General Discussion Banter GLN, page-9230

Was reading earlier on Zero hedge , the strong week on Wall Street was mainly all technical related factors mainly relating to short covering by CTA’s ( Wall Street acronym for commodity trading advisors , big funds that take technical positions using derivatives, our friends over at GS are included here ) .

Also Wall Street on Friday came out of the regulatory black out window for reporting season that prevents buybacks which has put a huge support in place this year to the fundamental weakness coming from rising rates . Plus the other big factor was short covering , the week started about 89 Bn of equities short , so a a huge amount of short covering in the week was tipped off by a S&P level to the higher side being breached. The big funds then don’t muck around they just close out .

Essentially Wall Street is dominated now by momentum traders , they trade it up and down and the massive volume of shorts in the market now exacerbates these movements up and down . That’s why despite little change in the underlying fundamentals we saw a big week and big month on Wall Street . But the general feel is a pivot on rates is coming and the peak of the Fed Funds may now be fully priced in with many calling 4.75 % the likely top in Fy 23.

Still implies quit a bit of further tightening to come and hence for mine we are not out of the woods yet . Property market in Us and here will definitely remain under pressure as Dulles mentioned for some time yet ( likely all the way through 23) to come as it tends to respond in a lagging way to rate rises , equities tend to be far more forward looking .