I've been closely watching bitcoin today as a barometer for sentiment and a pre-cursor to moves in equities, particularly in the Nasdaq. Earlier, we saw a jump in BTC to $57,000 and that optimism is bearing out in stocks.
Big winners include some of the biggest losers yesterday, particularly chipmakers. Nvidia is up 6.7% to $107, which is an impressive bounce from the $91 low yesterday and incredible volatility in one of the largest companies in the world.
Right now, the market isn't focused on company valuations but on option premiums, carry trades and recessionary fears. It's an emotion-driven market and right now greed is creeping in. That's understandable after a 10% overnight move in Japanese stocks.
The message there is that this round of the carry trade unwind and delevering is winding down. I will be watching carefully into the close today but if these gains can hold, then I would expect to see even-more money come in tomorrow.
In terms of market risks, the economic calendar is quiet all week and I think next week's CPI will only underscore how inflation worries are dying.
Further out, I worry that this round of volatility planted a seed of doubt in the AI trade, high valuations and the economy in general.