Month: January 2022

Submitted by Newsquawk

Summary

• Today’s FOMC is expected to be a signalling event for a March rate lift-off as the Fed’s asset purchases near a conclusion, while near-term Omicron headwinds are not expected to dissuade the Fed.
• Hawkish risks of an immediate conclusion to asset purchases are a possibility, but seem unlikely.
• Powell’s guidance on rate hikes will be used for clues around the amount of tightening expected in 2022 and beyond with markets currently pricing four 25bp hikes this year, and only two more in 2023.
• Speculation around an initial  50bps hike is largely not expected to become a reality, although remains a tail risk likely dependent on inflation getting alarmingly further away from target.
• Guidance around the balance sheet runoff will also be eyed, with the rundown expected to begin around the middle of the year and at a faster pace than before.

2022 HIKE PATH: Bloomberg’s economist survey saw a majority of the 45 respondents predict this meeting to be used to telegraph a 25bp hike in March, although two look for a surprise 50bp hike (the largest since 2000); economists were evenly split between three and four hikes in total for 2022. Markets themselves have already priced in both a March hike and four hikes altogether this year. There have also been some eye-catching suggestions for as much as six or seven hikes this year from market participants, but really what that depends on is the inflation path. If price pressures continue to roar and long-term expectations become unanchored, the Fed will be forced to be more aggressive and making a high single digit number of hikes more likely; Fed’s Waller has said if inflation remains above 3% the Fed will have to rethink its strategy. However, the most likely outcome at this stage is three/four hikes, that being based on near-term full employment being met and an expectation that inflation comes further back down towards target heading through the year.

TERMINAL RATE: The December SEPs has the Fed’s median long run rate at 2.5% (also the highest that rates got to in the prior hiking cycle), with the range between 2.0-3.0%. However, the Eurodollar curve (proxy for forward Fed Funds) has flattened out at the end of 2023/early 2024 in the implied 1.50-1.75% target range region, which would mark six 25bp hikes over the next two years. The market has not fully priced the Fed’s forecast terminal rate, and it will be interesting to see how the Fed is viewing the divergence. JPMorgan’s strats opine, “we believe markets remain skeptical in the ability of central banks to fully normalize given risk of inflation pressure adjusting relatively quickly or economy responding negatively to the first few hikes”. But Morgan Stanley believes the market could adjust to the Fed’s target once/if it begins running down its balance sheet at a fast enough pace, as that would have a more notable curve steepening effect. Either way, the combination of the hiking path and the terminal rate are evolving key questions for markets now that lift-off has been established.

BALANCE SHEET: There remains a wild card of the Fed abruptly ending its asset purchases at the January meeting ahead of the existing March plan, although that seems not much more than speculation given Fed officials have not taken the opportunity to express an interest. We are looking to Powell’s presser for any guidance around balance sheet reduction. 29% of Bloomberg’s economists surveyed expect the runoff to occur between April and June and 40% from July to September. The median estimate looked for monthly reductions (caps) between USD 40-60bln, bringing the balance sheet down to USD 8.5tln by year-end from 8.8tln at present. Powell said at his renomination hearing that it will be discussed at the January meeting, but noted the balance sheet decision tends to take two to four meetings to work through. The Fed Chair also echoed the Dec FOMC minutes in saying the Fed would reduce its holdings sooner and faster than last time.

DATA: The January meeting is likely to echo recent commentary regarding expectations for poor activity data to start the year given the surge of the Omicron variant, but a return to stronger growth as that fades, and thus, not a reason to walk back on the removal of accommodation. Financial conditions remain very accommodative, that’s despite the latest turbulence in equity markets and more aggressive hike pricing, with the current real Fed Funds rate (deflated by core CPI) down beneath -5%. So as much as inflation remains hot, and to the extent that the Fed believes demand is accentuating the supply-driven pressures, there remains bandwidth for a significant amount of policy removal (hikes and balance sheet reduction) to bring financial conditions into more restrictive territory to reduce demand pressures.

While traders are mostly focused on what the Fed will say about the coming rate liftoff, with markets today expecting just over 4 rate hikes by the end of 2022…

… a much more relevant question is what the Fed’s balance sheet runoff – i.e., Quantitative Tightening (QT) – will look like both strategically and tactically.

As a reminder, two weeks ago Deutsche Bank predicted some $3 trillion in balance sheet normalization as the Fed undoes the emergency actions from the covid crisis which doubled the Fed’s asset holdings from 20% to almost 40% of GDP.

Meanwhile, in its forecast of QT, Goldman forecast peak balance sheet runoff caps of $60bn per month for Treasury securities and $40bn per month for mortgage-backed securities, or $100bn total, with at most a brief ramp-up period. This pace of runoff would shrink the balance sheet from $8.8tn today to $6.1-6.6tn over 2-2.5 years, or a whopping $2.5 trillion in 2 years (by which point the US will be in a deep recession so the entire forecast falls apart but whatever).

And while most other Wall Street banks vary in their forecasts modestly, they all agree on one thing: trillions in liquidity is about to be drained from the market.

But how? And which parts of the financial system will the Fed suck the most liquidity from?

That, as Bloomberg writes today, matters because it could determine how disruptive the so-called quantitative tightening process is to financial markets as well as how long it might go on for. If and when the Fed starts to shrink its balance sheet, whether by simply not replacing maturing securities  or outright asset sales, there will be an increase in the amount of Treasuries in search of a home. Most of these are likely to be hoovered up by banks or money-market funds, which in turn will need to reduce the amount of cash they have parked in different ways at the Fed in order to purchase them.

If the buyers are mainly the banks, that will result in a significant drawdown in the amount of reserves that lenders hold with the U.S. monetary authority (as a reminder, it was the “plunge” in bank reserves in 2019 that sparked the repo crisis and launched “NOT QE” days later). Conversely, if it’s money funds, then there will likely be a drop in how much is stashed away with the Fed’s overnight repo facility. Most likely it will likely be a combination of the two, but whether one or the other takes the brunt will be important and is currently being debated by analysts.

And, as Bloomberg notes, it’s also a question that Fed officials, who are meeting this week to decide on their next moves, may struggle to answer, as it depends on how various market players react to the central bank’s policy steps. A big shift in bank reserves is the more problematic outcome and could curtail how long QT lasts — and how small the Fed balance sheet ultimately gets. If the biggest impact is on the banks, then there is a risk of repeating some of the reserve issues that took place in late 2019 following the last round of quantitative tightening, according to Priya Misra, global head of rates strategy at TD Securities in New York.

As noted above, back then, a drop in reserves below the system’s comfortable level helped fuel a disruptive spike in rates on repurchase agreements, a keystone of short-term funding markets. The Federal Reserve has since then implemented additional tools to help reduce potential problems in this area, but a decline in reserves could nevertheless create risks and forestall how much the central bank chooses to shrink its balance sheet.

On the other hand, if bank deposits decline faster than expected, there could also be a mismatch in lenders’ securities portfolios, which might spark more widespread de-risking and result in institutions selling securities at a time when the Fed is also stepping away from the markets.   That said, a reduction in the Fed;s reverse repo facility, which currently stands near $1.6 trillion and is full of largely inert liquidity, would likely be more benign, and the unwinding process could continue for a while, according to Misra. 

Below, courtesy of Bloomberg, are the views of several prominent rates strategists opining on how the Fed’s balance sheet will shrink:

• Bank of America strategist Mark Cabana, a former NY Fed staffer, believes that deposits will lead the drop, citing evidence from what happened after the Treasury Department rebuilt its cash balance in the wake of the most recent federal debt-ceiling imbroglio. While the Treasury amped up bill issuance following the latest Congressional fix, usage of the RRP also increased, climbing to new record highs. Cabana also suggested that when the Fed starts raising rates, banks may be slower to reprice their deposits with so much excess cash, while money-market yields are expected to more rapidly reflect central bank hikes. That said, he believes that a larger Fed QT reserve drain won’t meaningfully drive signs of reserve scarcity until the reduction approaches $2 trillion or $3 trillion, or roughly in line with the forecasts from Goldman and DB.
• Credit Suisse strategist Zoltan Pozsar, also a former NY Fed staffer and repo market stalwart, has also explored the potential ways that QT could play out, and concluded that drawdowns of reserves and the RRP are both equally likely. He also underscored how different this upcoming round of QT might be from the last and said that, unlike last time, the Fed could choose to go beyond simply allowing bonds to roll off to engage in actual outright asset sales (his full note is available to professional subs).
• Citigroup strategist Jason Williams, on the other hand, reckons RRP usage will drop faster, referring to the recent disconnect between the Treasury General Account and reverse repo facility as an “isolated incident.” He also said, however, that if reserves were to fall materially this year and next, there’s an increasing risk that the Fed would have to slow its balance sheet unwind.
• BNP Paribas strategists led by Shahid Ladha wrote in a note Tuesday that the RRP facility offers a large buffer against liquidity tightening, and we agree. They do not expect reserves scarcity in 2022 or 2023 and that QT should end before scarcity hits. The strategists also noted that the standing repo facility can be modified and other liquidity easing tools enacted as needed.

Of the above, we agree with the last: with $1.6 trillion in inert liquidity currently parked at the RRP, the Fed can withdraw almost $2 trillion from the facility without anyone in the market noticing.

By Michael Every of Rabobank

Let’s start with the Fed, and some thoughts that will needle. Stocks slumped in Asia, Europe, and the US session Tuesday – then the US magically rallied again, but not into the green. “The first rule of Fed Club is you don’t talk about Fed Club”; but did someone forget to sell enough bullish puts? Some may not like the idea that central banks are playing with markets, but as Groucho Marx said, “These are my principles. If you don’t like them I have others.” For example, IF there is a Fed Club, why can’t they raise rates AND pump markets? If secretly selling puts holds up stocks, and you can do that AND raise Fed Funds to pretend you are serious about supply-side inflation you can’t control,…then why not?

Similarly, why can’t you raise rates AND do QE? Yes, ‘they run in opposite directions on yields’. But if you want to finance a huge budget deficit while cooling the heels of the rest of the economy, buy freshly issued government bonds, with higher coupons flowing back to the treasury to boot, and raise rates.

It’s what one sees in a war economy.

On which, we published a note called “The Ukraine Metacrisis” yesterday underlining that:

• Markets are significantly mispricing the odds of an impactful war happening over Ukraine, with major volatility implied for energy, grains, fertilizer, metals, rates, and FX.
• The market impact of US sanctions could be extraordinary; at worst, they could bifurcate the globe into complying and non-complying countries – yet a failure to use sanctions would show US powerlessness to prevent Russia moving on Ukraine; and
• This is a metacrisis that will see an acceleration towards a different globalization in which the US can still thrive, but with huge challenges for many others, including the EU.

Recent developments underline and amplify that message.

In terms of war: more troops and equipment are still arriving from all over east, and west; the US is flagging it may send more than 8,500 soldiers to the EU; more NATO/Quad countries are asking nationals in Ukraine to leave or making lists of them (as the US flags it won’t help you if anything happens); and China’s Global Times has an exclusive – “Dirty trick again! US plots to authorize departure of staff from embassies in China over epidemic ahead of Beijing Olympics”. Over Covid, eh?

In terms of economics and finance: President Biden has stated a Russian invasion would “change the world”; a Russian senator has warned that if Russia is cut off from SWIFT, Europe won’t receive Russian oil, gas, or metals – but that it can work around a SWIFT ban anyway, and expects other countries to join it in that effort; and the White House has stressed that it will redirect global gas supplies from elsewhere to Europe and use Huawei-style global export controls as a primary economic sanctions tool against Russia, cutting it off from US technology, computing, aviation, etc.  

In short, the fattening tail risks are of a tipping point towards a bifurcated global economy – no matter how illogical some of the projected market pricing then is (i.e., supply gluts in some places, shortages in others). It still seems unlikely the present phase of this metacrisis will get us to that endpoint: but it is a large step in that direction, and if it extends to Asia the probabilities will shift.

The same bifurcation of economic ecosystems is already evident in musician Neil Young (who is old enough that Lynyrd Skynyrd asked him musical questions) has demanded his music is removed from Spotify because it also hosts Joe Rogan. As Rolling Stone magazine, which used to lionise 70’s ‘rawk’n’rewl’ excesses but is now deeply political and politically-correct, notes: “Young’s letter was addressed to his manager and a Warner executive. At press time, Spotify hadn’t responded to a request from Rolling Stone asking if they planned to remove Young’s music. It’s still available, but it might be smart to listen to Zuma and Rust Never Sleeps while you still can. They could disappear at any moment.“ And so could lots of other things – because once we start down the road of responding to feeling needled by imposing a “me or them” binary, damage is done. When do they come for Eric Clapton, one asks, as we “Keep on rockin’ in the ‘free’ world.”?

Meanwhile, the IMF (“Keep on rockin’ in the ‘free markets’ world”) just released its latest outlook, which stresses the world economy rests on one dyad: the Fed and Chinese housing. The former is looking tragicomically wrong unless they ‘raise and pump’, say markets; the latter sees Bloomberg report local government vehicles are buying land plots over the heads of struggling developers at above market valuation when that land is owned by the local government – borrowing money to buy assets from themselves to crack down on private developers and yet not the overall economy. Why are we so close to a global bifurcation when we actually have so much in common?!

Of course, this overlooks the inherent risks to markets of the Fed tightening and China loosening (wild swings); which would also run true for the Fed loosening and China tightening (wild swings); and for the Fed and China both tightening (wild crash); or, note well, of the Fed and China both loosening (wild inflation – and even Singapore’s MAS tightened unscheduled yesterday for only the third time in 20 years). Think about that and one starts to see the *logical* appeal of much deeper bifurcation: or of central global planning. But I have probably needled too much today already.

Except I also have to add that we will now get to see more details of the police interrogation of British PM BYO; a looming, critical report into his Conservative ‘Party’; and what will be No. 10 attempts to spin all this as ‘Fifty Shades of Gray’ rather than “I’ll get my coat”. Moreover, in Italy there is still no white smoke as they try to elect a new president, with potentially major implications for markets. Throw in a new, clashing German leadership and an election in France in months, along with deeply unpopular US leadership, and it’s hardly the perfect backdrop for the kind of ‘thread the needle’ geopolitical decisions that will have to be made to avoid causing too much damage.

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

baller (ˈbɔːlə)
n
slang someone, usually a man, who lives in an extravagant and materialistic manner, tending to be something of a socialite

My wife and I got sucked into watching the Dwayne Johnson series Ballers on HBOMax over the weekend. Aside from being hilarious, it struck me how much of a microcosm of our world this seemingly alien world of twentysomething millionaires and rapacious billionaires really is.

When you drill into the details, the world of Ballers really isn’t that far from ours.

For those that don’t know the setup, broke former NFL bad boy Johnson is trying to turn a new leaf “monetizing his friendships” to help NFL players hold onto all that money they are making at an age when they have zero ability to contemplate their own mortality.

One storyline from the first season is especially relevant. A kid with a good heart, Vernon, banking on his next big contract, is out of money having spent it all on being ‘loyal’ to his friends and family, throwing parties, inviting 40 people to a business lunch, etc.

His loyalty is so out of control he has to borrow money from Johnson (who’s broke mind you) to bridge him until the contract comes through. Of course there are complications and hilarity ensues. The typical Hollywood fantasy fare. Nothing groundbreaking, eventually things work out (mostly).

Johnson has to endure a lot to get Vernon to see the truth, put limits on the situation and get Vernon to properly save his money. The pitch is the right one: put it to work and pay everyone for the long term, not just for tomorrow.

Sound familiar?

No, because that’s exactly what we don’t preach in this world of central bank issued easy money. This shouldn’t be a central conflict, it should be a given.

Because this background for this story is playing out at every level of our society, all a consequence of too much money flowing around finding ways to corrupt everything it touches.

Ballers is all about the corruption money brings to those few thousand people in the NFL and their organizations because of the millions of people who spend too much money on a passing fancy, entertainment.

The NFL, like all pro sports, is nothing but a money funnel with a Federal Reserve sized Hoover attached to it. It’s the ultimate corruption of e pluribus unum. From many to one.

Take a little bit from all of us, time and again to help us relieve the stress of the shitty world they’ve built. Give some of it to the rubes who play the game, who blow it on hookers, high end cars, and drugs, while the lion’s share gets sucked right back up into the same oligarch class that created it in the first place.

But it’s no different than you or me, buying shit we don’t need on credit, self-medicating with pro sports, alcohol, video games, day-trading cryptos on Robinhood, yelling at racists on Twitter or my personal favorite, a ridiculous board game collection.

We’re all ballers to one degree or another, spending easy money on distractions rather than facing the reality that the most unsustainable thing about our society is the money which makes it all happen.

And before anyone revokes my libertarian creds, I pass no judgment on this. It’s all voluntary exchange, mostly. At the very least it has the appearance of being voluntary.

That said, here we are waiting to hear from the philosopher kings at the FOMC and the markets are melting down around our ears.

The tantrums that have begun are no different than those pitched by Vernon’s friends over having the barest amount of fiscal discipline imposed on them.

Everywhere I look everyone is saying some version of the same thing, “Hey man, Don’t take the punch bowl away.” They’d say it a lot more colorfully on Ballers, but being white I’m not allowed to use that language.

From Chairman Xi leading off this year’s virtual Davos with a plea not to hike rates to the howls from the Financial press including some Austrians, pleading that he can’t possibly raise rates because it would cause a market meltdown and blow out the Federal budget, Powell is now off everyone’s invite list to party on the yacht.

I get the feeling that some folks would rather be right about their hyperinflation theories rather than actually figuring out what’s really going on.

But the reality is that something has changed and the markets are finally coming to that conclusion.

For months I’ve been arguing that Jerome Powell ignited a firestorm when he raised the Reverse Repo Rate by 0.05%, pulling trillions in base liquidity from overseas markets while handing U.S. banks all the collateral they needed.

It’s created a political firestorm on Capitol Hill who tried to oust him from the Chair and failed. They got three of his fellow hawks, but not the king. He was able to run out the political clock on both Build Back Better and opposition to his reappointment.

But it doesn’t happen if Powell doesn’t have the backing of the people behind him.

And who backs Powell? The New York Fed, that’s who.

That leads you to the conclusion that all is not hunky dory in Oligarchville. That, shock of shocks, narcissists only like each other when they are sucking our lives and souls away. But when they start taking from each other, that’s when the knives come out.

It seems incredible to me that many people won’t consider this idea, that these people don’t like each other, and aren’t willing to hand over their business and their wealth without a fight?

Because that’s what’s implied when everyone jumps up and down and screams at Powell to “Save them!” from deflationary forces.

And he looks down from the Marriner-Eccles building and says, “No.”

It’s time to put it all in order. With ‘Build Back Better’ dead there is no more insane new spending to monetize. There is no reason for the Fed to keep up QE or rates at the zero-bound. Savings is down, money is circulating again. Inflation isn’t transitory.

People want to work. COVID-9/11 is behind us. The anger over losing two years is just getting started but that’s a different wrinkle to this story for another day.

If the Fed isn’t intimidated by the recent weakness in stocks, in truth a healthy correction after a massive run, and raises rates on Wednesday we have our answer as to what Powell and friends are willing to do. Whatever your opinion of it is, it will not be a ‘policy error’ but a clear-eyed understanding that it’s time to rein it in, change the direction of the big boat, and begin living within our means.

If he doesn’t it won’t be the opposite signal. It will simply mean that they’ll take another couple of months to nail down the particulars, namely getting proper control over the O’Biden administration, and begin hiking on schedule per the current expectations in the Eurodollar futures market.

Has anyone looked at the ratings for pro sports? Old media? Hollywood box office receipts? All down. Netflix is getting killed because it’s growth cannot sustain its valuation, much like a lot of the NASDAQ. This is something that should have happened two or three years ago, just like Tesla.

But didn’t because of COVID-19 and the massive wealth transfer the stimulus provided to them during the absence of sanity oceans of money always produces.

That said, these are all unsustainable Ponzi scheme masquerading as viable industries based on cheap money and malinvestment in politically-motivated production.

Now I’m not suggesting for a second that Powell is some kind of saint or anything. He’s no savior sent down to redeem us sinful ballers from our excesses. No sir. He represents the very people that helped create this mess.

But at the same time, they want to remain where they are. They are not willing to hand their power and their money over to another group within the cartel.

They didn’t get where they were putting their money on the table to bail out anyone else.

And they won’t this time.

All I’m doing here is assessing what everyone’s real motivations are and who they answer to. To quote another, far more classic television show, “The universe is run by the interweaving of three elements: Energy, matter, and enlightened self-interest.”

And, to me, where’s the enlightened self-interest angle for the NY Boys, represented by Powell, for turning over their business to a bunch of European and Chinese commies?

When you step back and really look at what’s happening, they have already told Europe, China and all those emerging markets currently whining, the post-COVID world you created is your mess now.

This is why I’m convinced the Fed will hike and hike aggressively this year, maybe starting on Wednesday.

There is no deal possible between Wall St., City of London and Europe. In that game, Europe loses. If China wants to play hardball and default on foreign-held property debt, fine. Have fun attracting any capital in the future.

All the fiscal projections of the U.S.’s insolvency are great (and accurate) but I hate to burst anyone’s bubble, literally, but you CAN taper a Ponzi scheme if you’re 1) the biggest Ponzi and 2) control the flow of funds into them.

And if you don’t think Powell and his backers at the NY Fed aren’t willing to sacrifice a few thousand points on the Dow or even a few points of GDP, to restructure the US’s finances for the long term while the Fed hands them all the collateral and liquidity they need to keep playing while everyone else craps out, I do believe you are terminally naïve.

It’s what they call playing hard ball.

There are two ways to reset the monetary system. The first option is printer go brrr and default by switching out the old currency for a new one. The other is collapse the old system by returning risk and rebuilding it after the malinvestment is gone.

Paul Volcker chose the latter to finally establish the Dollar Reserve Standard as the only game in town. Nixon set the process in motion, Volcker closed the deal. It’s what established today’s game.

We are at an inflection point in history, both monetary and geopolitical.

I discussed this in my latest podcast with Alex Krainer and believe the rules of the game have fundamentally changed. The next game will look a lot different than the baller one we’ve been playing.

Those who won’t adjust to that or admit it should be very afraid of what Jerome Powell does next.

*  *  *

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Is the worst behind us?

According to strategists from Goldman Sachs, Citi, JPMorgan, and BofA (selectively), it is time to buy-the-f**king-dip.

The market is experiencing a correction within an ongoing bull market cycle according to Goldman’s Peter Oppenheimer

“Any further significant weakness at the index level should be seen as a buying opportunity, in our view,”

“The key thing for equities from here is how much any of this shift upward in interest rate expectations and indeed in financial conditions will hit growth,” Goldman’s Oppenheimer said in an interview with Bloomberg Television.

“That’s going to be key to determine where equity markets stabilize.”

Specifically, Goldman notes that their Risk Appetite Indicator (GSRAII) has fallen back, suggesting we are getting closer to levels that have typically been a good entry point for longer-term investors.

Goldman warns that the biggest risk is that high valuations will continue to unwind should real rates rise much further, but they note the crucial determinant is what is happening to growth. Historically, a Fed tightening cycle that is accompanied by accelerating growth tends to be associated with strong returns and relatively low volatility.

However, Goldman argues, this does make it more likely we are in a cycle in which aggregate returns are much lower than in past ‘secular’ bull markets in history (in particular, 1945-1968, 1982-2000 and 2009-2020).

They conclude by noting that while interest rates in the US are set to rise, they are likely to rise to relatively low levels.

While our economists forecast that terminal rates will peak at around 2.75% in the US (still around 100bp higher than market pricing), this would still be very low relative to history and unlikely to generate a recession.

In the absence of recessionary risks, equities are likely to make progress this year.

Any further significant weakness at the index level should be seen as a buying opportunity, in our view, albeit with moderate upside through the year as a whole.

As for the rotation, Goldman says Value has further to run as tightening monetary policy and rising inflation should support a continued re-rating of pro-cyclical Value sectors.

So, in summary, ignore the historical precedent that higher rates will hurt growth – and assuming we don’t get pushed into recession by a Fed desperately trying to fight its nemesis, Stagflation – you should just buy the dip here.

Of course, Oppenheimer is merely the friendly client-focused face of Goldman’s machine, echoing Goldman’s-own flow trader’s views of the world as we outlined over the weekend.

Goldman are not alone in calling the bottom as Citi strategists including Robert Buckland, told clients that the “rapid de-rating of growth stocks may slow as real yields stabilize,” adding that their bear market checklist – which screens for various fundamental and market factors – is suggesting to buy the dip.

JPMorgan‘s Chief Equity Macro Strategist, Dubravko Lakos-Bujas, also sees this week as a strong buy-the-dip opportunity.

“We see this market sell-off as overdone, at least in the short-term, and see abullish setup (especially for small caps) going into today’s FOMC and month-end rebalance.”

Strategists at BofA wrote on Tuesday that investors should “buy some dips” in the U.S., recommending stocks with strong fundamentals and less vulnerability to macroeconomic factors.

Meanwhile, those at Wells Fargo were among the first to recommend buying, writing in a note on Tuesday that it’s “time to put new money to work.”

But not everyone’s an enthusiastic buyer here as Bloomberg notes that Barclays strategists led by Emmanuel Cau wrote in a note today that mutual funds and retail investors remain “very overweight” equities, so more de-risking is possible if fundamentals worsen.

In a midday headline that rocked Washington, NBC News reports that Supreme Court Justice Stephen Breyer, one of the minority of liberal justices on the Court, is planning to retire before the midterms to give President Biden a chance to nominate and install a replacement.

Now it’s time for Dems to hypocritically argue that it’s 100% OK to nominate and confirm a SCOTUS justice before an election that could result in a change of which party controls Congress.