SPX Gamma Wrap
The SPX gained 0.4% in a bumpy session today while rate hike expectations dramatically moved higher after a research note released by Citigroup called for four consecutive 50 bps rate hikes, followed by two 25 bps hikes.
It is absolutely remarkable, how investors now seem to look at the stock market as an inflation hedge, while a most brutal rate hike cycle is about to commence very soon.
When inflation startet to go up 1965, the Dow Jones sold off for the next 15 years and went from 8600 to 2500 points. Traders need to take a deep dive into history over the weekend, because this does not look healthy.
Geopolitically nothing is well either. Russia's Lawrow step it up quite a notch and stated, that Nato had declared a "total war" against Russia, while at the same time the offensive seems to lose steam. The russian nuclear doctrine states that nuclear weapons can be used "when the very existence of the state is jeopardized", but it is not entirely clear, if this only applies when the aggression is kinetic in nature, or not.
Today's fundamentals:
Pending Home Sales fell 4.1% in February (consensus 1.2%) after decreasing a revised 5.8% (from -5.7%) in January.
The final March reading for the University of Michigan Consumer Sentiment Index checked in at 59.4 (consensus 59.5) versus the preliminary reading of 59.7 and the final reading for February of 62.8. This marks the lowest level for the index since October 2012.
The key takeaway from the report is that rising inflation is destroying consumer sentiment, as consumers recognize their standard of living has been massively reduced because their income is not keeping up. Notably, it was indicated in the report that 32% of consumers expect their overall financial position to worsen in the year ahead, which is the highest level since the survey started in the mid-1940s.
Anyways. Total gamma now increased to 211MM and the gamma inversion level moved up to 4495. Should the situation materially change I will issue another update Sunday afternoon.
It is absolutely remarkable, how investors now seem to look at the stock market as an inflation hedge, while a most brutal rate hike cycle is about to commence very soon.
When inflation startet to go up 1965, the Dow Jones sold off for the next 15 years and went from 8600 to 2500 points. Traders need to take a deep dive into history over the weekend, because this does not look healthy.
Geopolitically nothing is well either. Russia's Lawrow step it up quite a notch and stated, that Nato had declared a "total war" against Russia, while at the same time the offensive seems to lose steam. The russian nuclear doctrine states that nuclear weapons can be used "when the very existence of the state is jeopardized", but it is not entirely clear, if this only applies when the aggression is kinetic in nature, or not.
Today's fundamentals:
Pending Home Sales fell 4.1% in February (consensus 1.2%) after decreasing a revised 5.8% (from -5.7%) in January.
The final March reading for the University of Michigan Consumer Sentiment Index checked in at 59.4 (consensus 59.5) versus the preliminary reading of 59.7 and the final reading for February of 62.8. This marks the lowest level for the index since October 2012.
The key takeaway from the report is that rising inflation is destroying consumer sentiment, as consumers recognize their standard of living has been massively reduced because their income is not keeping up. Notably, it was indicated in the report that 32% of consumers expect their overall financial position to worsen in the year ahead, which is the highest level since the survey started in the mid-1940s.
Anyways. Total gamma now increased to 211MM and the gamma inversion level moved up to 4495. Should the situation materially change I will issue another update Sunday afternoon.
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