Scott Burrill - Market Notes

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Scott's notes
Scott's Market Notes

Too Far Too Fast?

Sep 14, 2019

Assets continue their breakout, but rotation into Value and out of Momentum and Safe Haven's point to significant underlying divergences.

The moves, while not surprising from a mean reversion perspective, stand out due to asymmetric positioning and consequential violent unwinds.

Asset flows this past week were significant into Equities at over $14BB.

Trends are up, but note the change in the Treasury proxies.

Globally, the Bank of Japan, Bank of England, Swiss National Bank and the Federal Reserve will meet to decide interest rate policy.

For the US, expectations call for close to 2 rate cuts by year-end, but the magnitude of Wednesday's cut is only 25 basis points with a 96.9% probability. Recall, Chair Powell stated the cut in July was a safety cut and not a change in policy. Market expectations differ, so keep an eye on VVIX (Volatility of VIX) which currently is high at 98.93.

The SP500 Weekly Option Implied Move is + / - 42 points, with an Upper Edge and Lower Edge of 3049.95 and 2964.83, respectively.

The Economic Calendar is focused on the FOMC and Conference Season continues.

Updated Levels.

Have a great week.

All the best,

Scott

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