Monetary Matters with Jack Farley Jack Farley & Max Wiethe on Fed Hawkishness & Steep Stock Market Sell-off
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Dec 18, 2024 Max Wiethe, a finance expert and host of the Other People’s Money podcast, joins Jack Farley to dissect the recent steep sell-off in the stock market tied to the Federal Reserve's hawkish stance. They delve into the implications of interest rate adjustments and the balancing act the Fed faces amid inflation and unemployment concerns. The duo debates the future of monetary policy, including potential cuts in 2025, and discusses global currency trends, particularly how the euro may weaken against the dollar due to differing central bank strategies.
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Market Sell-off
- The stock market sell-off was surprising, given that the Fed's actions were in line with market pricing.
- Jack Farley bought puts before the Fed meeting, anticipating volatility.
Dow Jones Decline
- The Dow Jones's nine-day decline was due to a technical issue with UnitedHealthcare stock.
- This decline began after the assassination of UnitedHealthcare's CEO.
Implied Volatility
- Implied volatility in short-dated options was low, suggesting the market was caught off guard.
- The S&P 500's 3% drop implies a much higher annualized volatility than what was priced in.