Investors go risk-on as ceasefire talks advance

Markets are rising and meme stocks are pumping — nature is healing.

What’s the big deal? The war in Ukraine has raged on for over a month and now cease-fire negotiations are advancing further with positive developments.

• Yesterday, Moscow said it would reduce military operations near the Ukrainian capital — but failed to reach a ceasefire.
• This sent oil and other commodity prices down — with oil futures falling below $100 a barrel.

The news sent the broad market soaring — with the S&P 500 now down just 4% in the year after being down as much as 13% last month.

Risk-on: Meme stocks have soared with a strong rise in options trading volume — suggesting “the most speculative retail crowd on WallStreetBets” is chasing the rebound per Giacomo Pierantoni of Vanda Securities (via BBG).

• Since Mar. 14, GameStop (NYSE:GME) is up 127% and AMC NYSE:AMC) is up 113% — alongside other meme stocks.
• In 2022, Bed Bath & Beyond (NASDAQ:BBBY) is up the most (76%) after news of Ryan Cohen’s involvement.

The optimists: JPMorgan analyst, Marko Kolanovic thinks there’s “too much negativity” in markets and sees reasons to be optimistic (via BBG):

• Markets historically perform well at the start of monetary tightening cycles (i.e. Fed increasing interest rates).
• Certain economies (i.e. China and Japan) are still using market favorable monetary policies (opposite of the US).

Companies have a low bar for the upcoming earnings season starting in a few weeks — but positive economic developments could “translate into earnings surprises” per JPMorgan’s team.

Stay cautious: It may be too early for investors to let their guards down. Recession fears loom — as the Fed is expected to aggressively increase interest rates for the remainder of 2022…