Via a note from Goldman Sachs equity sales.

• Since the Wall Street Journal story from Nick Timiraos about the Fed debate future hike size, “we have seen one the largest 5 day easing of financial conditions this century” … you “simply can’t be short that”
• “I am old and grizzled enough to know that when Nick (goa)T tweets that the Fed is tapping the brakes, you get out of the way, even if you still believe the ultimate path for stocks is lower. I’m waiting to see if Jerome blesses that easing of financial conditions.”
• “Between this market soothe saying from officials, along with simple event risk premium coming out of vol markets as the ECB, BoJ and earnings pass, there has been a significant reduction in the equity vol curve this week.”
• “The focus now shifts firmly to Powell. Is he ok with this easing of financial conditions? That is the only question you need to ask yourself.”

The note goes on to say that while fundamentals are not good (cites tech firms drops in operating margin this quarter), technicals are:

• the recent move “is technicals winning out as vol compresses, non-economic buyers are forced to buy, while the fundamental picture deteriorates but is more of a medium term story”
• “If J Powell gives the green light next week and doesn’t deliver a Jackson Hole type performance, there is very little to stop this move from a technical standpoint. A body in motion stays in motion. Ultimately it will be a wonderful shorting opportunity, but there is no point in kissing the freight train if JPow is waving a green flag.”