MARKET WRAP

Last week officially marked a correction. With today’s close it may be time to declare a consolidation. SPX gave up yesterday’s gains to close near 5615, exactly where the market closed on last Monday’s big drawdown. The market has been volatile since, but keeps returning to this spot. For the day, SPX -1.2, QQQ - 1.7% and IWM -0.9%.

Yields were (barely) lower, oil was down -1%. Gold (+1.1%) continued its run higher. The VIX ticked higher towards 22. The Fateful 8 stocks were once again a drag on the Nasdaq. More on Fed Day expectations , and what could happen into Friday at the bottom of this email.

• On today’s RiskReversal Pod, Dan is joined by Marko Kolanovic with insights into the technical dynamics of recent sell-offs, potential recession indicators.

• MRKT Call has new trades, updates on old trades and more.

MRKT MATRIX: March 18, 2025

Today’s Top Stories:

• Dow slides 250 points, S&P 500 fights to stay out of correction territory (CNBC)

• JPMorgan Stock Traders Reel In Windfall as Trump Whipsaws Market (Bloomberg)

• Powell Contends With Double Threat of Economic Chaos and Political Hostility (WSJ)

• Bessent Sees No Reason for Recession, Economic Data ‘Healthy’ (Bloomberg)

• Nvidia announces Blackwell Ultra and Vera Rubin AI chips (CNBC)

• Nvidia, GM announce deal for AI, factories and next-gen vehicles (CNBC)

• Google Agrees to Buy Cloud Security Firm Wiz for $32 Billion (Bloomberg)

• Tesla Stock Extends Selloff; ‘Politicized’ Brand Faces Backlash (WSJ)

• Bullish Michael Saylor says ‘bitcoin will rip forward with a vengeance’ when risk-on returns to market (CNBC)

Today’s MRKT Call is Presented by Robinhood

Stock Market Sell-Off, Fed Preview, and Meta Chart's Moment of Truth

• Market update with today’s gap lower in SPX

• US10Y and TLT into the FOMC meeting.

• A look at two potential options trades in TLT.

• A recap of a recent V options trade.

• A preview of NVDA’s conference and the Jensen Huang keynote.

• A check-in on the Fateful 8’s struggles of late into a closer look at Chart of the Day META.

• Your questions beginning with GOOGL’s purchase of Wiz, then GLD and GDX.

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s RiskReversal Podcast is Presented by Current and RBC

Marko Kolanovic: Might is Right & The New Economic World Order

Dan Nathan and Marko Kolanovic, Former Chief Market Strategist at JP Morgan, discuss recent market trends on the Risk Reversal Podcast. They explore the state of the S&P and its rapid declines, the geopolitical and policy influences affecting the market, and the implications of US tariffs and trade conflicts. Marko provides insights into the technical dynamics of recent sell-offs, potential recession indicators, and the impact of global fiscal policies. The conversation also touches on corporate CapEx, interest rates, and the outlook for major sectors like tech equities and consumer spending. Marko emphasizes the heightened uncertainty in the current economic environment and the challenges in forecasting market movements.

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FOMC: What to Watch for Tomorrow

The FOMC meeting tomorrow is widely expected to hold rates steady, but market reactions are likely dependent on a few key elements:

1. The Fed’s dot plot – Any shifts in rate cut expectations for 2024 and beyond (currently two cuts, market is pricing three).

2. The statement language – Clues on inflation/tariff concerns and its effect on future policy adjustments, balance sheet etc, particularly into the May 7th meeting.

3. Powell’s press conference at 2:30 PM ET – Sometimes the highest volatility event of the day, it’ls likely to be dominated by tariff questions.

The options market is pricing in about a 1% move for the day, suggesting no major fireworks are expected, but more similar to the type of day to day volatility we’ve seen the past few weeks. Any surprise—whether hawkish or dovish—could push the S&P 500 toward last week’s high of 5700 or the low of 5500, which is closer to a 1.75% move and not out of the question.

With a large options expiration coming two days later, one thing to watch for on a muted reaction would be a further collapse in implied volatility, which could have a dampening effect on market moves into Friday’s close The mechanics behind that would be an avalanche of near term protection being sold and gamma quickly building for the next few day that could essentially pin the market within this past week’s range, and quite possibly at this current level.

Expected Moves for Tomorrow:

• SPX/SPY: 1%

• QQQ: 1.3%

• IWM: 1.5%

• TLT: 0.7%
  

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