How Hedge Funds Are Trading the Fed Pivot Under Warsh

Lucas and Luna dissect how hedge funds are repositioning for a hawkish Fed under Chairman Warsh, who just stripped rate-cut language from the statement and held rates steady at 3.63%. The episode centers on the divergence between the VIX at 18.44 and the VVIX at 94.53—a signal that tail-risk hedges are expensive while spot volatility is calm. Lucas explains why multi-strategy funds are short volatility via ETFs but long tail-risk options, while macro funds are fading the rate-hike chatter by shorting Eurodollar futures. Luna brings data on how the S&P 500 hitting 7,420 has lulled investors into complacency, even as the Fed signals a possible hike later this year. The hosts walk through a real trade: buying VIX call spreads funded by shorting VVIX futures, a popular pairs trade among volatility arbitrage funds. They also discuss how the small-cap Russell 2000 lagging at 2,918 reflects the rate sensitivity of smaller companies. No jargon dump—just a clear breakdown of what hedge funds are actually doing in this regime. #HedgeFunds #FederalReserve #KevinWarsh #VIX #VVIX #VolatilityArbitrage #SP500 #Russell2000 #MacroTrading #RateHike #TailRisk #Options #Eurodollar #HawkishFed #FOMC #Finance #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo