Wall Street may be at all-time highs, but “behind the lines,” there’s a mass exodus from bonds, a frenzy for gold, and a dollar selloff.
“Smart money” is looking for safe havens. And all this while the markets worldwide are experiencing, more or less, a santa rally, giving the message that everything is fine. But the movements of several major stocks, which usually lead bull markets, are experiencing a downturn.
At the same time, the dollar was dumped while gold, bonds, the Swiss franc and cryptocurrencies rose.
Notably, 0-DTE call coverage was very high.
Swiss franc surges against US dollar – second biggest ‘absolute safe haven’ of the year outside FOMC/ECT days,
This lifted the franc to its strongest level since the SNB intervened in January 2015. 2023 saw the Swiss franc’s strongest annual gains against the dollar since 2010.
2-year yields have collapsed as a wave of safe-haven buying has hit many asset classes.
But the entire curve was underperforming.
The bond rally pushed the 30-year 2023 yield lower.
In other words, Fed funds are rising by 100 basis points annually and the rest of the curve is flat or lower in yield.
The S&P 500 rose in the strong 5-year auction (as yields fell) but turned it all around.
The dollar fell.
The dollar hit its lowest level since July.
The dollar’s loss was gold’s gain as the precious metal soared.
And it closed at a new record.
A big day in crypto with Ethereum gaining significantly.
But short-term liquidations were noted in ETH.
ETH/BTC at recent key resistance.
Bitcoin extended the rally back to $43,500.
Despite the weakness of the dollar, oil prices are falling
Stocks have soared in line with global liquidity.
And, while over the past couple of months real yields have been falling as P/Es have been rising, they remain dramatically disconnected.
This level of forward valuation of the S&P 500 implies a negative real return.
“Smart money” looks for assets that offer a “Safe-Haven” for large funds.
