Rekt Mkts: EVERYTHING IS FINE RIGHT?

As you probably know, as hopefully this isn't your only source of financial information, that yesterday was pretty grim. I see a lot of financial press linking it to the CPI numbers...but tbh I don't think that caused it and actually watching the initial market reaction to an extremely hot CPI this morning confirms it for me. My guess is it was actually more to do with Anthropic's worse-than-expected revenue number...kind of get the feeling that was actually leaked ahead of time and that sparked the selloff in AI stocks and extended to risk assets including crypto.

CPI was about 0.1PP above expectations on most measures - it's not great but it's also not a crazy miss hence my commentary above. PPI however did come in extremely hot today, 0.6PPs above on the core YoY number and the headline MoM number yet we haven't really sold off much since the number came, with rates actually holding up very well - this for me solidifies my theory of the market being more worried about AI revenues here than rates/inflation...which makes sense...because the AI narrative is what has actually held us up in this high-rate environment. The 10Y is around 5.11%, down roughly 7.6bps from yday's 5.19% close. That's a more meaningful move than the small dips in yields earlier this week, altho borrowing costs are still high. Risk assets aren't doing much with the relief so far. WTI futures are around $94.10, down roughly 1%, while gold futures are around $4,172, up about 1.6%. Cheaper oil helps the inflation outlook, but it hasn't been enough to turn the mood around in stocks.

S&P 500 and Nasdaq-100 futures are lower, with tech under more pressure. SK Hynix lost roughly 11.1% in Korea today and Samsung about 9.5%...pretty nasty selling in the memory names rather than a quiet drift lower. TSMC reported Q3 revenue of $46.72bn, above its $44.6bn to $45.8bn guidance, and guided Q4 revenue to $52.3bn to $54.3bn. That hasn't stopped its US shares trading lower in premarket. The numbers are strong, but so far they haven't been enough to get ppl buying the stock. That doesn't look like an immediate collapse in chip demand, but it doesn't settle the competition question discussed yday. How much of the memory selloff is pricing in weaker future pricing, and how much is ppl just wanting out? The next production and customer-demand updates matter more for answering that than TSMC's revenue beat on its own. Strong demand for its chips doesn't automatically settle what memory suppliers will be able to charge. For now I prefer to continue to be flat these names and I actually kinda favour crypto over equities here.

BTC is down roughly 3% over 24H, with ETH off 5.6% and SOL around 4.5%. HYPE is down about 2.9%, holding up better than ETH and SOL but hardly escaping the selling. It feels like this 80-81k level is really stubborn for BTC and it's good to see it be held os far, but it we lose it it feels like we can expect a bigger selloff in alts. Tough for me to say which way the wind blows from here but bears definitely feel in control. US spot BTC ETFs lost $261.4m yday, reversing Tuesday's $175.7m inflow. ETH ETFs lost $129.5m after taking in $24.8m on Tuesday. Both are back to net outflows for the week...not much help from that side while prices are under pressure. ZEC is down roughly 12%, while VVV is off around 3.4%. The privacy and AI-related names discussed earlier this week aren't holding up equally, and ZEC's relative strength in yday's brief has reversed sharply. STRK is roughly flat after the weakness discussed yday. Today's moves don't settle the longer-term argument, but they do make it hard to treat enthusiasm for a theme as protection against a selloff. There's still room for prices to chop rather than immediately giving either camp the trend it wants. For ZEC in particular, recovering some of that relative strength would make the dip-buying argument more convincing; continued underperformance would make it harder. Being early with leverage can get expensive even if the longer-term view ends up being right. Good luck today.