of liquidity just as 2021 ended...
...which meant the first half of 2022 was a bloodbath for most. Stocks were clubbed like a baby seal,
bonds were battered, there was carnage in crypto as the dollar soared and gold was steady...
S&P was down 21.01% in 1970 H1, we are currently down 21.22% H1... so, according to Bloomberg
data, this would be worst since 1962... 60 years ago
Nasdaq Composite is down 30% to start the year - that is the worst start to a year ever, worse than the H1
2002 collapse.
Year-to-date, US stocks have been hammered lower with 3 small BTFD efforts...
Only the energy sector is green year-to-date with Consumer Discretionary the worst horse in the glue
factory...
Source: Bloomberg
Of course, the ugly quarter has prompted many calls for a rebound based on history... the question is - how
many of those times saw stagflationary pressures as large as the current quagmire...
Carl Quintanilla
@carlquintanilla · Follow
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The US economy saw false hopes of recovery in Q1 of 2022, only to have that slapped in the face of
optimists in Q2 as May and June saw macro data collapse...
Source: Bloomberg
The Short-end of the curve was the hardest hit, with 2Y rising 220bps in H1 and 30Y up 123bps...
Source: Bloomberg
For a different perspective on this shift, here is the before and after of the US yield curve...
Source: Bloomberg
The credit side of the bond market was also a bloodbath with HYG suffering its worst H1 losses ever...
Commodities, broadly speaking, were up 18% in the first half of 2022 (but we note they were up 22% in the
first half of 2021 - which is weird because we are pretty sure that Putin didn't invade Ukraine in 2021).
Oil prices soared 40% in the first half of 2022, but that is less than the surge to start 2021...
Crypto was carnage as Bitcoin fell 59% in the first half of the year - that is the worst start to a year ever for
the crypto currency (worse than the 57.99% drop in 2017). Ethereum was worse, falling 72% YTD...
Source: Bloomberg
The Dollar soared in the first half of the year, up almost 10% - its biggest start to a year since 2010...
So having got all that off our chest, let's focus back in on this week...
Stocks rollercoastered today, weakness overnight and then dumping early on in the cash session led to a
bid into and across the European close which managed to get the majors back to unchanged on the day...
only to see selling return in the afternoon
Interestingly, today's dead-cat-bounce managed to get stocks up to last Friday's cash open level before
stocks went panic-bid into OpEx...
Credit markets are breaking bad and signaling significantly more pain ahead for stocks...
Source: Bloomberg
Treasuries were bid today with the short-end outperforming (5Y -14bps, 30Y -9bps) and the belly continues
to outperform strongly into the quarter-end...
Source: Bloomberg
This pushed the 10Y Yield back below 3.00%, back below the CPI-spike lows on June 10th...
Source: Bloomberg
Global inflation expectations are starting to really tumble with US 10Y Breakevens at their lowest since
Sept 2021. Japanese inflation expectations have fallen the least...
Source: Bloomberg
Rate-hike expectations fell further today and subsequent rate-cut expectations rose as recession fears
rise...
Source: Bloomberg
Source: Bloomberg
The Dollar had a big month, quarter, and half; surging back to near COVID safe-haven spike highs...
Source: Bloomberg
On the day, the dollar was lower but still up on the week (and notably higher since CPI on June 10th)
Source: Bloomberg
Bitcoin fell back below $19,000 and then hovered around there today...
Source: Bloomberg
Source: Bloomberg
US Nat Gas tumbled further today on another bigger than expected storage build, plunging to 3-month
lows...
Notably this smashed US NatGas below WTI (on an oil barrel equivalent basis) and the widened the
spread to EU NatGas dramatically...
Source: Bloomberg
Finally, we note that global equity and debt capital markets lost a stunning $31 trillion in the first
half of the year...
Source: Bloomberg
Source: Bloomberg
And that was triggered by just $1 trillion drop in global central bank balance sheets...
Source: Bloomberg
Viraj Patel
@VPatelFX · Follow
$SPX $USD
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