SignalPlus Macro Analysis (20240308): The market currently predicts that the probability of interest rate cuts starting in June is over 75%.

Yesterdays European Central Bank meeting kept interest rates unchanged, but at the same time significantly lowered its growth and inflation forecasts. It is expected that price trends will fall back to the policy target in 2025.Although Governor Lagarde made little comment on the pace of interest rate cuts, he still revealed some dovish information during the question and answer session:

Dovish comments at the press conference included:

• Labor demand is slowing

• There are signs that wage growth is starting to slow

• Inflation is expected to continue its downward trend in the coming months

• Long-term inflation expectations are broadly stable at around 2%.

• “Risks to economic growth are still tilted to the downside.”

• We are making progress in the fight against inflation

• We are more confident about achieving our goals, but it is still not enough, We will not wait until 2% to make a decision

The European Central Bank seems to have laid the groundwork for the March meeting to hold steady, and the market currently predicts that the possibility of starting to cut interest rates in June is more than 75%. The European Central Bank rarely cuts interest rates before the Fed. Will the two central banks ease simultaneously in early summer as a gift to the market? Looks like a great chance!

Global bond yields fell on the back of a dovish European Central Bank meeting, and risk assets did not hesitate to rise again. At the same time, both Fed Powell and Mester also said that as long as inflation continues the current downward trend, an interest rate cut this year will be appropriate .

In the stock market, the European Stoxx 600 index hit a record high thanks to the boost in the share prices of the European Central Bank and chip equipment manufacturer ASML. In the United States, the Nasdaq index and the SPX index also rose by 1.5% and 1% respectively. The Nvidia GTC conference to be held from the 18th to the 21st of this month may be the next event affecting AI and technology stocks. However, the market value of this chip giant It seems to be only a matter of time before it catches up with Apple.

In terms of stock-picking “alpha,” the SPX bellwether’s implied correlation has dropped to near all-time lows, reflecting that the index’s rise depends on a very small number (or just one?) of stocks, namely Live or Die with AI ? The market doesnt leave us with many choices.

With risk sentiment running high, Wall Street is once again bringing past products to the table, allowing retail investors to lose money in a very compliant casino. The SVYX ETF was one of the most popular income ETFs in the past, allowing investors to profit by shorting volatility (VIX futures) through ETF products, a strategy that delivered a 250% return in 2017 (and barely any retracements), but as volatility suddenly spiked in early 2018 (volmageddon), the strategy suffered a -95% loss in 48 hours.

The market is fearless. After a few years of rest, Wall Street has once again launched a similar ETF structure, but this time it uses 0 DTE covered call options (that is, options that expire on the day) as an income strategy. There is a high chance that it can be extended to directly short 0 DTE Volatility or form of leverage.

Speaking of options, the U.S. SEC (unsurprisingly) has delayed approval of BTC spot ETF options submitted by the likes of Nasdaq and CBOE, with the agency’s final deadline for approving or rejecting these cryptocurrency ETF options being April 24. We believe it’s only a matter of time before options join the cryptocurrency market, and the SignalPlus platform is ready to serve all your cryptocurrency options needs, helping you get a head start in the market!

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