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Stocks Swoon As Trump Trade Deal Euphoria Fades, Small Caps Slammed

Did Trump drink Trudeau’s milkshake?

 

China is closed for golden week, and while stocks weren’t trading, yuan slipped back to crucial support levels…

 

European markets were dominated by Italiian weakness…

 

As Italian banks collapsed…

 

Futures markets show the overnight exuberance at the trade deal.. and how it faded once Europe closed…

Nasdaq drifted into the red by the closed but the Russell 2000 Index of small-cap stocks is the worst-performing major index today (worst day in over 2 months), and that comes hot on the heels of the index’s worst monthly retreat since February.

Bloomberg notes that Small Caps may be feeling the sting of a steady stream of Fed hikes, which is increasing the cost of capital. Small companies may also be seeing some outflows as investors may now need less of a hedge against a trade war with the new USMCA deal.

GE soared after the ouster of the CEO… (but faded off early highs as dividend cut questions arose)

 

TSLA (stocks and bonds) soared after Musk settled with SEC…

 

FANG Stocks managed to cling to gains but basically did a huge roundtrip on the day…

 

But Tech is still dominating financials…

 

Treasury yields chopped around on the day but notably sold off as stocks sold into the last hour (long-end underperformed)…

 

Which pushed the yield curve up to on-week steeps…

 

The dollar index managed to hold on to gains, erasing Friday’s losses…

 

Of course today’s big movers were the Loonie (highest since May) and Peso (highest since August), but the latter was less impressed by the close…

 

Cryptos were mixed with Ripple and Ether higher, Bitcoin and Bitcoin Cash and Litecoin lower…

 

Commodities were dominated by a spike in crude oil as the rest of the space drifted modestly lower…

 

Brent topped $85… highest since Nov 2014…

 

WTI topped $75…highest since Nov 2014…

The irony of these oil spikes is that they occurred after headlines suggested Trump spoke with the Saudi King once again (presumably about keeping prices down).

Gold was unable to get back to $1200…

 

And finally, all of this exuberance happened as The IMF warned that global growth has peaked…