The Market: Back to Squeeze Mode or on Fumes?

Executive Summary

• Powell was more neutral than I had forecasted, but more hawkish beneath the surface of his typical smooth, seemingly dovish talk.

• A decisive drop in VVIX and HY CDX in the wake of Powell supports the prospect of more SPX squeezing before a large-scale correction into the September/October danger zone. But…

• The economy MUST thread the soft landing needle for a sustainable squeeze.

• A near-term correction into August to reset bullish sentiment remains the more likely outcome.