A note via Macquarie bank analysts pointing to opportunity in markets now.

Says Monday's price action was 'stampede', citing a definition including "frightened animals or people run together in a wild and uncontrolled way to escape from something".

Says the 'something' was a combination of:

  • perception the Federal Reserve is behind the curve in cutting rates
  • tech bubble concerns
  • Yen carry trade unwinding

But, dismisses these:

  • US economy can avoid a recession
  • tech valuations are not close to bubble levels
  • USD/JPY is back to levels last seen in late 2023, the fundamentals for the carry trade remain in place

Acknowledging the inherent nature of markets:

  • stampedes are inherently unpredictable

But

  • "we view it is closer to irrational, thus creating buying rather than selling opportunities”

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S&P 500 daily candles:

S&P 500 candles update 06 August 2024 2