💥 Treasuries surge as traders bet on emergency Fed rate cut 💥
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Volatility is back...
The average S&P 500 stock has seen a 5% one-day move after releasing Q2 2024 earnings. This marks the most volatile earnings season since the 2008 Financial Crisis, according to Goldman Sachs. By comparison, in Q1 2024 and Q4 2023, the average stock moved by ~4% one day after the release. The volatility index, $VIX, is now up ~95% over the last month alone. Volatility is opportunity for traders. Source: The Kobeissi Letter
Deutsche Bank: "Why the BOJ has no choice and is merely prolonging the inevitable*
"at a gross balance sheet value of around 500% GDP or $20 trillion, the Japanese government's balance sheet is, simply put, one giant carry trade."
Japan Equities Crash, how significant?
Nikkei 225 lost 20% or more within a 3-week period? 1. 1990: -21%, (February 14 - March 7), asset price bubble plunge in Japan. 2. 2008: -23%, (September 26 - October 16) post the Lehman collapse. 3. 2013: -21%, (May 22 - June 13), economic stimulus panic. 4. 2020: -23%, (February 21 - March 13), the COVID pandemic panic of 2020. Source: Lawrence McDonald, Bloomberg
This is the biggest 2-day drop for the Nikkei in history, surpassing Black Monday
Source: www.zerohedge.com, Bloomberg
US earnings: The beat rate is the smallest since 4th quarter of 2022 377 S&P 500 companies (80% of index EPS) have reported, beating consensus by 2%, the smallest since 4Q22.
71%/55%/45% beat on EPS/sales/both Source: BofA, Mike Z.
Bonds have surged higher with the collapse in interest rates and the US Aggregate Bond ETF is now up 7.7% over the past year, outperforming the Treasury Bill ETF ($BIL +5.4%)
Source: Charlie Bilello
Cost of hedging using outright puts nears YTD highs
Source: BofA, Mike Z.
