Hey VIPs! This week’s market commentary highlights a complex dynamic between the 180 million barrel SPR releases and the physical bottleneck at Hormuz, alongside key factors including CTA flows, negative gamma positioning, and critical CPI levels. ⬇️
📊 Market Risks
We are witnessing an unusual convergence of geopolitical tensions, inflationary pressures, and political cycle uncertainty. Historically, U.S. midterm election years have seen average S&P 500 peak-to-trough drawdowns near 16%.
⏱ Historical Perspective
However, the 12 months following midterms have consistently delivered positive returns, with the S&P 500 averaging a 19% gain since 1939. Bitcoin has outperformed further, rallying an average 54% during post-midterm periods on record.
🔼Investor Outlook
The central question remains whether today’s fragile market environment—characterized by negative gamma, elevated leverage, and unresolved supply shocks—will develop into a durable buying opportunity or a more significant market repricing.