Powell Didn’t Give the Market a Green Light

But he did remove the red one...

We got the 25bp cut, delivered with a tight jaw and a clear signal that the time for “risk management cuts is past”. Jay tried to sound hawkish, sure, but the market was already positioned for a “hawkish cut”. And in all honesty, it all sounded very dovish to me. The biggest signal came from Powell himself, casually dropping that recent job growth is overstated by 60k per month. Hence, the dollar’s slide below 98.5 this morning confirms that.

The market should have ripped. The downside risk was lifted. But then, Oracle…

Instead of melting higher, ES1 and NQ1 got hit, with Oracle leading the tech complex into a messy pre-market. The stock is getting smoked because the print was poor. They missed on revenue, guided soft, and increased the capex guide, which has in turn moved the 5y CDS today +17bps to 142bps - I still think that the CDS noise is overblown, but hey, so far I have been wrong. The capex number brings the FCF and the credit side of the AI trade straight into question.

So, here we sit: The Fed just provided a floor, and a single tech name immediately broke the AI trade for now. Now every discretionary manager who was forced to buy the rally yesterday is sweating, wondering if this is the start of a proper year-end clean-up.

ES1 got flushed down to 6817.50, and NQ1 traded 25383 overnight.

I bought the dip this morning at 6833.00 because the price action was a bit overdone off the back of ORCL with index down over 1% at the lows.