Bears got thrown a lifeline

VVIX exploding higher

VIX of VIX is exploding higher. The crowd is loading up on VIX options. Do we see VIX catching up soon?

Source: Refinitiv

VIX volatility structure shifting higher

The entire curve is shifting higher as the crowd is back to chasing hedges. Note the shift is most notable in the short end of the curve, where the biggest "juice" is to be found.

Source: vixcentral

Flipped the switch

Morgan Stanley’s US cycle indicator has flipped from 'expansion' to 'downturn'. Historically, this phase has supported a defensive posture and meant a worse backdrop for risk asset returns, changes in sector leadership, and a good environment for fixed income.

Source: Morgan Stanley

NASDAQ's rates gap - zoomed out

30 min 6 months chart of the gap between NASDAQ and the 10 year inverted needs little commenting.

Source: Refinitiv

If dollar is a risk on/off "indicator"...

...then make sure to watch the short term gap between the SPX and the eurusd closely.

Source: Refinitiv

Too far too fast?

MSCI World has recovered almost half of the ’22 losses...

Source: Barclays

Nobody said it was going to be easy

S&P 500 EPS CY23 going down and S&P 500 going up....

Source: Bernstein

The yield curve: This time it is different

"Our analysis above strongly suggests that a large part of the inversion seen in current US yield curves comes not from high recession odds or inflation normalization, but rather from low long run real rate levels. Investors appear to be wedded to the secular stagnation, low r* view of the world from the last cycle. We believe this cycle is different, with an economy that can support a higher long run real rate than currently assumed. The next few months should offer clues on which of these views is correct". (GS)

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