The Market: Monday Musings

Discussion

1. Near-Term Fed Put. The fact the Fed sold a put on Friday at the SPX low is a very important development as the market heads into yet another window of strength underpinned by strong flows emanating from heavy VOL supply and a reopening of the corporate buyback window. The Fed followed up with more dovish musings this weekend via Nick Timiraos: “If higher rates weren’t responsible for the progress on inflation to date, that suggests central banks may be able to lower them before a painful recession sets in.” This is the “controlled demolition” in full swing, as these dovish musings came just days following FED Chair Powell’s explicit guidance at the post-FOMC press conference that the Fed will not entertain rate cuts until a “full year from now.”