US CPI came in hot, to the surprise of many, but not us, as we have been talking about this for the past 3 weeks, right? (TwitterX).
What honestly surprised me is that #stocks didn’t manage to follow the usual script once the latest US CPI was released, although they tried.
The $VIX crush came punctual like a Swiss train ?, the #stocks pump tried to follow and lift everything up after the very first negative knee-jerk reaction. The pump this time only kept $SPX and $NQ futures in the green till open, when #stocks cash trading began. The first hour was a dumping festival with $VIX rising above 13 in the process. The second $VIX crush began shortly after the European #stocks closed for the day, but the #BTFD that followed just managed to lift indexes back to flat at close.
Considering the level of euphoria as of late, even if I expect a “Black Friday” for banks to kick off one of the worst earnings seasons since GFC (post in quote below), in the grand scheme of things, I would have still considered today just a speed bump. However, right after the close, the news that the US & UK are starting military operations against the Houthi in Yemen hit the tape.
Did someone explain to Joe Biden and Rishi Sunak that it would have been very hard to “politically adjust” the future #inflation data when shipping costs are skyrocketing once again because of the troubles in the Middle East? So, did they decide to opt for a stronger “political adjustment” (i.e., start a war to remove the Houthi)?
It’s hard not to suspect that someone, as usual, knew about this plan in advance, and that is why the flood of put options that hit the tape yesterday was strong enough to balance the relentless #FOMO buying. Quite interestingly, the sense of “urgency” was so high that put options buyers started to even sweep above the Ask early in the trading session (TwitterX).
Now the big question is, will this new military action be taken seriously by markets as a sign that geopolitical risk is spreading like wildfire since the war in Ukraine started and the one in Israel followed? If the answer is yes, will the combined effect of this and a potentially disastrous beginning today for Banks’ earnings season be strong enough to scare investors’ euphoria away and eventually stop the latest stocks run (at least for a while)?
Hilariously, no one in #Japan should worry about hitting a speed bump or a wall because #stocks are literally flying out there, so they can avoid worrying about anything on the ground :-). Hopefully, the #Nikkei plane isn’t a #Boeing because in that case, the chances of a sudden crash landing aren’t remote at all.
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