Oil Soars In July As Massive Short-Squeeze Sends Stocks Up For 5th Month In A Row

While the Chinese manufacturing economic system continued its contraction in a single day, July noticed the third straight month of upside financial information surprises within the US – now at its most constructive since March 2021 – crushing speak of ‘any’-landing in any respect…

Source: Bloomberg

Interesting, regardless of the shocking macro image, rate-change expectations for the remainder of the 12 months had been little modified MoM (albeit with an enormous dovish drop early on adopted by a hawkish shift again to high-for-long by the tip of the month)…

Source: Bloomberg

That ‘good’ information lifted shares – all of them – on the month, with Dow Transports main the month (together with Small Caps) and the S&P and Dow Industrials lagging (however nonetheless up 3% on the month). That’s the 5th straight month of features in a row – the longest win streak since Aug 2020 …

Source: Bloomberg

The final couple of minutes of the month noticed a mini-melt-up in shares…

Energy shares outperformed on the month (together with financials?) whereas Defensives (Healthcare and Real Estate) lagged…

Source: Bloomberg

Cyclicals solely marginally outperformed Defensives on the month…

Source: Bloomberg

The features had been supported by one other enormous squeeze. ‘Most Shorted’ shares accelerated greater in July by probably the most since Jan (the third straight month of squeeze/overlaying – the largest 3 month rally since March 2021)

Source: Bloomberg

The implied correlation embedded inside S&P 500 choices crashed to a report low in July (i.e. the index-level threat plunged relative to that of the idiosyncratic threat of all of the parts as merchants offered index vol relative to single-stocks like there was no tomorrow)…

Source: Bloomberg

VIX went mainly nowhere in July as shares soared…

Source: Bloomberg

But this week could possibly be enjoyable…

Source: Bloomberg

Bonds had been combined in July with the short-end outperforming (2Y -7bps, 30Y +15bps)…

Source: Bloomberg

The 10Y yield tried (and failed) twice in the course of the month to interrupt above 4.00%…

Source: Bloomberg

Which meant the yield curve (2s30s) steepened considerably on the month – however solely after it flattened to its most-inverted since SVB’s collapse…

Source: Bloomberg

The greenback fell for the second straight month in July, however bounced again from an unsightly intra-month low

Source: Bloomberg

Cryptos had been very combined on the month with BTC and ETH down round 4%, Solana and Ripple ripping greater and Litecoin flailing…

Source: Bloomberg

Perhaps most notably, Bitcoin volatility dropped to its lowest since 2016…

Source: Bloomberg

July was Oil’s greatest month since Jan 2022, with WTI hitting $82, again above pre-OPEC-Cut ranges from March/April…

Gold rallied in July – up round 3% for its greatest month since March with futures again above $2000…

Finally, as Goldman sums up the sturdy market efficiency forward of the current constructive financial information as “Uncomfortably Long”.  Because the market has already taken significant credit score for higher progress and inflation information, the highway forward could possibly be somewhat bumpier than in the previous few weeks. US equities are the poster youngster for the strain between macro information and valuation.

Source: Bloomberg

Stocks don’t look low-cost, however there may be little doubt that the macro information – greater progress, decrease inflation – is a extra equity-friendly combine than was anticipated.  BUT For now, credit score markets ain’t shopping for it…

Source: Bloomberg

With Thursday and Friday being VERY event-risk-heavy, catalysts for some tactical pull-back to actuality in shares are excessive.