2,155 Stocks Fell on the Day the Minutes Asked for 1 More Hike

Tuesday Had 1,605 Advancers. Wednesday Had 572. 572 of 2,727, which the index chose to describe as nothing much

On Tuesday 1,605 NYSE issues went up and 1,101 went down. On Wednesday 572 went up and 2,155 went down, and the S&P 500 recorded the difference as seventeen points and change, which is a rounding error with a decimal point. One stock in five. New lows beat new highs ninety to sixteen, the small-cap index lost 1.310587%, and the headline said nothing had happened.

Forget the nine other things. The number was 572, and the reason it matters is that the index is a weighted average and the market is a crowd, and on Wednesday the two of them counted differently.

We should own our part in this, because we filed a shot on 25 September saying precisely that the rate shock was being absorbed by participation rather than by the index, and we tested it with a ten-session median at or above 0.700. Wednesday printed 0.265429, the worst session of that window and little more than a third of the line it was tested against, and the median is now secured above that line whatever today does. The claim took its heaviest blow and the test could not feel it. That is a badly built falsifier, not a good call, and it closes today anyway.

Which leaves the thing the tape has not settled. The 29-Year 10-Month reopening prices at 13:00 ET.

The One That Mattered

The committee published its homework on Wednesday afternoon and the homework says most of them want money dearer before Christmas. Twelve votes for, none against. By the close the 2-year sat at 4.77%, two basis points cheaper, and the 20-year sat at 5.71%, three dearer and in its thirteenth session as the dearest money anywhere on the curve. Nobody has shown us the bar where one of those caused the other, and we are not going to invent it. What we can say is that 2,155 stocks went down the same afternoon. If most of the committee wants one more hike this year, why did the front end get cheaper and the long end dearer? We went down the rabbit hole in today’s Macro Edge. [link]

Stock Market Edge

The Curve Closed Steeper and the Small Caps Closed Worst A 3 basis point long end, a defensive rotation and 90 new lows

Premarket snapshot:

December ES traded 7,834.00 on the 06:30:00 to 06:34:59 UTC five-minute bar, captured at 07:30 UK and read twice to be sure, 0.23877% under its own 7,852.75 settlement. December NQ was 0.402041% lower and December RTY 0.522722% lower, which is the small caps leading again, in the wrong direction. On all four contracts the capture bar’s own low was the overnight low to that point. Volatility carries Wednesday’s official close of 15.08, because this stack has no premarket VIX and has stopped pretending otherwise.

Sector rotation:

Health care added 1.029385% and was the only one of eleven proxies to manage it. Industrials finished last at 2.179741% lower, materials at 1.508144% and real estate at 1.289538%. Best to worst was 3.209126 percentage points. The three at the bottom are sectors rather than names, we hold no constituent attribution for any of them, and so no reason is offered. The count is on the ETF-proxy basis, because the cap-weighted route died last week and has not been replaced.

Earnings or guidance:

Levi Strauss put adjusted earnings of 48 cents against a 36 cent consensus, on revenues of 1,609.7 million dollars, for the quarter ended 30 August. One wire put that quarter end at 31 August. The company’s own filing says the 30th, so the 30th it is. PepsiCo and Progressive report this morning.

Cross-asset nuance:

The dollar index rose 0.3967% to 102.249 and the euro leg supplied 76.73% of a six-leg rebuild of it, so “the dollar rose” mostly means “the euro fell”. November crude settled 88.28 dollars, down 1.296959% and the lowest November-contract settlement since 3 September. December gold settled 4,140.7, down 1.108166%, with spot down 1.28413%, which is why nobody should say “gold” without saying which one.

Crypto Market Edge

484.9 Million Left, and the Boards Stopped Taking Calls The worst day on a table that only reaches back to 21 September

Price snapshot:

Bitcoin closed 83,310.18 on the UTC mark, down 2.611061%, having traded as high as 85,588.37 and as low as 82,776.30. Ether closed 2,573.85, down 4.581044%. Across 41 sessions both are the second-sharpest one-day falls, behind 15 September, which is the sort of placing nobody puts on a poster. Two independent routes agreed to 0.0422% on bitcoin and 0.0408% on ether, looser than Part 219’s 0.0379% and still nowhere near a conflict.

Flows and positioning:

US spot bitcoin funds shed 484.9 million dollars, the lowest single-day figure on a table that begins 21 September and more than five times the next-largest on it. BlackRock lost 207.7 million, Fidelity 105.1 million, Ark 101.7 million. Six issuers negative and none positive, which is the second most unanimous thing that happened all day. Ether lost 160.9 million for a seventh consecutive negative session, 568.8 million out across the run, and one of those seven rows is still provisional.

Leadership and rotation:

Strategy fell 6.794287% to 153.37, about 2.6 times bitcoin’s own move, having filed nothing at all. All five majors were off all three attention boards at depth 25, and the cross-asset board came back identical to the equities board, rank for rank, with no crypto name on it anywhere.

Catalysts and roadmap:

No Senate vehicle, no scheduled vote, no revival. The 6 October ether row stays provisional, because its shape matches a row that later restated by 31.9 million and we are not marking that twice. Farside’s visible table has eroded to 21 September, a ninth consecutive session gone.

TL;DR

• The index lost 17.16 points and 2,155 NYSE issues lost rather more than that, which is this entire edition compressed into one sentence and a half.
• The minutes recorded most participants leaning to one more hike by year end, and recorded the September hike itself as unanimous at 12-0.
• The 2-year fell to 4.77% and the 20-year rose to 5.71%, taking the 2-to-30 gap to its widest of the thirteen sessions we hold.
• Bitcoin funds shed 484.9 million dollars, more than five times the next-biggest outflow on a table that only reaches back to 21 September.
• Jobless claims print at 08:30 ET, a 22 billion dollar bond reopening prices at 13:00, and the September inflation figures land next Wednesday morning.

Fun Fact

The Treasury Curve Has a 1.5-Month Tenor 14 columns, and 1 of them is a month and a half

The official daily Treasury yield curve publishes fourteen tenors, and one of them is labelled “1.5 Month”, wedged between the one-month and the two-month like a bad cinema seat. It prints every session and gets quoted roughly never.