Is it hawkish to project two rate cuts while warning about a sluggish economy—and dovish to slam the brakes on QT while telling markets to ignore inflation warnings? Apparently, Jerome Powell can do both without blinking, leaving the commentariat scrambling to decide whether we are witnessing a brand-new Powell Put or just a Fed that needs a better PR team. Personally, I see a masterclass in strategic confusion—call it intentional ambiguity. By selectively dismissing certain data (UMich’s infamous inflation survey) while quietly acknowledging tariff-driven price pressures, Powell has pinned markets in a zone where risk-on euphoria and crash panic coexist in a single breath.
If that sounds like a contradiction, well, that’s the point. Dangle enough conflicting signals, and nobody can front-run your next move. It’s brilliance, disguised as muddle: one moment, the Fed warns about stagflation, the next they are quietly loosening liquidity constraints. Too hawkish for the easy-money crowd, not hawkish enough for the inflation birds—just ambiguous enough to keep everyone guessing. While legacy pundits call it incoherent, I see a deliberate move to keep bigger, scarier forces (fiscal drama, tariffs, the next election) at bay. When the rules keep shifting, no one can bet against a clear trend. And that, my friends, is the real Put: a stealth safety net hidden in contradictions.
Below, as always, the minimum we need to know to get a feel for what’s cooking:
The Dollar’s Weaponization
Talk of a so-called Mar-a-Lago accord has unnerved foreign holders of US assets. A shifting global currency dynamic - where tariffs, sanctions, and capital controls become tools of statecraft - raises the risk of a deeper outflow from US markets. If policymakers continue to test the dollar’s global reserve status, liquidity disruptions and a weaker greenback may follow.
Europe’s Rearmament
From increased defense budgets to ramped-up industrial initiatives, Europe’s pivot toward strategic autonomy is well underway. While this can energize local economies, the cost pressures on raw materials, labor, and supply chains are real. Early signs of bureaucratic bottlenecks already hint that rearmament could stoke more inflation.
Hedge Funds & CTA Flows
Systematic funds and hedge managers recently dumped a mountain of equities, intensifying the correction. Fresh data shows that liquidation may have eased, but it’s unclear if this lull is permanent or just the eye of the storm. Timing these flows is tricky; a sudden rally could squeeze shorts, while more bad news might trigger the next wave of selling.
Get Rich Overnight with Options? Yeah Right...
TUESDAY TARGET: No target this week — we’ve got enough risk on and are waiting for the next big move.
Instead, check out this masterclass in trade repair that still leaves us with a broken asset in the end. That said, we repaired it from a 100% total loss down to only a 75% loss. Hooray.
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Please note, all content is for educational purposes and isn't personalized for individual portfolios or financial advice. Curious about putting any of these ideas into action? Juri von Randow is here to offer guidance or connect you with the right resources.