3min chapter

The Macro Trading Floor cover image

Why Is Powell Ignoring "Animal Spirits"

The Macro Trading Floor

CHAPTER

The Reflexive Rally, a Short Squeeze to the Bottom

The theory is driven by the fact that in October last year, the Powell seemed to be Volcker. The most shorted sectors were the one that disproportionately benefited from this mechanical flow. A mechanical flow of that size has a disproportionate effect on smaller sectors such as unprofitable tech. So if you have mechanical flows actually buying the equity market in general, it disproportionately waits on this.

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