The market was worrying about eminent reccession, which triggered a massive unwind of the popular trade. That is why any rally can not hold and can not follow through before today. Investors did not want to be the bag holders once recession hits, and some were taking the rally to bail themselve out.
why reccession is bad for popular trades? the popular trade earler this years are SEMI and AI. During recession consumers with much smaller paycheck would buy less automobile and less smart phone, and business with much less budget, would invest less in cloud and AI infrustruture.
That is why investors were rush to cash out the winning chips and run.
And the street were not hesitate to put fuel on the fire. Goldsman said the probablity of recession this year is 25%, while JPmorgan gaves 35% this morning.
But, here comes the initial claim this mornig, followed by a robust GDPnow this afternoon.
Hi, reccession is not as eminent as feared. today, investors has spoken.
Soft landing is more important than fed cut. If the economy hit reccess, no matter what fed do we will like see more volatility.
Hope recession is a low probability event, if not 0.
