BETWEEN THE HEDGES: Today's Headlines

Bloomberg:

Worst Week in 2 Years for Stocks Ends on High Note. (video) U.S. equities ended their worst week in two years on a positive note, but rate-hike fears that pushed markets into a correction remain as investors await American inflation figures on Feb. 14. The S&P 500 tumbled 5.2 percent in the week, its steepest slide since January 2016, jolting equity markets from an unprecedented stretch of calm. At one point, stocks fell 12 percent from the latest highs, before a furious rally Friday left the equity benchmark 1.5 percent higher on the day. Still, the selloff has wiped out gains for the year.

JPMorgan Sees ‘Severe’ Unwind by Systematic Strategies Coming to an End. “The position unwinding from both CTAs and Risk Parity funds has been so severe that any further position unwinding by these investors should be limited from here, especially if stop losses have been triggered already,” the report said. “This, combined with the low equity exposures of Discretionary Macro and Equity Long/Short hedge funds, leaves retail investors as the main residual risk for equity markets going forward.”

How'd Your Week Go? Low-Vol Blowup, Stocks Jitters, in 5 Charts. (graph/video)

Bond Traders Smash Fed-Hike Odds Lower as Stocks Whipsawed. (video) The interest-rates market is signaling just 2.3 Fed hikes in 2018, down from 2.76 a week ago, according to fed funds futures data compiled by Bloomberg. The median projection from central-bank officials is for three increases this year, a stance reiterated Thursday by Kansas City Fed President Esther George. New York Fed President William Dudley went so far as to say four hikes were possible if the economic outlook further improves.

Bank of Italy Revises GDP Growth Forecast Up. The Bank of Italy expects the nation’s economy to expand in 2018 at the same pace as last year since monetary policy “is working” and the ongoing reduction of economic slack has strengthened confidence, Governor Ignazio Visco said. The central bank expects Italy’s gross domestic product will expand about 1.5 percent this year and should remain above 1 percent in the next two years, Visco said Saturday. In January the Bank of Italy forecast GDP growth of 1.4 percent for 2018 and 1.2 percent for the following year.