Despite crushing swings last week, stocks posted flat week… but signs inflationary pressures apexing

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Despite the dramatic "rethink" of May FOMC meeting, the S&P 500 closed out the week flat

There was so much drama in the final days of last week, as markets had a "rethink" of the May FOMC meeting, it felt like the entire equity market was upended. Yet, one might be surprised to see that the S&P 500 was essentially flat last week:

  • start 4,131.99
  • end 4,123.80
  • change -0.20%
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...Similarly, the VIX fell 10% last week from 33 to 30

Similarly, the VIX actually fell last week, falling from 33 to 30. So it seems like despite the hysteria around Fed and "75bp not actively considered" etc, macro investors seemingly sold volatility. This might not be how things felt on Thursday and Friday last week, but the point to point observations make our point.

  • in the span of the past week, despite what seems like "bearish" reaction to the Fed
  • equities and VIX tell a story of market that has largely remained flat
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...we stick with our view that a lot of bad news is baked in, which means upside surprises have higher reactions

In other words, the above commentary supports our view that a lot of bad news is baked in. Take a look at the latest positioning data from Goldma...

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