- Should we worry about the Fed raising rates?
- Even if you do worry, the Fed isn’t the worry as there are plenty of other worries
- Adding more long exposure and a new short idea
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- Ahead of the Fed, the bounce is very strong with a lot of doubters
- Thoughts on the Trade Ideas sheet and taking profits on recent SPY and QQQ call spreads
- If anything big happens after the Fed I will post another note
Soft Landing The Movie
- The markets are in a good mood today with potential Ukraine talks and Fed Chair Powell stating 25bps is what to expect at the March meeting.
- He also mentioned “Soft Landing” which is a great title for a movie
- So what would be the plot of the movie?
- Crude going higher as a reminder is economic cyanide
- A couple of Trade Idea’s
A Bullard in a china shop
- A CPI showing the highest inflation in 40 years and the market bounced
- Fed Governor Bullard put a halt to that calling for larger and faster rate hikes
- The market just has been too forgiving with what is happening in the macro
Tony Hawkish
- The market is anticipating the Fed announcement and Powell’s press conference
- The market now has some consensus expectations with Powell and the Fed
- Powell is expected to be hawkish but he’s gotta pull off a very tough trick to also calm the markets
- Raising stops on trading longs SPY, QQQ, IWM. Covering LRCX +13% ahead of earnings
- Credit spreads have not given any risk-off signals like 2018 and 2020
Mixed Messages
- There are a lot of mixed messages with the equity market right now
- I run through sentiment and internals that normally is easy to make a call
- One market that has a very clear message is the bond market
- Adding one new long idea and selling one long idea
- I’m not overly enthusiastic about today’s bounce