Umm…Say What Now? – The Nasdaq is now in positive territory for the year. The more concentrated NDX100 went above the ‘high-water’ mark on Monday and has only added to it since. Of course, FAAN(M)G along with Tesla make up nearly 50% of the QQQs and their runs has been well-documented. Where has this money been coming from? Value names have yet to grab the conch, with large-cap and more notably small-cap value names still deep in the red YTD. Companies that have been neatly placed for this sort of event, Peloton (+16.7%), Paypal (+13%), and Fortinet (+20%) will only have investors more in need to chase performance. Meanwhile, Apple and Microsoft are bigger than the EuroStoxx 50.

Bulls vs Bears – Earnings season has proven to be a series of moving the goal posts. With more than ¾ of the S&P500 having reported by now, 70% have beat EPS forecasts. Great! But hold the phone – the bars have been lowered drastically. Concentration risk in the FANGs persists (see below – Breadth troubling?) but they all reported this week and did quite well, although Amazon’s “reinvestment” being taken poorly today – it’s coming off all-time highs YESTERDAY so lets not fret. And these companies have nearly become as defensive as the traditional consumer staples names. Positive linearity has been a oft-cited phrase; are things stabilizing to getting better? That’s the bar right now. At some point the Street will need to see actual growth but we’re not there yet.

‘I’n a ‘B’ad ‘M’ood – If you were able to pick up on those not so subtle clues, the market looked to recover from Monday’s slide lower and pinned some hopes on the first big tech name to report. Granted this earnings period will be a giant finger in the air (not that one although by the time the season is over…) but IBM’s report didn’t live up to the challenge. One particular comment about a ‘a shift in client priorities toward the preservation of capital’ seemed to spook investors and cause a selloff in a crowded trade that had been relatively immune. No longer, at least not today. FANG has been caught up in the momentum unwind but with a whole lot of Netflix and Chilling going on over the last 5 weeks, the streaming service gets a chance to turn the tide as they report post the bell.

We’ve Never Been Here Before – And yet…at the same time, we have. The cause may have been different and to be fair, unlike anything we’ve ever experienced previously, but the effect is looking awfully familiar. The economic damage remains incalculable – the IMF projected a global contraction of 3% – for context the world economy shrunk by less than 1% during the GFC of 2008-09. But while still well off highs, the market has again shown its remarkable resilience, now +34% from the lows a mere 3 weeks ago. With the efficacy of the Fed fireworks still in question, the only guide has been the rate of coronavirus infections or deaths – with those seeming to level off, its been enough of a catalyst for the FOMO crowd to pile in. A significant increase in volumes would be a nice accompaniment.

To Survive a War, You Gotta Become a War – Jerome “Rambo” Powell? In another example of the Fed flexing their unlimited ammo muscles, they announced another repo facility and a VERY important one in our opinion. A) It lowers global US$ scarcity risk and B) alleviates upward pressure on USD (perhaps an unintended but +ve consequence). The window is open to north of 250 central banks/int’l monetary authorities and they can exchange their Treasury holdings for US$ at a rate of IOER +25bps overnight. Chairman Jer-ambo isn’t playing around…

Days Lock Horns – Its Monday vs Tuesday once again, for the 3rd week in a row a rough/brutal Monday has led to a turnaround the next day. And while rounds 1 and 2 have easily favored the first day of the week, round 3 goes to TT by a big margin; although to be fair Tuesday has a lot more ground to make up. The worst of the distressed unwinding could be over a truly relenting USD would not only loosen market logistics but sentiment as well. On the bright side, at least relative to yesterday’s move lower, volumes are elevated on this ‘snapback’, but there’s been so much chatter about it happening it almost became self-fulfilling.

Calm before another tornado…? Quad witching is coming. Tomorrow is shaping up to be one of the most volatile trading days in years during one of the most volatile months in market history. The S&P has risen or fallen at least 4% in eight straight sessions, which is actually the longest streak in history. Today is quite a bit less dramatic (S&P o +1.16% thus far, but the day is still young). Traders are bracing for this particular quad witching, especially as options contracts outstanding tied to the S&P hit a record this week. More than $1.5 trillion worth will expire – the largest motional ever– thus extending the voracious stress levels of investors globe-wide.

Grab Yourself a Snickers… Because most of us won’t be going anywhere for a while. Talk about a marketing campaign that keeps on giving! The impossible has become the inevitable, with some companies going split teams and most sending everyone to work from home. Schools have been closed and will continue to be so for likely much longer than initially anticipated and bars/restaurants are following suit, with talk of a national curfew possibly going into effect. Get comfortable.