Wall Street Hedges As ‘Johnny Whipsaw’ Rules Today’s Markets

Via Global Macro Monitor,

Do you not know? Have you not heard? Wall Street is an everlasting marketing machine.

– Book of GMM

Is The Street now day trading their market strategies? 

Check out the opposing views from America’s largest bank, the eighth largest in the world.  No wonder markets are volatile.

Johnny Whipsaw rules today’s markets. 

My guess is they are practicing the Islamic proverb, whether they know it or not, 

Trust in Allah but tie your camel.  

Hedge your bets, speak cryptically and in double-entendre, claim you were correct whichever way the market turns, and collect the year-end bonus just as the Oracle Of CNBC does. 

“We believe that equities still offer upside, and that the cycle is far from over,” the London-based strategists wrote in a Feb. 7 note. In addition to the VIX signal they look for more gains in earnings, a bottoming in Chinese activity and say investor sentiment has become too negative of late.

– Bloomberg

Expectations about corporate earnings growth are quickly diminishing, JPMorgan Chase & Co. quant strategists said, warning that the gloom could spell more trouble for global stock markets after an underwhelming start to the year.

– Bloomberg

Secure Your Bonus, Boys And Girls

Discount the cheerleaders, folks.

Moreover, it’s about time we hold them accountable for helping drive stocks into the stratosphere (see chart below), as the extreme valuations are now a significant constraint on the Fed’s ability and willingness to stamp out the inflationary fires. 

The Fed Put, Are You Shitting Me?

Good Gawd, they are now even trying to estimate the level of the Fed put.  No doubt, the Fed should intervene when markets crash (such as 1987, 2008, and 2020) to stave off systemic risk and a financial collapse but, come on, not to prevent markets from regressing to their fair values.

The timing of this move, known colloquially as the “Fed put”, is of course unclear. But the BoA survey suggests it will occur when the S&P 500 falls below 3700 index points.

– Financial Review

Do not these people realize the accumulation of all “Fed puts” over the years are a significant factor that has painted the economy into this god awful corner?.

Moral Hazard

This type of moral hazard behavior is what blew up some of my trading accounts in 1998, betting Russia was “too nuclear to fail.” and would be bailed out by the IMF and U.S. government.  Bill Clinton and Larry Summers disagreed. 

At least, I was in good company,

Tepper’s Worst Trade

Roger Nachman , Benzinga Staff Writer   

September 24, 2010 8:31am   

David Tepper said his worst trade was in 1998, as Russia eventually defaulted.

He believed that Russia should devalue its currency, but not default, and Russia wound up doing both.

– Benzinga

Tyler Durden
Sat, 02/19/2022 – 19:35

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