Thoughts on the Moody's Downgrade of the US sovereign credit rating (inspired by a tweet by Jim Bianco):
➡️ In August 2011, S&P first downgraded the US from AAA to AA+. Back then, many derivative contracts, loan agreements, investment directives, and similar documents prohibited the use of non-AAA securities. The fear was that a downgrade meant Treasuries were no longer eligible under these rules and would mean forced selling was to follow. ➡️ The 2011 downgrade left the US Split-Rated AAA (Moody's Aaa, Fitch AAA, S&P AA+). So, the US was still an AAA country and NOT in violation of these contracts. But everyone knew it was only a matter of time before the US lost its AAA status. So, in the years after 2011, those contracts were rewritten from "AAA securities" to "government securities," thereby excluding the credit rating qualification.
Welcome to panic-driven buying!
Going into this week: * Hedge funds just hit 100th percentile gross leverage * Biggest 6-week positioning jump since 2020. * Net buying at +2.5 SD (largest since Dec ’21) * Put protection near multi-year lows * "Offers wanted" floods GS desk This isn’t cautious buying—it’s panic-driven chase mode. Source: The Market Ear
Sometimes we need to be careful with magazine cover page.
Or use them as contrarian indicator?
the virtue of discipline
Source: Seek Wiser
On May 15, the GDPNow model nowcast of real GDP growth in Q2 2025 is 2.5%
.
$1.2 Trillion of S&P 500 $SPX notional options exposure is set to expire on Friday with a max pain price currently sitting at 5,840
Source: Barchart
Global 30-Year Bond Yields from Europe to North America to Asia are all sending the same message
Source: Barchart
April PPI plunged largely due to collapse in company margins as a result of absorbing tariff increases
What does it mean for corporate margins going forward? Moreover, Fed chairman Powell told us companies would pass through tariffs. Is it going to be the case? Source: zerohedge
