To The Moon

The SP500 dropped by over 2% along side other main indexes despite multiple big banks earnings beat on Friday pre market.

This is because of 1 main reason and a few sub reasons. It started on 13/10 thursday, CPI m/m came out as a beat to the upside and the market dropped by around 2%. Then the FED minute came out and the market narated it as a 'good' news which surged the SP500 by around 4%, although many disagrees with this narative. In my opinion, the market naration of 'good' news from FED minutes was just to give an opportunity for big money to exit which I will back this point up at the end of this writing with the most recent VIX movement. (13/10 made the market euphoric). Then on 14/10 which is Friday, UoM inflation expectation came out and it was at 5.1% which is a relatively big increase from previous few inflation expectation numbers which made the market scared because J.Powell have always associated the FED's success with low inflation expectation, because inflation expectation can be a self fulfilling prophecy which is by Paul Volcker raised rates so much in the 1970s. This is the main reason on why the market tanked by over 2% after rising by 4% the previous day.

An additional point i want to add is that the VIX index only gain by 0.25% despite the market being so red which indicates that there is lesser big money in the market already hence lesser hedging occuring so the reflection in the VIX index is less volatile. Other data that came out includes retail sales which grew by 0.0% instead of the expected 0.2%. Business inventory grew by 0.8% instead of the expected 0.9% and import prices decreased by -1.2% instead of -1.1% which indicates that the dollar is strengthening faster than expected.