Syz the moment

FACTS: The overall tone of Chair Powell’s Jackson Hole speech was relatively hawkish but not as hawkish as some feared on the back of recent strong data. It was also less hawkish than last year. The main message is that The Fed is definitely on hold but leaning on a more hawkish stance should data don’t show more progress in inflation / growth cooling down. OUR TAKE: The big event is now behind us, and we didn’t learn anything new. Powell believes that monetary policy is tight, but he opens the door to an even tighter one. With regards to macro data, they are going into the right direction but there is a risk of further upside, i.e interest rates path remains very data dependent which means that markets will now turn its attention to PCE inflation and US jobs data (next week). The Fed is likely to stay nervous as long as they see evidence of a serious break in job growth below the 200K pace. We are not there yet, which means that in the coming weeks, we will likely see macro volatility leading to market volatility. Our view remains that central bankers want first and foremost to avoid the big mistake (rather than targeting a pre-defined target). In the previous decade, central bankers wanted to avoid the deflation trap, hence the over-printing. This time, they want to avoid the risk of another round of inflation. Hence the temptation of over-tightening. MARKET REACTION: Rate-hike expectations initially moved lower but then reverted higher after investors actually read and listened to his speech. 2Y yields are back to July highs and equity markets are whipsawing.

Source: TrendSpider

Source: Fund Strat thru Carl Quintanilla

Sounds like an effective contrarian indicator... Source: Brian Feroldi

Yesterday it had its lowest close of 2023, back to the panic levels of mid-March when Silicon Valley Bank failed. Source chart: James Bianco

Source: Visual Capitalist

1/ Extreme weather intensified by global heating ravaged this season’s crop of the citrus fruit: last year Florida, which produces more than 90% of the US’s orange juice supply, was hit by Hurricane Ian, Hurricane Nicole and freezing conditions in quick succession, devastating orange producers in the Sunshine State. 2/ A bacterial disease -> Florida Producers battled an incurable citrus greening disease that is spread by an invasive insect, rendering fruit unusable. Most infected trees die within a few years, and some producers said they were giving up farming and selling their land. Industry figures said US orange production would reach its lowest level for more than a century. Source: The Guardian, Longview Economics

The SPX Put to call ratio is at its highest since the SVB banking crisis. In a short term view, the 'PUT BUS' is getting crowded and a crowded trade is usually not a good trade. Source: JC Investment