Trying to explain the strange moves this morning

Traders work on the floor of the New York Stock Exchange.
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A strange morning of trading, with the German stock market down big (about 3 percent), German bunds rallying big, euro rallying big, oil rallying big.

The simple way to understand this is to know where the market is. In general, market participants are:

1) Long the dollar

2) Long Germany

The really weak economic numbers—particularly the disappointing GDP—implies those two trades could be coming a bit unwound:

Weak GDP = Fed is slower to raise = weaker dollar/higher euro = foreign exchange headwind for German exports = bad for German stock market.

The implication for stocks is that other long plays could be under pressure. What is the biggest gainer this year? Healthcare, in particular, biotech.

But biotech has been volatile. We have seen significant gains in other healthcare sectors this year, and that too is coming under some pressure. In the U.S. markets, we have a new route going on in healthcare, but not just biotech: Medical equipment makers like Stryker, labs like LabCorp, hospitals like Tenet, and HMOs like Cigna are all down 2-4 percent.

Of course, this doesn't explain everything. We also had a huge runup in German bund yields, up 12 basis points to yield 0.28 percent. The rally in yields began at the open in Europe and continued through the close. Traders blamed some of this on Jeff Gundlach's comments that he might make an amplified bet against German bunds. A German auction of five-year notes also did not go well.

What we need now is the Fed to put it all in perspective.