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👍5
both thoughts intresting reads, esp teh quoted tweet https://x.com/GavinSBaker/status/1906744903687712975
BGC Priv Journal
normal correlations are coming back. the extra forces (like capital outflows by europe) seem to be fading. solid (purple is es [s&p500 mini futures] & white is EUR/USD)
context:
pic 1) illustrates capital flow of loading up on us assets into trump and the following unwind (i posted on twitter iirc). The Euro/usd pair was anti correlated to stocks and dxy was ~1:1. Can assume thats bc of capital flowing out of us assets back to euro: sell stocks get dollars -> sell dollars for euro= stocks down, dollar down, euro up
pic 2) can see the correlation more zoomed in. Early april the tightened correlation dollar and equities started to diverge. 2 things happened then
a) trump tarrif walk backs and the 90 day pause
b) Less discussed - the asian market starting to price out BOJ rate hikes (this was more bullish crypto imo)
With US stocks, there were still some intraday selling by the europeans, probably selling off the rest of their book that was unhedged.
now the correlations are reverting back to normal - dollar down stocks up euro inline with stocks or negligible. This likely indicates that flows out of US assets has greatly declined, at least the magnitude of it
pic 1) illustrates capital flow of loading up on us assets into trump and the following unwind (i posted on twitter iirc). The Euro/usd pair was anti correlated to stocks and dxy was ~1:1. Can assume thats bc of capital flowing out of us assets back to euro: sell stocks get dollars -> sell dollars for euro= stocks down, dollar down, euro up
pic 2) can see the correlation more zoomed in. Early april the tightened correlation dollar and equities started to diverge. 2 things happened then
a) trump tarrif walk backs and the 90 day pause
b) Less discussed - the asian market starting to price out BOJ rate hikes (this was more bullish crypto imo)
With US stocks, there were still some intraday selling by the europeans, probably selling off the rest of their book that was unhedged.
now the correlations are reverting back to normal - dollar down stocks up euro inline with stocks or negligible. This likely indicates that flows out of US assets has greatly declined, at least the magnitude of it
👍4
starting to get to a point where the relative positioning tailwinds that were big pushers of price are starting to wean a bit. idt the tailwinds going anywhere MTF (next month or two), but short term wouldn't be surprised for a dip soon. There still could be some room to push up before that happens in equities, crypto stalling a bit's likely to happen first -
for crypto could translate to solidifying 100k floor and some alts/memes pulling back and consolidating a bit (like some of them kind of have been the last few days). That could continue to be a tailwind for onchain tho, since they were almost blackholing liquidity for a bit when they'd ramp hard
if we get a pullback i also don't think it'll be anything crazy/violent (barring some negative catalyst) just healthy. non-levered positions probably safu
for crypto could translate to solidifying 100k floor and some alts/memes pulling back and consolidating a bit (like some of them kind of have been the last few days). That could continue to be a tailwind for onchain tho, since they were almost blackholing liquidity for a bit when they'd ramp hard
if we get a pullback i also don't think it'll be anything crazy/violent (barring some negative catalyst) just healthy. non-levered positions probably safu
👍1
BGC Priv Journal
starting to get to a point where the relative positioning tailwinds that were big pushers of price are starting to wean a bit. idt the tailwinds going anywhere MTF (next month or two), but short term wouldn't be surprised for a dip soon. There still could…
feels like this was the -20-30% dip accross alot of alts/established meme's and should be good going foward
the way ppl tp'd alts ahead of btc 105k shows how much skiddishneess still here, which could be bullish. still alot fo ptsd, ppl playing safe. same with the way onchain rotating, ppl playing with smaller stacks keeping the rest in cash - i.e. playing it safe vs. playing in bigger size and holding multiple coins in size feeling comfy/complacent
the way ppl tp'd alts ahead of btc 105k shows how much skiddishneess still here, which could be bullish. still alot fo ptsd, ppl playing safe. same with the way onchain rotating, ppl playing with smaller stacks keeping the rest in cash - i.e. playing it safe vs. playing in bigger size and holding multiple coins in size feeling comfy/complacent
👍7🔥2
earnings crushed expectations by a wide margin. sure there are company's that are feeling heat or had bad/no guidence, but those arent large index components so u can just not buy them. the companies that didnt have good color on guidence bc of the tarrif uncertainty will start talking to analysts this quarter / give soft guidance for next quarter during conferences and its prob gonna be better than current sell-side estimates. It wouldn't be shocking to see a wave of analyst upgrades throughout the quarter for companies that were downgraded in march on the back of uncertainty but fwd outlooks better than feared
w/ instutions continuing to position, now the game will be targeting companies that are still somewhat thrown out by the market but based on ur work, the march downgrades on uncertainty outlook are overdone. figuring out what those are before the sellside starts to upgrade their outlook again is where the bigger alpha will be generated (example - was rated Equal weight then march downgrated to Underweight but will likely be upgrated back to Equal weigh). The race for that alpha is also what likely lifts the rest of the index outside mag7.
w/ instutions continuing to position, now the game will be targeting companies that are still somewhat thrown out by the market but based on ur work, the march downgrades on uncertainty outlook are overdone. figuring out what those are before the sellside starts to upgrade their outlook again is where the bigger alpha will be generated (example - was rated Equal weight then march downgrated to Underweight but will likely be upgrated back to Equal weigh). The race for that alpha is also what likely lifts the rest of the index outside mag7.
BGC Priv Journal
earnings crushed expectations by a wide margin. sure there are company's that are feeling heat or had bad/no guidence, but those arent large index components so u can just not buy them. the companies that didnt have good color on guidence bc of the tarrif…
spx is only 18x FY26 eps estimates, inline with longterm avg's, its not at a premium. the multiple excluding mag7 is probably alot lower (like 16x - idk if true just a guage) giving room for flows to broaden and give an uplift
if mag7 contniues to stay elevated or grind up while there are alot more of the 493 companies that fits ^ that profile vs. a profile where uncertainty remains and downgraded estimates are warrented, then the indexes are likely going higher over the mid term
if mag7 contniues to stay elevated or grind up while there are alot more of the 493 companies that fits ^ that profile vs. a profile where uncertainty remains and downgraded estimates are warrented, then the indexes are likely going higher over the mid term
🔥2
BGC Priv Journal
spx is only 18x FY26 eps estimates, inline with longterm avg's, its not at a premium. the multiple excluding mag7 is probably alot lower (like 16x - idk if true just a guage) giving room for flows to broaden and give an uplift if mag7 contniues to stay elevated…
6050 hit, then we proceded to nuke across all markets due to conflict escalation in the middle east
If oil doesn't climb higher, making a new elevated floor then this move is likely short term in response to the escalations and won't actually have any material effect on inflation and therefor unlikely to play through to earnings on a broad basis
Buying geopolitical risk is the move the majority of the time, its the Hedge Fund playbook. Given their positioning tailwinds are still present in the market, dips likely get bought up by them as the headlines start to be repetitive and have a diminishing effect on vol (barring no huge spike in oil, like it running hot to $100 which would likely only be caused by severe escalation)
New target 6,150 on SPX.
If oil doesn't climb higher, making a new elevated floor then this move is likely short term in response to the escalations and won't actually have any material effect on inflation and therefor unlikely to play through to earnings on a broad basis
Buying geopolitical risk is the move the majority of the time, its the Hedge Fund playbook. Given their positioning tailwinds are still present in the market, dips likely get bought up by them as the headlines start to be repetitive and have a diminishing effect on vol (barring no huge spike in oil, like it running hot to $100 which would likely only be caused by severe escalation)
New target 6,150 on SPX.
👍3
a look at oil and what you don't want to see (dumb squiggle, but just general move of establishing a higher level and continuing to increase)
BGC Priv Journal
a look at oil and what you don't want to see (dumb squiggle, but just general move of establishing a higher level and continuing to increase)
report that iran wants to end the hostilities, was in the chart
BGC Priv Journal
report that iran wants to end the hostilities, was in the chart
oil continuing to reject hard telling the market that inflation shouldn't be a concern and conflict worries might have peaked
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