quantwise 1.2.0 → 1.2.2

package/.claude/skills/weekly-trade-strategy/.claude/skills/market-news-analyst/references/market_event_patterns.md

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+# Market Event Patterns and Market Reactions
+
+## Central Bank Monetary Policy Events
+
+### Federal Reserve (FOMC)
+
+**Event Types:**
+- Federal Funds Rate Decisions
+- Quantitative Easing (QE) / Quantitative Tightening (QT) Announcements
+- Forward Guidance Changes
+- Emergency Policy Actions
+
+**Typical Market Reactions:**
+
+**Interest Rate Hikes:**
+- **Equity Markets**: Generally negative, especially for high-growth/tech stocks (higher discount rates reduce present value of future earnings)
+- **Bond Markets**: Bond prices fall, yields rise
+- **Dollar (USD)**: Strengthens
+- **Commodities**: Gold typically weakens (opportunity cost of holding non-yielding asset), Oil may weaken on demand concerns
+- **Sectors Most Impacted**:
+  - Technology: Negative (high valuations sensitive to rates)
+  - Financials: Positive initially (higher net interest margins), but negative if rate hikes slow economy
+  - Utilities/REITs: Negative (yield-sensitive sectors)
+  - Consumer Discretionary: Negative (higher borrowing costs impact spending)
+
+**Interest Rate Cuts:**
+- **Equity Markets**: Generally positive, especially growth stocks
+- **Bond Markets**: Bond prices rise, yields fall
+- **Dollar (USD)**: Weakens
+- **Commodities**: Gold strengthens, commodities generally positive
+- **Sectors Most Impacted**:
+  - Technology: Positive
+  - Real Estate (REITs): Positive
+  - Financials: Mixed (lower margins but better credit quality)
+
+**Quantitative Easing (QE):**
+- **Equity Markets**: Strong positive (liquidity injection)
+- **Bond Markets**: Bond prices rise (central bank buying)
+- **Dollar (USD)**: Weakens (currency debasement)
+- **Commodities**: Positive across the board (inflation hedge)
+- **Risk Assets**: Broad support
+
+**Quantitative Tightening (QT):**
+- **Equity Markets**: Negative pressure (liquidity withdrawal)
+- **Bond Markets**: Yields rise (reduced central bank demand)
+- **Dollar (USD)**: Strengthens
+- **Commodities**: Mixed to negative
+
+**Hawkish vs Dovish Tone:**
+- **Hawkish** (inflation-focused, tightening bias): Risk-off, USD strength, bond yields up
+- **Dovish** (growth-focused, easing bias): Risk-on, USD weakness, bond yields down
+
+### European Central Bank (ECB)
+
+**Key Differences from Fed:**
+- Eurozone fragmentation concerns (peripheral vs core spreads)
+- Negative rate environment history
+- Bank-centric economy (vs capital markets in US)
+
+**Typical Reactions:**
+- EUR/USD currency pair highly sensitive
+- European bank stocks react strongly to rate decisions
+- Sovereign bond spreads (Italy, Spain, Greece vs Germany) sensitive to policy
+
+### Bank of Japan (BOJ)
+
+**Unique Characteristics:**
+- Yield Curve Control (YCC) policy
+- Decades of ultra-loose policy
+- Direct equity ETF purchases
+
+**Typical Reactions:**
+- JPY movements extreme when policy shifts (especially YCC band adjustments)
+- Japanese equity markets (Nikkei) sensitive to JPY movements (export-dependent)
+- Global carry trade implications (JPY as funding currency)
+
+### People's Bank of China (PBOC)
+
+**Policy Tools:**
+- Loan Prime Rate (LPR)
+- Reserve Requirement Ratio (RRR)
+- Medium-term Lending Facility (MLF)
+
+**Typical Reactions:**
+- Easing: Positive for commodities (China as major consumer), positive for EM currencies
+- Tightening: Negative for commodities, negative for risk assets globally
+- Australian Dollar (AUD) highly sensitive (China trade exposure)
+
+## Inflation Data Releases
+
+### US CPI (Consumer Price Index)
+
+**Higher Than Expected:**
+- **Equity Markets**: Negative (rate hike expectations increase)
+- **Bond Yields**: Rise sharply
+- **Dollar**: Strengthens
+- **Gold**: Mixed (inflation positive but rate hike negative)
+- **Fed Policy Expectations**: Hawkish shift
+
+**Lower Than Expected:**
+- **Equity Markets**: Positive rally
+- **Bond Yields**: Fall
+- **Dollar**: Weakens
+- **Gold**: Strengthens
+- **Fed Policy Expectations**: Dovish shift
+
+### PPI (Producer Price Index)
+
+- Leading indicator for CPI
+- Strong reactions in industrial/materials sectors
+- Commodity-linked stocks sensitive
+
+### PCE (Personal Consumption Expenditures)
+
+- Fed's preferred inflation measure
+- Core PCE most important
+- Similar directional reactions to CPI but often larger magnitude
+
+## Employment Data
+
+### Non-Farm Payrolls (NFP)
+
+**Stronger Than Expected (High Job Growth):**
+- **Initial Reaction**: Positive (economic strength)
+- **Secondary Reaction**: Can turn negative if triggers rate hike concerns
+- **Sectors**: Cyclicals outperform, defensives underperform
+
+**Weaker Than Expected:**
+- **Initial Reaction**: Negative (growth concerns)
+- **Secondary Reaction**: Can turn positive if dovish policy response expected
+- **Sectors**: Defensives outperform
+
+**Wage Growth Component:**
+- Higher wages: Inflation concerns, negative for equities
+- Lower wages: Disinflationary, positive for equities
+
+### Unemployment Rate
+
+- Below natural rate (~4%): Inflation concerns
+- Above natural rate: Growth concerns
+- Initial claims (weekly): Leading indicator sensitivity
+
+## GDP Reports
+
+**Stronger Than Expected:**
+- Positive for equities generally
+- Currency strengthens
+- Rate hike expectations increase (if economy already strong)
+
+**Weaker Than Expected:**
+- Negative for equities
+- Currency weakens
+- Rate cut expectations increase (if economy weakening)
+
+**GDP Components Matter:**
+- Consumer spending strength: Positive for Consumer sectors
+- Business investment: Positive for Industrials, Technology
+- Trade balance: Currency implications
+
+## Geopolitical Events
+
+### Military Conflicts / Wars
+
+**Immediate Reactions:**
+- **Equity Markets**: Risk-off selloff, especially in affected regions
+- **Safe Havens**: USD, JPY, CHF strengthen; Gold rallies
+- **Oil**: Spikes if energy supply disruption risk
+- **Volatility (VIX)**: Surges
+
+**Examples:**
+- Russia-Ukraine conflict: Energy prices surge, European equities weak, defense stocks rally
+- Middle East conflicts: Oil volatility, regional equity weakness
+
+### Trade Wars / Tariffs
+
+**Announcement of Tariffs:**
+- **Affected Countries' Equities**: Negative
+- **Export-Dependent Sectors**: Negative (Industrials, Materials)
+- **Domestic-Focused Sectors**: Relative outperformance
+- **Currencies**: Affected countries' currencies weaken
+
+**US-China Trade Tensions:**
+- Technology sector highly sensitive (supply chain concerns)
+- Agricultural commodities volatile (retaliatory tariffs)
+- Emerging market currencies under pressure
+
+### Sanctions
+
+- Targeted country's assets decline
+- Replacement suppliers benefit (e.g., US LNG exports when Russian gas sanctioned)
+- Financial sector compliance costs
+
+## Corporate Earnings Events
+
+### Mega-Cap Technology Earnings
+
+**Companies: Apple, Microsoft, Amazon, Google, Meta, NVIDIA, Tesla**
+
+**Impact on Broader Market:**
+- Index-level impact significant (high market cap weights)
+- Sector rotation triggers (Tech strength/weakness affects growth vs value)
+- Forward guidance critical (AI spending, cloud growth, etc.)
+
+**Typical Reactions:**
+- **Beat + Raise**: Strong positive, often lifts entire index
+- **Beat + Lower Guidance**: Negative despite beat
+- **Miss**: Severe selloff, can drag indices significantly
+- **AI-Related Themes**: NVIDIA results particularly market-moving (2023-2024)
+
+### Banking Sector Earnings
+
+**Major Banks: JPMorgan, Bank of America, Wells Fargo, Citigroup**
+
+**Key Metrics:**
+- Net Interest Margin (NIM): Rate environment sensitivity
+- Credit Loss Provisions: Economic outlook indicator
+- Trading Revenue: Market volatility impact
+- Loan Growth: Economic activity proxy
+
+**Broader Implications:**
+- Financial sector earnings often lead cycle
+- Credit quality trends predictive of recession risk
+- Regional bank stress contagion risk (March 2023 example)
+
+### Energy Sector Earnings
+
+**Key Drivers:**
+- Oil/gas price realizations
+- Production volumes
+- Capital discipline (buybacks vs drilling)
+
+**Market Impact:**
+- Correlated with commodity prices
+- Inflation narrative implications
+- Geopolitical overlay
+
+## Credit Events
+
+### Corporate Defaults / Distress
+
+- Credit spreads widen
+- Flight to quality (Treasuries rally)
+- Equity markets negative (systemic risk concerns)
+- High-yield bonds decline
+
+### Credit Rating Changes
+
+**Downgrades:**
+- Stock price negative
+- Bond yields rise (prices fall)
+- Sector contagion if systemic
+
+**Upgrades:**
+- Stock price positive
+- Bond yields fall (prices rise)
+- Limited broader impact
+
+## Commodity-Specific Events
+
+### OPEC+ Meetings
+
+**Production Cuts:**
+- Oil prices rally
+- Energy stocks positive
+- Inflation concerns if sustained
+
+**Production Increases:**
+- Oil prices decline
+- Energy stocks negative
+- Disinflationary positive for growth stocks
+
+### Grain/Agricultural Reports (USDA)
+
+- Weather impacts (droughts, floods)
+- Planting/harvest data
+- Agricultural commodity prices volatile
+- Food inflation implications
+
+### Metals Supply Disruptions
+
+- Mining strikes
+- Export restrictions
+- Positive for metal prices
+- Mining stocks rally
+
+## Recession Indicators
+
+### Yield Curve Inversion (2s10s)
+
+**Inversion (short rates > long rates):**
+- Historical recession predictor (12-18 month lead time)
+- Initial reaction: Risk-off
+- Financials particularly negative (NIM compression)
+
+**Steepening (disinversion):**
+- Can signal imminent recession (ironically negative initially)
+- Or economic acceleration (positive if growth-driven)
+
+### Leading Economic Indicators (LEI)
+
+- Manufacturing PMI (ISM)
+- Consumer confidence
+- Housing starts
+- Composite LEI
+
+**Negative readings:** Recession concerns mount progressively
+
+## Historical Case Studies
+
+### 2008 Financial Crisis
+
+**Lehman Bankruptcy (September 2008):**
+- Equities: S&P 500 -40% peak to trough
+- Credit spreads: Blew out to crisis levels
+- Safe havens: Treasuries rallied, gold initially sold (liquidity crisis) then rallied
+- USD: Strengthened (deleveraging)
+
+### COVID-19 Pandemic (March 2020)
+
+**Initial Selloff:**
+- Fastest bear market in history (S&P 500 -34% in weeks)
+- Oil crashed (WTI briefly negative)
+- VIX hit 80+
+
+**Fed Response:**
+- Unlimited QE announcement: Market bottom
+- Zero rates, emergency facilities
+- Equities: V-shaped recovery
+
+### 2022 Inflation Shock
+
+**Aggressive Fed Tightening:**
+- 75bps hikes (unprecedented in modern era)
+- Growth stocks crushed (Nasdaq -33%)
+- Bonds no diversification (60/40 worst year since 1970s)
+- Dollar rallied strongly
+
+## Pattern Recognition Framework
+
+### News Type Classification
+
+**Tier 1 (Market-Moving):**
+- FOMC decisions
+- Inflation surprises (±0.2% from consensus)
+- Major geopolitical shocks
+- Mega-cap tech earnings misses
+- Banking crisis events
+
+**Tier 2 (Sector-Moving):**
+- Sector-specific regulation
+- Commodity supply disruptions
+- Large corporate M&A
+- Credit rating changes (investment grade)
+
+**Tier 3 (Stock-Specific):**
+- Individual company earnings
+- Management changes
+- Product launches
+- Smaller M&A deals
+
+### Sentiment Analysis
+
+**Risk-On Environment:**
+- Growth stocks outperform value
+- High-beta outperforms low-beta
+- Emerging markets outperform developed
+- Credit spreads tight
+- VIX low (<15)
+
+**Risk-Off Environment:**
+- Value stocks outperform growth (or decline less)
+- Low-volatility outperforms
+- Developed markets outperform emerging
+- Credit spreads widen
+- VIX elevated (>20)
+
+### Time Horizon Considerations
+
+**Immediate (Intraday):**
+- Algorithmic/HFT reactions
+- Often overshoot
+
+**Short-term (Days-Weeks):**
+- Fundamental reassessment
+- Positioning adjustments
+
+**Medium-term (Months):**
+- Earnings revision cycles
+- Policy transmission lags
+
+**Long-term (Quarters-Years):**
+- Structural shifts
+- Regime changes