{"id":1451214,"date":"2024-01-17T12:20:00","date_gmt":"2024-01-17T17:20:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1451214"},"modified":"2024-01-17T12:20:00","modified_gmt":"2024-01-17T17:20:00","slug":"stocks-are-still-blinded-to-risks-by-rate-cut-optimism","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/stocks-are-still-blinded-to-risks-by-rate-cut-optimism\/1451214\/","title":{"rendered":"Stocks Are Still Blinded To Risks By Rate-Cut Optimism"},"content":{"rendered":"

Stocks Are Still Blinded To Risks By Rate-Cut Optimism<\/span><\/p>\n

\n

Authored by Simon White, Bloomberg macro strategist,<\/em><\/p>\n

Animal spirits are regnant in stock world, as net positioning shoots higher this year.\u00a0<\/strong><\/p>\n

But the reason for the market\u2019s expectation of imminent interest rate cuts \u2013 rising financial-instability risks <\/a>– is also the reason more caution is warranted.<\/p>\n

Stock investors have got off to an assertive start in 2024.<\/p>\n

Aggregate positioning of speculators across major US equity indices has rocketed from net short to net long in only a few weeks.<\/strong><\/p>\n

<\/a><\/p>\n

The aggregate number is driven by net positioning for Dow Jones and Nasdaq futures, which are at their highest levels in at least two years. Net positioning in the S&P e-minis remains net short, but is rising.<\/p>\n

Stock optimism has been boosted by the Fed\u2019s pivot in December, and the market\u2019s eagerness to out-dove the central bank by pushing for a rate cut as early as March. <\/strong><\/p>\n

[ZH: Fed’s Waller pushed back the hardest yet on the market’s March rate-cut odds expectations]<\/em><\/a><\/p>\n

<\/a><\/p>\n

There have been several hypotheses put forward for this, such as a dovish read of recent economic data, or large yield-curve steepening positions upending short-term rate pricing. But none are particularly convincing.<\/p>\n

However, through the prism of a\u00a0rise in perceived financial-instability risks, pushing for a cut makes a more sense.<\/strong><\/p>\n

If that\u2019s the case though, the zeal for equities could face a rude awakening.<\/p>\n

That\u2019s especially the case if the Fed forcefully pushes back on a March rate cut, and there is greater financial instability as quantitative tightening begins to bite harder, leading to potential funding flare-ups. <\/strong><\/p>\n

Stocks in such a situation would find themselves on shaky ground.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nWed, 01\/17\/2024 – 07:20<\/span><\/p>\n

\u200bRead More<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Stocks Are Still Blinded To Risks By Rate-Cut Optimism Authored by Simon White, Bloomberg macro strategist, Animal spirits are regnant in stock world, as net…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1451214","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-65wG","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1451214","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1451214"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1451214\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1451214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1451214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1451214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}