FOMC flipped from hikes to hold in six weeks — @scotiabank
The Fed reversed course fast.
As recently as September 16 the committee was raising rates. By October 28 it shifted to maintaining the target. That's a sharp turn, and it didn't come without friction: dissenters Cook and Hammack prefer hikes, per Scotiabank's read of the decision.
That internal split raises the odds of more volatility around future meetings.
A committee that just reversed direction and still has vocal hawks isn't one sending a clean signal.
https://x.com/joemccann/status/2115783159489130542
The Fed reversed course fast.
As recently as September 16 the committee was raising rates. By October 28 it shifted to maintaining the target. That's a sharp turn, and it didn't come without friction: dissenters Cook and Hammack prefer hikes, per Scotiabank's read of the decision.
That internal split raises the odds of more volatility around future meetings.
A committee that just reversed direction and still has vocal hawks isn't one sending a clean signal.
https://x.com/joemccann/status/2115783159489130542
Inflation breadth stays above its 2017-2019 average
Inflation is still spread across more PCE components than the 2017-2019 average. UBS's chart tracks the share with 6m annual inflation above 3%. That share remains elevated, even after retreating from its peak.
https://x.com/joemccann/status/2115798808713986362
Inflation is still spread across more PCE components than the 2017-2019 average. UBS's chart tracks the share with 6m annual inflation above 3%. That share remains elevated, even after retreating from its peak.
https://x.com/joemccann/status/2115798808713986362
The token bull market continues.
Total token spending rose 23.0% compared with the same week last month.
https://x.com/joemccann/status/2115802080082612557
Total token spending rose 23.0% compared with the same week last month.
https://x.com/joemccann/status/2115802080082612557
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The $QQQ short squeeze setup
$QQQ short interest has climbed to its highest level since 2023, according to JPM.
https://x.com/joemccann/status/2115855449463595343
$QQQ short interest has climbed to its highest level since 2023, according to JPM.
https://x.com/joemccann/status/2115855449463595343
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The next China shock may not stay in China.
China's domestic economy is struggling, but its export machine is running at full speed. @BankofAmerica's Hartnett highlights Chinese exports surging 36% year-on-year, with high-tech exports up a staggering 63%.
The problem is that this industrial strength is increasingly disconnected from domestic demand.
China is relying on foreign buyers to absorb its production, raising the risk of exporting deflation and squeezing corporate earnings globally.
https://x.com/joemccann/status/2115856119008800945
China's domestic economy is struggling, but its export machine is running at full speed. @BankofAmerica's Hartnett highlights Chinese exports surging 36% year-on-year, with high-tech exports up a staggering 63%.
The problem is that this industrial strength is increasingly disconnected from domestic demand.
China is relying on foreign buyers to absorb its production, raising the risk of exporting deflation and squeezing corporate earnings globally.
https://x.com/joemccann/status/2115856119008800945
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AI HY spreads were 400bps over Treasuries, significantly wider than non-AI BB/B since mid-2025.
@GoldmanSachs expects 2027 to be an active AI issuance year across currencies and asset classes. That expected supply adds risk for AI-linked HY credits already under pressure.
https://x.com/joemccann/status/2115871789159162282
@GoldmanSachs expects 2027 to be an active AI issuance year across currencies and asset classes. That expected supply adds risk for AI-linked HY credits already under pressure.
https://x.com/joemccann/status/2115871789159162282
S&P 500 averages 1.9% in November. UBS flags squeeze risk
November is the S&P 500's strongest month, with a 1.9% average gain since 1950. @UBS S&T's Justinus Steinhorst flags acute short squeeze risk: gross shorts are rising even as net exposure stays low.
The longer-term case draws on post-midterm history. UBS cites a 13.8% average 6M S&P 500 return with a 100% historical hit rate, and a 7.7% average 3M return with an 89% historical hit rate. Those are historical outcomes. They support UBS's longer-term positioning case without guaranteeing the next result.
The tactical view is in commodities. UBS points to November oil weakness (-2.9% on average) versus strength in copper (+1.7%) and silver (+1.1%). Amid Iran tensions, the desk sees an opportunity to shift Energy equity exposure into Metals & Mining (UBXXMETL).
https://x.com/joemccann/status/2116277613589361102
November is the S&P 500's strongest month, with a 1.9% average gain since 1950. @UBS S&T's Justinus Steinhorst flags acute short squeeze risk: gross shorts are rising even as net exposure stays low.
The longer-term case draws on post-midterm history. UBS cites a 13.8% average 6M S&P 500 return with a 100% historical hit rate, and a 7.7% average 3M return with an 89% historical hit rate. Those are historical outcomes. They support UBS's longer-term positioning case without guaranteeing the next result.
The tactical view is in commodities. UBS points to November oil weakness (-2.9% on average) versus strength in copper (+1.7%) and silver (+1.1%). Amid Iran tensions, the desk sees an opportunity to shift Energy equity exposure into Metals & Mining (UBXXMETL).
https://x.com/joemccann/status/2116277613589361102
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A cool $110 billion volatility trap
@Nomura estimates that a 2% SPX decline could trigger approximately $110 billion in mechanical selling across dealers, leveraged ETFs and volatility-control strategies.
At a 3% decline, that figure rises to almost $178 billion.
With systematic equity exposure already near the 95th percentile, the market is increasingly vulnerable to a self-reinforcing feedback loop.
Selling creates volatility.
Volatility creates more selling.
https://x.com/joemccann/status/2116332404709433491
@Nomura estimates that a 2% SPX decline could trigger approximately $110 billion in mechanical selling across dealers, leveraged ETFs and volatility-control strategies.
At a 3% decline, that figure rises to almost $178 billion.
With systematic equity exposure already near the 95th percentile, the market is increasingly vulnerable to a self-reinforcing feedback loop.
Selling creates volatility.
Volatility creates more selling.
https://x.com/joemccann/status/2116332404709433491
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Expect more bodies to float to the trading floor surface in the coming weeks
https://x.com/joemccann/status/2116390120840643039
https://x.com/joemccann/status/2116390120840643039
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Hedge funds net bought US equities for the first time in 4 weeks
Hedge funds returned to net buying, led by Macro Product short covers, according to @GoldmanSachs' October 30, 2026 rundown.
Mag 7 was still net sold in 4/5 sessions amid earnings volatility.
The Russell 2K outperformance had a similar driver. @GoldmanSachs attributes it to orderly short covering, with a $2.1B decline in open interest. Fresh longs weren't the driver. Rate sensitivity remains a constraint.
The S&P 500 is testing its 100dma (7614) and CTA threshold (7554). Those are the technical levels @GoldmanSachs flags alongside the covering activity.
@GoldmanSachs also describes constrained appetite for AI amid election uncertainty.
Investors are seeking names it calls AI-resistant, including $IBM, $AAPL and $SPOT.
https://x.com/joemccann/status/2116591145690206486
Hedge funds returned to net buying, led by Macro Product short covers, according to @GoldmanSachs' October 30, 2026 rundown.
Mag 7 was still net sold in 4/5 sessions amid earnings volatility.
The Russell 2K outperformance had a similar driver. @GoldmanSachs attributes it to orderly short covering, with a $2.1B decline in open interest. Fresh longs weren't the driver. Rate sensitivity remains a constraint.
The S&P 500 is testing its 100dma (7614) and CTA threshold (7554). Those are the technical levels @GoldmanSachs flags alongside the covering activity.
@GoldmanSachs also describes constrained appetite for AI amid election uncertainty.
Investors are seeking names it calls AI-resistant, including $IBM, $AAPL and $SPOT.
https://x.com/joemccann/status/2116591145690206486
Gold sees $8bn of bearish flows in 5th straight week
The $8bn outflow was driven by Other/Non-Reportable positions (~95%).
Gold slipped 1.6% despite an 11bp yield drop.
Net positions peaked before the futures price. @GoldmanSachs reads the subsequent decline in net longs as reduced hedging support, with more downside risk during corrections as hedgers exit.
The tactical concern is persistent selling pressure and less support if gold falls further.
https://x.com/joemccann/status/2116591794347708796
The $8bn outflow was driven by Other/Non-Reportable positions (~95%).
Gold slipped 1.6% despite an 11bp yield drop.
Net positions peaked before the futures price. @GoldmanSachs reads the subsequent decline in net longs as reduced hedging support, with more downside risk during corrections as hedgers exit.
The tactical concern is persistent selling pressure and less support if gold falls further.
https://x.com/joemccann/status/2116591794347708796
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Financial Markets, not Prediction Markets, now suggest a split Congress, not a Democratic sweep.
The @goldmansachs Affordable Care Act (ACA) Basket (GSHLCACA) divided by the S&P 500 ex-AI (SPXXAI) vs. a Democratic Sweep Odds on @Kalshi.
The two series tracked closely from April through mid-October 2026, both rising as Democratic sweep odds climbed from ~40 to ~65+.
However, we are now seeing a stark divergence in the last two weeks.
The ACA ratio (black) peaked near 115 around Oct 14-16, then sold off hard to 106.41 -- a roughly 8-point drop.
The Dem sweep odds (blue) held at 65-66 and actually ticked up slightly over the same window.
That decoupling is the signal, in my opinion.
Three probable reasons for the divergence:
1. Profit-taking / position unwind
The ACA basket had an outsized run (~+15% relative to ex-AI S&P since September). Institutions that rode the political trade are harvesting gains ahead of Nov 4 elections, regardless of current odds. I see this as a sensible but low probability.
2. Sweep odds vs. implementation risk
Kalshi House odds sit at ~91% Dem, Senate at ~64% Dem (Kalshi News, Oct 27-28). A full sweep is priced in on the House but the Senate is a coin flip with 36% GOP. Markets may be pricing the scenario where Dems win the House but not the Senate; ACA expansion stalls in a split Congress.
I see this as most likely.
3. $XLV flow context
Dark pool data shows heavy distribution on Oct 30 (buy ratio dropped to 0.30, strongest sell signal in the 20-day window).
Options flow remains strongly bullish (put/call premium ratio 0.19), so there is a split: institutional blocks distributing while options desks stay long vol into the election. That kind of conflict typically signals hedging, not conviction.
Also a sensible explanation, but again, seems less likely
In short, the ACA basket is repricing from a "full sweep, full expansion" multiple toward a "House only" multiple.
Sweep odds have not moved, but the marginal value of the Senate seat is being discounted.
The divergence is the market saying that a House win is in the price, Senate is the variable, and the trade already had a 15% run.
https://kalshiview.com/markets/midterms-2026/
https://x.com/joemccann/status/2116597717162148069
The @goldmansachs Affordable Care Act (ACA) Basket (GSHLCACA) divided by the S&P 500 ex-AI (SPXXAI) vs. a Democratic Sweep Odds on @Kalshi.
The two series tracked closely from April through mid-October 2026, both rising as Democratic sweep odds climbed from ~40 to ~65+.
However, we are now seeing a stark divergence in the last two weeks.
The ACA ratio (black) peaked near 115 around Oct 14-16, then sold off hard to 106.41 -- a roughly 8-point drop.
The Dem sweep odds (blue) held at 65-66 and actually ticked up slightly over the same window.
That decoupling is the signal, in my opinion.
Three probable reasons for the divergence:
1. Profit-taking / position unwind
The ACA basket had an outsized run (~+15% relative to ex-AI S&P since September). Institutions that rode the political trade are harvesting gains ahead of Nov 4 elections, regardless of current odds. I see this as a sensible but low probability.
2. Sweep odds vs. implementation risk
Kalshi House odds sit at ~91% Dem, Senate at ~64% Dem (Kalshi News, Oct 27-28). A full sweep is priced in on the House but the Senate is a coin flip with 36% GOP. Markets may be pricing the scenario where Dems win the House but not the Senate; ACA expansion stalls in a split Congress.
I see this as most likely.
3. $XLV flow context
Dark pool data shows heavy distribution on Oct 30 (buy ratio dropped to 0.30, strongest sell signal in the 20-day window).
Options flow remains strongly bullish (put/call premium ratio 0.19), so there is a split: institutional blocks distributing while options desks stay long vol into the election. That kind of conflict typically signals hedging, not conviction.
Also a sensible explanation, but again, seems less likely
In short, the ACA basket is repricing from a "full sweep, full expansion" multiple toward a "House only" multiple.
Sweep odds have not moved, but the marginal value of the Senate seat is being discounted.
The divergence is the market saying that a House win is in the price, Senate is the variable, and the trade already had a 15% run.
https://kalshiview.com/markets/midterms-2026/
https://x.com/joemccann/status/2116597717162148069
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Momentum demolished and the index goes nowhere.
S&P 500
-0.13% (July)
+2.62% (August)
-0.45% (September)
-0.93% (October)
GSPRHIMO (Goldman Sachs Momentum Basket)
-30.19% (July)
-13.67% (August)
+26.96% (September)
-18.60% (October)
-- @GoldmanSachs
https://x.com/joemccann/status/2116612752177594746
S&P 500
-0.13% (July)
+2.62% (August)
-0.45% (September)
-0.93% (October)
GSPRHIMO (Goldman Sachs Momentum Basket)
-30.19% (July)
-13.67% (August)
+26.96% (September)
-18.60% (October)
-- @GoldmanSachs
https://x.com/joemccann/status/2116612752177594746
$GOOGL's one day drop was the 2nd largest decline in market cap in a single day in history
https://x.com/joemccann/status/2116616195982213134
https://x.com/joemccann/status/2116616195982213134