Posts Tagged ‘ $SPY ’

The Powell Put is Struck Lower

December 27, 2018
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The Powell Put is Struck Lower

In spectacular fashion, over the past few weeks, stark reminders emerged on how fast confidence unravels in the midst of a slowdown, particularly so, when the slowdown is doused with policy response errors. A conflux of negatives compounded to send US financial markets into bear market territory, ultimately, calling into question the economic expansion since 2009. What happened? What started with a run of the mill correction, due to slowdown fears, turned into an all out rout in risk assets. The economy and financial system is more fragile than previously perceived. Since the financial crisis, an implicit “fed put” has cushioned the downside of every economic slowdown, and market pullback. The thought process goes something like: every time something bad happens, the fed will accommodate, so why purchase downside protection (a...

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Odd Market Swings Intra-day; Volatility Crush Over Multi-day

April 19, 2017
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Odd Market Swings Intra-day; Volatility Crush Over Multi-day

Earlier this month, April 5th was an odd day for financial markets. During market hours, it was interesting to behold one of the strongest single hours of the year, at the open, when the market rallied 20 handles on no real news of consequence. Sales could be seemingly filled at any price. One felt an aura of panicky, indiscriminate buying. Wednesday’s tape had a gushing first hour. After stabilizing through the day, at higher levels, the market came undone starting around 2:30. As un-stoppable the rally, the sell-off was of an equal magnitude violent to the downside. The excuses, after the fact, we’re squishy: that the Fed minutes cited participants noting the market was expensive, and/or Paul Ryan mentioning that a tax plan was at least several months away. Both statements...

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Holding Pattern

March 31, 2017
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Holding Pattern

The relentless grind higher in equity markets continues irrespective of periods of policy awkwardness, twitter rants, and republican in-fighting. Recent announcements that corporate tax reform isn’t likely until August/September didn’t faze the market at all. Clearly, the benefit of the doubt is being given to the Trump administration to make the American economy greater, and, the Fed is complicit, hinting at a lower for longer interest rate policy, still, into 2017. Not surprisingly, asset price re-ratings persist, and now the bond market, gold, energy, commodities, EM currencies, have all bounced too. Risk pricing remains high, and implicit volatility is exceptionally low. The playbook, between now and the fall, appears limited at first blush, with markets neither likely to rally at an accelerated pace, nor likely to sell off meaningfully,...

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