Trump et al. were quick to reassure markets again that trade talks were going "very well"...

China was not happy overnight (ugly PMI data)...

Europe was not having a bonne annee... (ugly PMI data) but then ramped back to unch along with US stocks (France was down)

Because nothing says BTFD (to the worst start to a trading year since 2001) like dismal US, EU, and China PMIs... Of course, another huge short squeeze was just what the doctor ordered...

However, in the last hour, OCC issued a reassuring statement that the US banking system was "well prepared" - not clarifying 'prepared' for what - sending stocks lower into the close...

And by the close - thanks to one last minute ramp - all major US equity indices closed green...

Tesla stocks tumbled - as once again the equity market catches down to bond's reality...

FANG Stocks were aggressively bid off the early ugly lows...

Everyone quickly jumped on the narrative that Oil's rally prompted stocks to rebound, but Bloomberg's Vincent Cignarella points out, as we did earlier, that S&P futures began to turn at around 9:45, crude at around 9:25. The Saudi tanker tracking story was out at 10:02.

The Saudis saw a drop in exports, not a cut in production as some are saying. OPEC + production cuts did not start until today and will take some time to show up in data. A drop in exports more likely a result of falling demand, actually growth and crude negative so crude rallying on the Saudi news in my opinion highly unlikely. Some traders saying the spike was a result of a short squeeze, naked put seller driving trading desks to buy up futures contracts for a hedge. Seems more likely when you look at the timing of things. In addition, Russia total crude output near record highs for 2018.

As, as Cignarella concludes, all in all I do not see the equity rally holding up-based on a bad theory.

We agree wholeheartedly as the bond market was clearly not buying the short-squeeze either...

Treasury yields were mixed (short-end higher, long-end lower)...

10Y Yields hit an 11-month low and 30Y Yields broke back below 3.00%...

With the yield curve tumbling...

And inverted through around the 8Y maturity point...

High yield bond prices fell again but the machines levitated them back to unchanged very briefly before it slid...

Initial overnight weakness in the Dollar was violently bid as stocks tumbled, then dropped into the close as OCC issued their statement...

Cryptos extended gains for 2019 with Ethereum soaring 15%...

Copper was clobbered as China data signaled economic contraction, crude went wild...

The big headline of the day was utterly farcical ramp in WTI - which had the smell of some algo gone wild on the back of a fund liquidation...

Gold in Yuan rallied on the day...

Finally, we note that US economic data is at its weakest since Sept 2017...

So 'bad' news is good again?