Macro & Volatility™ #30: Operation Epic Earnings

Real similarities and differences between today and the late 90sLow correlation on the way up will likely mean low correlation on the way down, at least initiallyFixed income will dictate the go-forward AI spend

Bond bears are winning globally, but deficits may be the real storyGeopolitics and oil are driving rates more than inflation fearsEarnings, not rates, are still the equity market's steering wheel

This is a different type of de-leveragingHigher equity correlation ≠ VIX explosionGeopolitical and oil risks are for real

Equity rally is broad, earnings-driven, and still not stretchedMarkets can tolerate higher rates until speed becomes the riskAI capex is creating a sustained, structural inflation floor

Equity rally is fundamentally earnings-driven, not war “denial”Excessive hedging mispriced the upsideBonds are selling off because inflation is shifting from short-term to structural

Convexity conundrum: diversifying assets didn’t workCommodities are not tariffs and cannot be altered at the stroke of a penTape bombs are having diminishing impact

More about rotation than directionBonds are still not protectingImplied correlation / VIX is at a record low

Healthy correction in gold and silverHigher nominal rates globallyWarsh’s impact on the MOVE and VIX

Ready, Shoot, Aim FedMisunderstanding of Oracle CDSWelcome back to the ‘90s

Long Vol and long DeltaPaid to be long CorrelationBuy Everything!