Watching the markets these days, I’m reminded of the cinema classic “The Princess Bride” when Inigo Montoya tells Vizzini …

“You keep using that word. I do not think it means what you think it means.”

We have the Federal government spending money this summer without any regard for inflation – when nearly all of the reasons for inflation are connected to the fiscal policy of the last couple years.

It’s like they say they want to end inflation but do not know what it means.

The good news is that they just do the opposite, things should improve.

But the bad news is the US government needs to do the opposite – which would admitting everything they did was wrong.

One can dream.

Last week, the Brits got a taste of that with a mix of deregulation and small supply-side tax cuts.

They might have warned the Bank of England first but it was a try.  It also is instructive that markets want to see serious action.

What a Week: Truss UK announcement , selloff , BOE liquidity rescue and reality.

That instability is causing turmoil in other places and that filters down to the equity markets.  Rumors are swirling around Credit Suisse CA (Ticker: CS) and Deutsche Bank AG (Ticker: DB) are not helping either. 

Funds start selling the good stuff.

Apple Volatility Is Getting Very High

Note that Apple Inc (Ticker: AAPL) realized vol is getting sky-high.

AAPL 3 month chart with 1 day candles up top and 20 day realized vol on the bottom

We are nearly back to the bad old days of June when things looked bleak on the rate raising front.  Those days are now realized, as the Fed pushes forward to help quash inflation by the fastest rate rise in history.

AAPL is also one of the few stocks to hold its multiple here as many, many of the stocks in the 

S&P 500 have had serious multiple reductions this year.

AAPL has had drawdowns in the past of 50% or more when folks get spooked the big growth is over for a while.

I like put butterflies in AAPL in the short term and expect it to test new lows.

The turmoil in other markets will spread in the short term to the US equity market until things become more clear.  

Should be a bumpy week!

Roll with Mark live every day for profits now.

To Your Trading Success,

AG