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StockMarketNews @investinq.bsky.social · 14h

JUST IN: President Trump says Hamas and Israel have signed off on the first phase of his peace plan.

StockMarketNews @investinq.bsky.social · 1d

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I broke this down in great detail in this week's newsletter.

Investinq’s Substack | Stockmarket.News | Substack

We break down the biggest moves in macro and markets every day. Clear and concise, built for readers who want to have a real understanding of markets. Click to read Investinq’s Substack, by Stockmarket.News, a Substack publication with thousands of subscribers.

www.thestockmarket.news

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StockMarketNews @investinq.bsky.social · 1d

Do I think there’s going to be a crash? No, not in the near term.

Do I think the market feels extremely weird right now? Absolutely.

This is a market driven by momentum and positioning. Don’t fight the trend, go with it. The path of least resistance is still higher, at least for now.

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StockMarketNews @investinq.bsky.social · 1d

That’s why this setup feels a bit odd.

We have record speculation, record call buying, rising volatility, and historical seasonality all colliding at once.

The market isn’t acting scared, but it’s not confident either.

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StockMarketNews @investinq.bsky.social · 1d

Looking at 100 years of data, October 26th has historically marked the Q4 low for the S&P 500, while October 27th is the low for the Nasdaq 100.

Late-October dips often act as a springboard for markets, setting up what tends to be the strongest rally period of the year.

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StockMarketNews @investinq.bsky.social · 1d

Now we enter October, the most unpredictable month of the year.

On average, October volatility runs 33% higher than in any other month.

It’s when investors get jittery, fund managers adjust positions, and corporate earnings start rolling in. Volatility tends to spike this time of year.

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StockMarketNews @investinq.bsky.social · 1d

There’s also a growing gap between realized volatility (how much the market actually moves) and implied volatility (how much traders expect it to move).

Stocks look calm, but protection is getting more expensive.

That tells you investors are uneasy, even as prices rise.

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StockMarketNews @investinq.bsky.social · 1d

Volatility is now being driven by excitement, not fear.

The VIX is rising because speculation has reached extreme levels.

People are betting on upside so aggressively that even a small shake can cause big swings.

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StockMarketNews @investinq.bsky.social · 1d

Call options increase leverage.

When investors buy them aggressively, it forces market makers to hedge by buying the underlying stocks.

That chain reaction can push prices up faster, but it also adds instability. The market starts feeding on its own momentum.

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StockMarketNews @investinq.bsky.social · 1d

Instead of hedging, traders are chasing.

Everyone’s buying call options at record levels.

Option volume is hitting new highs, with over 40 million contracts traded daily, and it’s now distorting volatility itself.

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StockMarketNews @investinq.bsky.social · 1d

The VIX is often called the “fear gauge.”

It usually rises when investors buy put options, contracts that protect against losses because they expect trouble.

When stocks rise, those fears fade, and the VIX normally falls. But this time, both are climbing together.

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StockMarketNews @investinq.bsky.social · 1d

The market just broke a rule that’s held for 35 years.

The S&P 500 rose for five straight days, up about 1%, while the VIX , the market’s fear gauge, also climbed more than a point.

Both rising together has never happened before.

(a thread)

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StockMarketNews @investinq.bsky.social · 1d

Ken Griffin summed it up perfectly here.

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StockMarketNews @investinq.bsky.social · 1d

BREAKING: Elon Musk’s xAI is reportedly closing in on a massive $20 billion capital raise and Nvidia is investing up to $2 billion of its own equity in the deal.

The Infinite Money Glitch strikes once again.

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StockMarketNews @investinq.bsky.social · 1d

If you enjoyed this, subscribe to my newsletter, It’s FREE to sign up!

Investinq’s Substack | Stockmarket.News | Substack

We break down the biggest moves in macro and markets every day. Clear and concise, built for readers who want to have a real understanding of markets. Click to read Investinq’s Substack, by Stockmarket.News, a Substack publication with thousands of subscribers.

www.thestockmarket.news

StockMarketNews @investinq.bsky.social · 1d

Markets are now running without the $2.5T Fed safety buffer, liquidity is stretched thin.

Even routine events like auctions or tax dates could spark outsized volatility.

Without a shock absorber, the system is efficient for now but we are one funding squeeze away from trouble.

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StockMarketNews @investinq.bsky.social · 1d

When SOFR trades above the Fed funds rate, it means cash is getting scarce.

Banks are paying more to borrow overnight, collateral is harder to find, and funding markets are tightening.

It’s one of the earliest signs of liquidity stress in the financial system.

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StockMarketNews @investinq.bsky.social · 1d

Also, Bank reserves just slipped below $3 trillion, the lowest since 2021.

The gap between SOFR and the Fed funds rate is now at its widest since late 2024, a clear sign of tightening liquidity.

When that spread widens, funding stress is already building beneath the surface.

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StockMarketNews @investinq.bsky.social · 1d

In 2019, the Fed let reserves fall too far and repo rates spiked above 7% overnight.

Markets froze, and the Fed had to inject emergency liquidity and halt QT.

That same plumbing risk is creeping back, only this time, there’s no spare cushion.

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StockMarketNews @investinq.bsky.social · 1d

Think of it like a bathtub.

Reserves are the water, QT is the drain, and RRP was a spare bucket on the side.

Now the bucket’s empty, so every pull of the drain lowers the water level faster.

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StockMarketNews @investinq.bsky.social · 1d

The Fed’s balance sheet has already shrunk from $9 trillion to $6.6 trillion.

Every month, Treasuries and MBS roll off without replacement.

With RRP drained, each dollar of QT now reduces bank reserve, the system’s true buffer.

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StockMarketNews @investinq.bsky.social · 1d

The system is simply running out of excess cash.

Treasury issuance, tax flows, and QT are all pulling dollars out of circulation.

Money funds no longer have trillions in idle capital to lend to the Fed overnight.

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StockMarketNews @investinq.bsky.social · 1d

Before, much of that cash flowed into Treasury bills as yields climbed.

But now, 3-month T-bills pay around 3.9%, below the Fed’s 4.25% RRP rate.

That means the exodus isn’t about yield anymore, it’s about tightening liquidity.

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StockMarketNews @investinq.bsky.social · 1d

Now that mountain of cash has disappeared.

From $2.5 trillion to $4.6 billion, it’s almost entirely drained.

Trillions have left the Fed and are being pulled into markets, bank deposits, and day-to-day funding needs across the system.

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StockMarketNews @investinq.bsky.social · 1d

Between 2021 and 2023, this facility ballooned to over $2.5 trillion per day.

Pandemic stimulus flooded the financial system, and banks were drowning in deposits.

Money market funds had nowhere safe to park their cash, so they parked it with the Fed.

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