March Bottoms & Fear Tops

Just as you see equity indices ending the US session strongly higher, the Pentagon comes up with an assessment that Putin can be expected to deploy his nukes against the West if the war drags on. I think both Asia and Europe will extend the rallies of the last 12 hrs. More on this later. But let's recap the post-FOMC developments: US dollar fell, gold rose alongside equities. Who cares if the Fed dot plot signaled 7 rate hikes? As long as the dot plot revised its inflation forecasts to 4.1%-4.7%, sufficiently larger than the year-end Fed Funds rate target of 1.9%, then gold and silver bulls should be happy. The 7 rate hikes was what we anticipated here in our pre-FOMC forecast. The snapshots below show how did we approached the post-Fed trades in gold, silver, SPX and USDJPY. Regarding the yen, any tacit approval from Kuroda on the current yen levels, should prop the pair closer to 119.50s.

We correctly predicted that gold would show its typical post-FOMC announcement intraday declines before staging a robust advance (like it did on Nov 3rd and Dec 15th). We also remained bullish NZDUSD, while re-affirming longs in SPX. We kept USDJPY longs as a partial hedge. 

Back to the indices. Earlier today I tweeted that 2009 generational low in equities occurred on March 6th and the Covid-crisis low took part on 23rd March 2020. This year's Ukraine-Russia low is 8th March 2022. Sounds similar? Yes, but even if markets rally 7% from here, I still expect fresh pullback near (not necessarily to) the March lows. Do not be surprised if US500 reaches 4460s before end of week.