Massive Quarter for Equities

FRB can hold rates high, while adding assets to balance sheet

Massive quarter for the equities, now its a bit before the close but if we stay near current levels the Nasdaq and SP500 futures will be up close to 18.7% and 5.7% respectively. (Using 13265 and 4126 June Futures at 3:45est) This is really a big move and one that we suspect would not have transpired if the FRB didn’t put out the BTFP program, if discount window and USD Swap lines weren’t utilized. However, the facts are these programs were created and some $400Bn or so was put to work and put to work where it always is put to work, in risk assets.

What is curious today is that the USD is strong today not much but it is higher across global FXs and this is usually not the case. We will get into why we believe the regime has once again changed and it has changed out of a matter of necessity and we will explain why, shortly here but in more detail in the days to come.

Anyway let’s look at a few charts, Nasdaq and SP look very bullish even for quarter end window dressing. (remember, new lows come after the first rate cuts, which we may not see anytime soon and we will explain why):