Nomura: Traders Are Missing "Two Major Unintended Consequences" Of A Debt Ceiling Deal

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by Tyler Durden
Thursday, May 18, 2023 - 06:25 PM

The world and their pet rabbit appears to have bought into the idea that all we need for a sustained rally in stocks to the moon is s debt ceiling deal, removing all that uncertainty and unleashing animal spirits. Of course, one would need to ignore The Fed (only way they are cutting is if shit hits the fan in the markets, so careful what you wish for there), sticky global acyclical inflation (the decline in headline inflation has been driven by the fall in the cyclical component, while the structural component is still near its highs), the ongoing banking crisis (no deposit outflows have not stopped... and won't all the time MM funds offer 4-5%), and global geopolitical risk escalation (Ukraine and Taiwan).

The 'safe haven' (AI) driven surge has lifted the Nasdaq to 13 month highs in the face of all this...