The U.S. economy expanded by 4 percent in the second quarter? Whoa!
That balances the anemic first quarter gross domestic product (GDP) of –2.1 percent. So what are we left with for the second half of the year? Roughly 2.5 percent growth, or perhaps a bit higher? That would average perhaps 2 percent growth for the entire year.
The problem for traders is that we are back to a choppy market. You get a down day like yesterday and an up day, and you can't stay hedged. Investors are looking for trends: for example, you're looking for 5 down days in a row. That's how you make a lot of money...when you get zigzag pattern, it eats your hedges away and the value drops materially.
Stocks go up, but your hedge gets much less valuable. The bottom line: you can't stay heavily hedged.
Still, big GDP numbers on a Federal Reserve decision day! The market needs to hold its early gains.