Stocks are hanging around but we have seen that before
US university application rates are somewhat dependent on the weather during the potential applicant’s tour
highlights
Wile E. Coyote
Current Views
23MAR 158.30 USDJPY put
22bps off 159.65 spot
2APR .69/.68 AUD put spread
21.7bps off 0.7025 spot
Short EURUSD 1.1527
Stop loss 1.1677
Short 07APR EURCHF 0.9010/0.8960 put spread +
long 07MAY 0.9110/0.9160 call spread for 2bps
Currencies and stocks
I am going to keep it super short today because you’re busy.
First thing I would say going into ECB is that a hawkish ECB is a fade in FX … We have enough history of ECB hiking into oil shocks, and we have seen enough “hawkish ECB / EURUSD lower” days in our lives to know that if the ECB ratifies the hikes in the curve, it’s by no means sure to be bullish EUR.
I would sell any EURUSD pop to 1.1500/40 with a stop at 1.1677 if ECB is hawkish.
In a similar vein, I think the market could soon pivot from: Hawkish RBA and positive ToT shock regime for AUD to “RBA hiked into a growth/supply shock and risky assets are cratering” regime.
Buy 2-week 0.6900/0.6800 AUD put spread for around 21bps.
Equities are doing their best Wile E. Coyote impression, but I think they will go lower in the next two weeks because:
- Gold and silver showing liquidity is not plentiful.
- Central banks aren’t coming to the rescue.
- No clear off-ramp for the Iran war.
- Market is complacent and still fears missing the topside rip on deescalation.
- Quadruple witching tomorrow could clear up gamma and allow some vol.
- Many stocks have been compressing for months (NVDA).
- Tax refunds have mostly been issued, and retail is running out of money.
- Setup looks like 2018 and 2022. Midterm years with more hawkish than expected central banks and nowhere to hide as bonds, precious metals, FX, and equities all go down.
That’s it for today. Keeping it super tight. New trades in sidebar, including the USDJPY which was put on after FOMC. The EURCHF bull trade is working well, suddenly.
Note that Brent Crude through $120 makes this different from the Russia/Ukraine oil rally in 2022 as oil never took out the major spike high in that scenario. Such a move would validate the view of most oil experts that this is bad.
US college application rates are lower when students experience bad weather during the campus tour.
“We find that poor tour weather reduces participants’ likelihood of applying. Tour participants, for example, are 10 percent less likely to apply when their tour is hot and 8 percent less likely when precipitation occurs during their tour.”
