With the Fed desperate to not upset markets these days (they meet this week), with the likelihood of a Brexit-friendly outcome to this Thursday’s UK election, with the strong odds that the U.S. is not going to allow the scheduled tariff increase to take effect on 12/15, and with this morning’s rumor that USMCA (US, Mexico, Canada trade agreement) is about to pass Congress you’d think the market would be screaming higher this morning.
Well, if the above indeed plays out, just wait, surely the market is coiling ahead of a strong rally.
But there’s something strange occurring below the surface, the VIX is up nearly 8% as I type??? Which means options traders are acting as if something’s amiss. Or maybe they’re just playing it safe and buying some protection just in case.
My guess is that their angst is around the Tues/Wed Fed meeting. The latest data have improved a bit and that could have the Fed sounding far-less dovish than they did the past few meetings.