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‘Soft’ (Philly Fed & NAHB) and ‘Hard’ data (Retail Sales, Initial Claims) improved today but manufacturing production shit the bed…

Source: Bloomberg

Ignoring the manufacturing slump, this data reinforced the ‘no landing’ narrative and pushed rate-cut expectations notably (hawkishly) lower…

Source: Bloomberg

Additionally, The Trump Trade has taken hold of the narrative for now…

Source: Bloomberg

Goldman’s Chloe Garber told clients today that Polymarket is priced at 60/40, there is ~1.5% upside to 65/35 odds, and 4% downside to 50/50 odds.

“I think there is a possibility this pair could go to the July highs before the election, but it would require some terrible polls for Kamala Harris, whereas a lot of work has been done.

Clients are betting this direction because a 60/40 market going to 100 delta is still an enticing proposition whereas a coin flip is just hard.”

Importantly, she added that this local Trump trend hasn’t been driven by earnings revisions…revisions have been slightly negative since the end of July, so if 3Q earning season matters, these stocks could get affected. 

Small Caps underperformed today (for a change), but all the majors ended well off their highs of the day. The S&P ended unchanged and Nasdaq marginally higher as The Dow hit another record closing high….

…notably, the Nasdaq outperformance today comes at a key support level relative to Russell 2000…

Source: Bloomberg

…and at the same time, Polymarket sees the odds of a ‘Red Sweep” also soaring…

…which helped send yields soaring on the day, led by the long-end (30Y +10bps). On the week, the short-end remains the laggard…

Source: Bloomberg

…the dollar index continued to charge higher (up 12 of the last 14 days)…

Source: Bloomberg

…and, rather oddly given the dollar’s move, gold surged to yet another new record high. just shy of $2700…

Source: Bloomberg

The last few weeks have been very unusual with the correlation between the dollar and gold spiking dramatically…

Source: Bloomberg

Bitcoin limped slightly lower on the day after topping $68,000…

Source: Bloomberg

Oil prices went nowhere for the second day in a row with WTI trading in a very narrow $70-71 range…

Source: Bloomberg

Finally, stocks are aggressively pricing in a ‘Trump victory’ versus a ‘Harris victory’…

Source: Bloomberg

While it is ‘easy’ to manipulate the noisy and game-able prediction markets (given their low liquidity), it is arguable that the various stocks in these baskets from Goldman Sachs are ‘game-able’, suggesting there is more than just a whale or two driving this sentiment narrative.