Surely everyone’s contrarian impulses were triggered by the sight of the guy nicknamed Dr. Doom saying the biggest risk to markets is that the economy does too well, and given the S&P 500
SPX
did end lower (barely) on Monday, maybe a few people shared that thought. Kevin Muir, the former trader turned blogger, has a piece breaking down the current bear and bull market advocates. The bulls, represented by Jefferies strategist David Zervos, argue the Fed put is back in markets, on the possibility, even if not enacted, that the Federal Reserve will cut interest rates. (The Fed put is the idea the central bank will step in if the economy deteriorates.)
He quotes Zervos, who spoke at the iConnections Global Alts 2024 event last month, as saying, “we took the pain, the firetrucks went and put the inflation fire out, and Jay, and the Fed infrastructure which has backstopped this economy through many different kinds of supply and demand shocks, is back in play.” The bears are represented by Morgan Stanley’s Mike Wilson, who argues the bond market will end up being the source of the problem. “There is a threshold where rates get to a point where market says, oh gosh, we’re not getting the cuts, and financial conditions are actually going the wrong way again, and I’ve got too much risk on,” said Wilson at the same event. “We get bond vol. Then we get equity vol. And that’s how it happens. It doesn’t have to be a crash, but that’s a correction.” Where that b …
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SPX
did end lower (barely) on Monday, maybe a few people shared that thought. Kevin Muir, the former trader turned blogger, has a piece breaking down the current bear and bull market advocates. The bulls, represented by Jefferies strategist David Zervos, argue the Fed put is back in markets, on the possibility, even if not enacted, that the Federal Reserve will cut interest rates. (The Fed put is the idea the central bank will step in if the economy deteriorates.)
He quotes Zervos, who spoke at the iConnections Global Alts 2024 event last month, as saying, “we took the pain, the firetrucks went and put the inflation fire out, and Jay, and the Fed infrastructure which has backstopped this economy through many different kinds of supply and demand shocks, is back in play.” The bears are represented by Morgan Stanley’s Mike Wilson, who argues the bond market will end up being the source of the problem. “There is a threshold where rates get to a point where market says, oh gosh, we’re not getting the cuts, and financial conditions are actually going the wrong way again, and I’ve got too much risk on,” said Wilson at the same event. “We get bond vol. Then we get equity vol. And that’s how it happens. It doesn’t have to be a crash, but that’s a correction.” Where that b …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]