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IPFS News Link • Stock Market

"Aberrative Silliness" - Stocks Are Dismissing Fed Hawkishness, Hoping For Next Round Of Q

• https://www.zerohedge.com by Tyler Durden

The US cash opening has been a catalyst for panic-buying most of those days as traders unwind the massive negative-delta hedges that had been placed ahead of The Fed's rate-hike and into last Friday's sizable options expiration.

Even after yesterday's post-OpEx 'gamma unclenching' and Powell's notably hawkish comments, stocks (S&P) managed to scramble back to unchanged, apparently shrugging off the front-loaded tightening to come and ignoring Powell's Volcker-esque warnings that The Fed will do 'whatever it takes' to quell inflation?

So what is going on?

The Fed is wrongly interpreting equity strength as 'support' for its aggressive tightening plan - when in fact it is just more negative-delta unwinds - and is thus emboldened to do more, sooner. As Goldman noted earlier, the recent shift in wording from "steadily" in January to"expeditiously" today is a signal that a 50bp rate hike is coming. And not just one but two, because according to Goldman, the Fed will raise interest rates by 50 basis points at both its May and June policy meetings, and by 25 basis points in the four remaining meetings in the second half of the year


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