Bond markets are running around like headless chickens, much like equities, as they try to price in much the same reasons as outlined above. Long-dated yields rose overnight, unwinding much of the falls from the day before.
Likewise, US bond markets continued gyrating as well.
The US dollar’s time will come again, and perhaps sooner than we think. But I will note, the Fed is just getting started on rate hikes, and will soon be selling USD 95 billion of bonds a month into the open market, something the street seems to have forgotten/ignored. Combined with the strong CNY fixing from the PBOC yesterday, the US dollar is poised for a much deeper bull market correction. That saw the euro rally by over 1.0% against the US dollar, and it sparked a general risk sentiment rally through the G-10 and EM FX complex, sending the US dollar lower across the board. I’m not sure how raising the deposit rate from -0.50% to 0.00% represents an aggressive stance on controlling inflation, especially when you are still quantitatively easing at the same time, but what do I know? The European financial system has been on QE-driven life support since the GFC anyway, so I suppose this does represent a shift of sorts. Ms Lagarde said the ECB policy rate would no longer be negative by September with rate hikes impending at the next meetings, all in the name of reigning in inflation. The ECB’s Christine Lagarde came out hawkishly swinging in a blog post overnight. It is not just stock markets of course that are chasing their tails. But I am a mere pilot fish of the financial market, not an island in its ocean. The Fed, for example, hasn’t even started balance sheet reduction yet, lest we all forget. From my point of view, stagflation and food security keep me awake, with lower being the path of least resistance. The result is a day-to-day chop-fest, and it seems clear that volatility is the winner. The market continues to turn itself inside out and back to front as it tries to decide if it has priced all of the impending rate hikes, soft landing or recession, inflation or stagflation, China, Ukraine, US summer driving season, supply chains, the list goes on. It highlights how fleeting swings in sentiment are now and also that investors are running at the first sign of trouble. That’s stopped all the “worst is over” pundits in their tracks. But when the Snap story hit the wires, after-markets index futures were sold heavily, led by Nasdaq futures, which are down by 1.40% in Asia as I write. After an extended run of down days, the brain-washed buy-the-dip FOMO gnomes were desperate for a reason to buy, and that was as good as any on a slow news day. Stock markets had finally staged a broad rally overnight, after JP Morgan’s Jamie Dimon said things weren’t as bad as everyone thought. What intrigued me about the Snap story wasn’t Snap, it plays no part in my life. By the way, Facebook is for old people in case you didn’t know. One of them has never heard of Bruce Springsteen heinous, but you can’t tell me that as she publishes across Snap, TikTok (the fav), or Instagram Stories, she is thinking about supply chain disruption. None of the factors mentioned above plays a part in their need to “tell their story,’ making the memo complete nonsense.
Snap crackle pop plus#
I’m reasonably confident that I can extrapolate the social media habits of my girls to their wider demographic, plus 5 years and minus 10 years, with 100% certainty. I do know that my two millennials have the most inelastic of demand for selfies, other photos, and little stories.
I’m not sure how any of that impacts a company that monetises self-destructing 24 hours selfies taken by “the kids,” but what would I know in my Boomer dotage? Blame was apportioned to the usual suspects, rising inflation and interest rates, supply chain shortages, and the impact of the Ukraine conflict amongst others. Snap’s stock price went snap, crackle, pop, as it fell by over 30% in extended trading after the CEO, in a note to employees, said it would miss quarterly guidance on growth and revenues. Snap, Crackle, Pop may bring back memories of breakfast cereals, but for Snap Inc their quarterly guidance was more of a dog’s breakfast.
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