S&P 500 Gamma EOD Update
The S&P 500 lost 0.8 percent and is now trading just above the gamma inversion level at 4670 points. Below this level we could see more rapid sell offs, so the idea that the market calms down before the Fed and other central banks publish their monetary decisions seems less probable now.
The reason behind the sudden risk-off attitude is not entirely clear. Yes, Boris Johnson warned of a Omicron "tidal wave" and announced the first "Omicron death" (albeit with little background information), but as of now only a very low number of patients are hospitalized with the new variant.
Maybe the market's just realized, that it doesn't make much sense to carry record high valuations into a FOMC meeting (I talked about this Friday), while inflation expectations are through the roof as the most recent NY Fed survey showed today.
Besides Omicron and inflation the usual risks just kept increasing: Russia is talking about stationing nukes on its borders, European natgas / electricity spiked once again to unprecedented levels and the Iran talks do not look very promising.
In a comment somebody said investors are betting on a declining dollar and therefore load up on assets. I am not sure about the rationale behind this thinking. Inflation is probably one of the most destructive forces for the economy and I am not sure if I would want to hold stocks in this environment.
Anyways, good luck y'all.
The reason behind the sudden risk-off attitude is not entirely clear. Yes, Boris Johnson warned of a Omicron "tidal wave" and announced the first "Omicron death" (albeit with little background information), but as of now only a very low number of patients are hospitalized with the new variant.
Maybe the market's just realized, that it doesn't make much sense to carry record high valuations into a FOMC meeting (I talked about this Friday), while inflation expectations are through the roof as the most recent NY Fed survey showed today.
Besides Omicron and inflation the usual risks just kept increasing: Russia is talking about stationing nukes on its borders, European natgas / electricity spiked once again to unprecedented levels and the Iran talks do not look very promising.
In a comment somebody said investors are betting on a declining dollar and therefore load up on assets. I am not sure about the rationale behind this thinking. Inflation is probably one of the most destructive forces for the economy and I am not sure if I would want to hold stocks in this environment.
Anyways, good luck y'all.
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