Market Journal: Key Day

Discussion

Language out of the Fed today via Clarida was key for reversing the widening of US HY CDX. Floating cuts is a big deal. And defensive stocks are lagging, too. I’m not yet sure what to make of today in the context of the short term topping process discussed this morning, but what I am sure of is the case for substantial SPX downside into September/October is growing by the day. I think the Fed sees what The Kitty sees beneath the hood of the economy, and material economic weakness is going to come through the pipeline soon, which the structure of the options market is preparing for.

Exhibits