MegaCap Tracker Switching to QQQ Call Hedge
Yield Curves stronger again! FED Pause Inbound
We saw a couple of notable things today, first off Chicago PMI was a disaster:
Anyone that thinks the FRB is going to hike into numbers like this are pure crazy, Magnelibra is still calling for a no go June and July and first hint of cuts coming in August…yea yea, we heard about the JOLTS survey and no, we do not believe for one minute that there are 10m plus job openings, that is a sham of a number. We only need a terrible NFP number this Friday to solidify our no go June call. In fact we had FED voters, Harker and Johnson hinting at a pause today for June!
The US Yield Curves continue yesterday’s strength as the 5s30 was +3.4bp on today’s settlement sheet with the 2Y and the 5Y the star performers -8bp on the day:
As far as the MegaCap tracker we covered the SPY Call hedge and swapped into the QQQ Calls, covering the 425C and selling 5 QQQ 354 Calls at 1.90:
Thoughts are the Nasdaq chart doesn’t look so hot, the AI FOMO has run into heavy technical selling and we believe that we will see a bit of back and forth here to consolidate recent strength. Also we know the debt ceiling vote is here and that is the first pillar toward our eventual reversal of the massive Nasdaq inflow vs US Treasury selling or outflow. The next shoe to drop will be the June pause…btw the CME Watch Tool shows that the chance of a pause has risen today to 74% from yesterdays 33%. We do not expect the FRB to give the market something it doesn’t expect and we suspect the equity markets aren’t going to like it!
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