Authored by Christoph Gisiger via Finanz und Wirtschaft,
Blackstone’s market maven Byron Wien warns that stocks are in danger of suffering a setback. But he also explains why investors should keep their calm and weather the impending storm.
Facebook first tumbled then jumped after reporting Q2 EPS of $1.32, which initially slammed the stock as much as 5% lower however, then jumped just as quickly when it emerged that Bloomberg had blasted a wrong EPS estimate, according to which the company had missed earnings of $1.38...
... only to immediately correct itself, and release the correct consensus expectations, which was $1.13.
With all eyes on the market's traditional risk measure - VIX, tracking the forward-looking view of S&P 500 volatility - and the ever-higher prices of Tech stocks, a funny thing happened under the surface that is starting to worry some...
As S&P 'VIX' enedlessly limps lower, implied equity volatility for Tech stocks has been rising for two months...
Ignoring the "relatively soon" balance sheet unwind, the dollar index is careening lower (at 14-month lows) on inflation-weaker signals from The Fed.
And gold spiked back above its 200DMA ($1251)...
However, stocks limped higher as VIX crashed to a record low 8.84...
As Bond traders feel the short squeeze coming on...
With 'zero' expectations for a rate-hike today, all eyes are focused on any shifts in The Fed's balance sheet normalization timeline ("balance sheet unwind to start relatively soon") and its most-recently-dovish inflation outlook (following the weak June CPI print, The Fed now says "inflation seen rising to 2%" but is weaker").
Key takeaways from FOMC: