Top Goldman Sachs trader, Rich Privorotsky, introduced the world to yet another new \'protective\' term today - the Executive Put:
On the facts of today it’s fundamentally bearish.
That said, the language on China appears to be softening.
Rhetoric on Fed is softening.
Doesn’t mean we go back to business as usual but the parade of CEOs through the White House explaining the micro economic implications of policy to their respective business seems to be yielding exceptions/delays (autos?).
The true off ramp is to make policy more gradual and incremental over long term.
Technicals are supportive with CTA demand in the background.
If the lesson of the last couple of weeks is the reemergence of some form of executive put then the left tail should be severely degraded.
Skew/vol compression on its own can lead to continued re-leveraging and particularly from vol control whose exposure has moved to near decade lows.
There is no strong fundamental bull case to be made here and I\'m firmly of the view this remains a traders markets but just calming/stability/removal of left tail on its own can continue to support equities form these levels (still think that exposure is best held overseas).