'All Greed, No Fear' Ahead Of Fed: VIX Hits 4-Year Low As Crude Carnage Continues
The market appears to be calling 'Powell the Pusillanimous' bluff by rallying fearlessly (and selling vol unabashedly) into tomorrow's FOMC (and Dot-Plots) meeting.
He wouldn't dare stomp on the massive easing in financial conditions, right?
Source: Bloomberg
Or admit the economy is not doing so great?
Source: Bloomberg
Or admit that the 'trend' in CPI is disinflationary? (cough today's SuperCore CPI bounced back above 4.00%)...
Source: Bloomberg
For now, the market remains of the opinion that every Fed member will be wrong about monetary policy next year - the question is: how many of those Fed 'dots' will sheep-like move to the market's demands, or stay firm 'higher for longer' to stamp out inflation for good?
Source: Bloomberg
The disconnect between stocks and commodities in a weaker macro-environment is growing wider and wider as cyclical stocks (growthy) soar while cyclical commodities - Oil - plunge...
Source: Bloomberg
Who's right? Or are they both right? Oil has priced in the recession and stocks have priced in the post-recession QE.
VIX was clubbed like a baby 'fear' seal back to an 11 handle...
...basically its lowest post-COVID close...
Source: Bloomberg
The vol-selling helped fuel more gains in stocks, led by Nasdaq. Everything accelerated higher after 1pmET. The last 30 mins of the day saw some profit-taking which dragged Small Caps into the red...
A solid 30Y auction appeared to trigger a massive buy program in stocks (at around 1pmET)...
Source: Bloomberg
After the massive short-squeeze on Dec 1st, the 'most shorted' stocks basket has chopped sideways unable to extend or reverse its trend (helped by the vol-crushing surge in long gamma)...
Source: Bloomberg
Treasuries were mixed today with the long-end outperforming (30Y -2bps, 2Y +2bps). This recoupled the wings (2Y and 30Y) as the belly is outperforming on the week...
Source: Bloomberg
The 30Y yield tested Friday's lows, ramped almost 10bps on the CPI print and then faded back after the strong auction...
Source: Bloomberg
Despite a little hawkish pullback this week, the trend remains very dovish for next year (with 115bps of rate-cuts priced in)...
Source: Bloomberg
CPI sparked a kneejerk higher in the dollar (briefly into the green on the day) before fading back to red...
Source: Bloomberg
Bitcoin saw resistance at $42,000 once again and faded back today...
Source: Bloomberg
Spot Gold rallied intraday (but was unable to get back up to $2000) before fading back to $1980...
Source: Bloomberg
Oil prices puked again today, with WTI breaking below last week's lows ($68 handle)...
That is basically the lowest level in the last two years and has historically been a significant support level...
Source: Bloomberg
Finally, as a reminder, the dramatic easing of financial conditions has erased all of The Fed's rate-hike pressures since June 2022...
Source: Bloomberg
Is that really what The Fed wants?
