Week of April 21

Regime change. But timing is everything

Recap of last week

Last week the only trade we took was SVIX which we exited for a small gain. Thought things might get hairy again due to vix expiration coinciding with the Powell speech which was just in time.

Tuesday, we warned that sellers were likely perched as supply on top of the 5500 support turned resistance before Powell sent the SPX down 3% the next day.

Powell hasn’t changed his tune in months now, preferring to do all he can for his legacy on the inflation front rather than bending the knee to Trump and cutting rates too early. What is notable is that he went out of his way to talk about not having an equity put, when he usually declines to comment. In addition, his stance was in stark contrast from Waller’s, who is happily ready to cut rates even if the wounds are self inflicted.

It is not common to see these two big wigs at the Fed diverge so significantly on monetary policy. And needless to say, the same goes for the Fed and White House. Trump has openly tweeting about his dissatisfaction and intention to fire Powell which is an additional risk we have monitor. We all know now most of us made the mistake of not taking Trump seriously regarding tariffs, and moving forward we must acknowledge that he is not a rational man, and is prone to do nothings that other people might consider crazy.

Good Friday was a bit of a market rebound, but then faded. It was kind of a noisy day being monthly OPEX, as well as a holiday so not sure it provided much signals.

Next week we finally kick off Mag 7 earnings. Is it time to start cranking down the P and the E, or can we finally rally?

Next move for markets