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Don't Get Excited About that Thwack- 3/1/24

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From Nolan

For the month, Bitcoin surged $18,972 (45%), surpassing October 2021’s previous monthly record gain ($17,540). Nvidia surged 29%, Meta 29%, Lattice Semiconductor 26%, Coherent Corp 25%, and Applied Materials 23%. The Semiconductors (SOX) returned 11.1%.  The Nasdaq Composite returned 6.2% for the month, and it wasn’t only tech driving the gains. The Nasdaq Transports returned 7.7%, Nasdaq Industrials 7.2%, Nasdaq Insurance 6.6%, and the Nasdaq Financials 5.9%. There were 49 stocks in the Nasdaq Composite that at least doubled in price during the month. And indicative of the highly speculative market environment, the Goldman Sachs Most Short Index surged 16.6% for the month.  The major indices all posted big months. The Nasdaq100’s (NDX) 5.4% slightly bettered the S&P500’s 5.3% return. The broader market outperformed. The S&P400 Midcaps’s 5.9% somewhat led the small cap Russell 2000’s 5.7% return. The “average stock” Value Line Arithmetic Index returned 4.0% during February.  While uneven, global equities generally posted solid gains. Japan’s Nikkei 225 returned 8.0%, posting a record high for the first time since the bursting of their Bubble 34 years ago. Germany’s DAX returned 4.6%, France’s CAC40 3.5%, and Italy’s MIB 6.0%. An abrupt rally saw China’s CSI300 recover 9.4% during the month.  While certainly not as captivating as crypto and equities melt-ups, Credit market developments were no less spectacular. Following record January issuance of $189 billion, early-month forecasts projected February would approach the monthly record set just last year ($150bn). As it turned out, February’s issuance of $198 billion crushed the previous record by almost a third. At about $400 billion in two months, 2024 is off to nothing short of a rip-roaring historic start.  March 1 – Bloomberg (Gowri Gurumurthy): “The broad rally in risk assets has propelled CCCs, the riskiest part of the junk bond market, to the top as the best performing asset class in February. Returns for the month were 1.7% after climbing for six consecutive sessions.”  With stunning gains and record equities prices, record corporate issuance, and multiyear lows in corporate spreads and CDS prices, there is ample support for the thesis that market financial conditions have turned the loosest since the mortgage finance Bubble period

More at his site credit bubble bulletin

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IN THE GOLDILOCKS ZONE

The treasury yeild curve is just where the FED wants it.

In the 4-5 zone.

Not too hot not too cold.....just right.

Any attempted move by the curve below of above this zone will be countered with the application of the appropriate amount of synthetic QT or QE.

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