Finally some blood in the water. Overnight deterioration with correlations rising; people selling winners and losers, moving to cash, scrambling to reposition for a stagflationary narrative.
Asks what fundamentally changed from yesterday's rally.
Dani Burger
Michael Ball
Different regional approaches: Europe and Asia feel more energy pain, the US is more insulated and optimistic about a shorter campaign.
Asks about the natural gas spike.
Matt Miller
Michael Ball
Calls it the 'Widowmaker.' Geopolitical shock leads to a gamma squeeze and mechanical hedging that worsens the move, creating a living entity that ramps on tail risk.
Later asks Ball to elaborate on the equity sell-off.
Matt Miller
Michael Ball
The S&P is breaking down through key levels. Systematic funds (CTAs) are selling, creating a self-feeding cycle. There's a gamma squeeze to the downside. This is an outright rush to cash/get out of anything risky due to the stagflationary backdrop.
Asks if investors are waking up to inflation risk and if it's reflected in rate cut odds.
Matt Miller
Michael Ball
Yes, cuts are being priced further back (to September). New Fed leadership will have a harder time cutting if the committee is firm against it.