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The Market Ear with the latest equity internals. The margin crush has started but so far it has been offset by multiple expansions. It remains my view that earnings have a much worse downside ahead as inflation falls amid the reverse bullwhip effect. These are Q4 earnings when the US was still growing at 3%!
Cost of downside protection via puts at 2-year low
The absolute cost of a 2 month 5% put in SPX is trading at one of the lowest level in ~2 years. Below the level of the top of the “summer squeeze of 2022” last August.
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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