Stocks, risk assets and crypto plunge
This Daily Digest will cover:
- 📊 Stocks, risk assets and crypto plunge
- 🏦 Silvergate collapse and SVB plunge spreads to trad banks
- 🗂 NFP in focus today but I struggle to see a number that turns the mood
What a 48 hours we have seen in the markets.
The collapse of Silvergate has spread to the wider banking community and even the bond market as US yields collapsed in response. Whilst I see little reason for sustained contagion within the US banking system, the market found a reason to sell off and gather some momentum that it had been looking for. The S/P 500 has broken cleanly below its 200 day moving average and the FTSE has broken its uptrend for the year in spectacular fashion.
Crypto has had the wind taken out of its sails with BTC sub 20,000k this morning and the sickening sight of ETH starting with a 13 handle. No change in my view in the medium term as you would expect, but I cannot put my hand out at these levels in this environment. 18,400 is a severe possibility should risk get sold again this afternoon.
FX is a mess with unwinding of positions the name of the game as funds run for the sidelines. This has seen GBP back to 1.2000 this morning in a frankly senseless move to me. The BOJ held its policy unchanged which has added fuel to cross/JPY short covering, but should risk get hit this afternoon, I think cross/JPY short is the play with GBP/JPY and EUR/JPY my picks.
All this leads me to this afternoon’s NFP which would normally be something I would lay out the various scenarios and how I think the market will react. Frankly this seems unnecessary today as I struggle to see a number that will reassure markets. Big numbers, interest rates – up risk off. Bad numbers recession fears will snuff out any rally with the current mood and I suspect a late in the day sell off will ensue. An inline number is probably the best chance we have for the market to step back and take a breath, but even then I am worried with the current market issues who will buy risk on this particular Friday…
As always, good luck out there.
