“When you have a sustained period of time where you have that low volatility, you bring those systematic flows back into the market.” – 01:57
Michael Reinking, Senior Market Strategist at the NYSE, joins Remy Blaire, to discuss the current state of the U.S. stock market, focusing on the recent volatility and the implications for major banks as earnings season kicks off.
Michael explains the recent resurgence in market volatility, attributing it to escalating tensions with China regarding rare earth export controls. He notes that after a prolonged period of low volatility, the market is experiencing aftershocks from this volatility shock. Remy and Michael analyze the S&P 500’s performance, particularly its near proximity to key moving averages, which indicates the market’s susceptibility to further fluctuations.
As the conversation shifts to earnings season, Remy emphasizes the strong year-to-date performance of major banks, which have outperformed the S&P 500. Michael shares insights on the mixed responses to the banks’ earnings reports, highlighting the robust capital markets and investment banking activity. He also discusses the importance of provisioning practices in light of recent bankruptcies in the private sector, noting that JP Morgan has taken reserves related to these events.
With the ongoing government shutdown affecting the release of key economic data, Remy and Michael discuss the significance of the upcoming Consumer Price Index (CPI) figure expected before the end of the month. They also look ahead to Fed Chair Powell’s remarks, which could provide clarity on rate cut expectations in the current economic environment.