It was a brutal week for markets to close out the hardest month of trading in quite some time, which saw the S&P erase all gains since the Trump election, derailed by 1) tariffs 2) earnings fades (VST, NVDA) 3) techincals concerns (CTAs, month-end) and 4) muted risk appetite, however, as we correctly noted on Friday morning, the month-end pension rebal was to thank for the pop into the close with a MOC of $8.2BN to BUY (we had previously noted that pensions had $13bn to buy which ranks in the 97th percentile on a net basis over the last 3 years and was the largest buy imbalance since September 2022).
CTA dump at open. Next up: Pension buying
— zerohedge (@zerohedge) February 28, 2025
On the week, S&P -1%, NDX -3.3%, RTY -2%, and understandably, traders remain on edge. As to the drivers behind the powerful puke, there was a full menu to pick from but the highlight is that growth came into question (as expected, the MSM blamed DOGE for slashing billions in government graft and embezzlement spending) following back-to-back weak consumer sentiment readings that point to much higher inflation expectations (UMich + Consumer Confidence). Respondents - or rather Democrat Respondents - to these two surveys now expect inflation to rise to between 4.3% and 4.8% over the next year, even if Friday's January PCE inflation release was only 2.5% (at the same time, economists across Wall Street, lowered their Q1 2025 GDP growth tracking estimates to capture a historic rise in the trade deficit reported today, likely driven by gold imports).
