- Sentiment remains overly bearish in the face of short and intermediate tops in yields, crude, inflation and the dollar.
- The bullish divergence that has sent risk higher over the past month will be further bolstered by the receding headwinds mentioned above.
- Biden essentially buried himself during last week’s presidential debate. With odds of a Trump presidency now at 62%, market participants will want to reposition for greater risk.
- Only a risk-off liquidity event could derail the ongoing summer rally. With inflation falling and unemployment rising, the Fed would be quick to stamp out fears, ultimately adding fuel should this occur.
