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Wall Street's Most Accurate Analyst: Still Early To Position For Full "Fed Pivot", But Here Is How And When It Will Come

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by Tyler Durden
Monday, Aug 01, 2022 - 12:14 AM

Two days ago, when we discussed the dramatic surge in stocks in the aftermath of the dovish FOMC comments by Powell, which extended into Thursday and again on Friday as hedge funds were positioned extremely bearish and were forced to not only cover into the meltup but chase it higher (which subscribers were warned about late last night), we said that "it is quite likely that we will now see unprecedented chasing by funds and even L/Os into a ramping market, at least until such time as Powell realizes what he has done and trapdoors stocks again, sending the S&P to new 2022 lows next time, at which point the real "ugly bear" recession can begin, and setting the Fed on course to not just rate cuts but negative rates and trillions more in QE."

In other words, just as we predicted one month ago in "Fed Rate-Hikes To End This Year, Followed By 3% Of Rate-Cuts & QE", the market has now moved beyond the worst-case stagflation outcome and is instead focusing on a vanilla recession, and is suddenly confident that the pivot has arrived because Powell said that the Fed's rate is now at the neutral rate.

There is just one problem: as we warned two days ago, the market's collective reversal has merely set the stage for another furious meltup, one which will drag commodities sharply higher too, and will force Powell to double down in his efforts to eradicate bullish sentiment.