Geo Chen
· Fidenza Macro
· August 18, 2026 at 13:17
· ⏱ 4 min read
| Read on Substack ↗
Summary
The author argues that the current low-volatility market equilibrium is temporary and will soon be disrupted by three converging macro themes. A 'Super El Nino' threatening global agriculture, a reversal of recent disinflationary trends, and negative seasonal patterns point toward a near-term spike in volatility and a broader market correction.
•The NOAA estimates a 93% probability that El Nino will intensify into the 'very strong' category between September and November.
•Embrapa researchers estimate a potential 10% loss in Brazil's 2026/27 soybean and corn crops due to drier weather in the Cerrado and Central-West regions.
•The recent US economic surprise index downturn created a temporary disinflationary impulse, but the author expects AI capex, US-Iran tensions, and food prices to push inflation back up.
•The S&P 500 exhibits a strong historical seasonal tendency to trade sideways or lower during September and October.
•The VIX index is currently at year-to-date lows, which historically precedes a seasonal spike in September and October.
•Despite recent pullbacks, AI remains the most crowded trade according to BofA's fund manager survey, increasing vulnerability to a 5%+ market correction.
Read time4 min
Length4,523 chars
Categoryfinance
Ideas
Geo ChenGlobal macro trader; ex-head of FX trading, Credit Suisse
The author highlights that a 'Super El Nino' could lead to an estimated 10% loss in Brazil's 2026/27 corn and soybean crops, while European corn crops are also facing severe heat wave damage.
The author highlights that a 'Super El Nino' could lead to an estimated 10% loss in Brazil's 2026/27 corn and soybean crops, while European corn crops are also facing severe heat wave damage.
Risk: Weather patterns may normalize or shift, mitigating the expected drought conditions in key agricultural regions like Brazil's Central-West.
Geo ChenGlobal macro trader; ex-head of FX trading, Credit Suisse
The author expects a correction of 5% or more in the S&P 500 over the next two months, driven by negative September-October seasonality, a hawkish Fed, and overly bullish market positioning.
The author expects a correction of 5% or more in the S&P 500 over the next two months, driven by negative September-October seasonality, a hawkish Fed, and overly bullish market positioning.
Risk: The recent weak non-farm payrolls data could be confirmed by future reports, forcing the Fed to turn dovish and extending the equity rally.
Geo ChenGlobal macro trader; ex-head of FX trading, Credit Suisse
The author notes that the VIX index tends to spike during September and October, and views this seasonal signal as highly reliable because the index is currently sitting at its low for the year.
The author notes that the VIX index tends to spike during September and October, and views this seasonal signal as highly reliable because the index is currently sitting at its low for the year.
Risk: Macroeconomic equilibrium and low volatility could persist longer than expected if geopolitical tensions ease and inflation remains subdued.
This newsletter, published August 18, 2026,
features Geo Chen
discussing CORN, SPY, VIX.
3 trade ideas extracted by AI with direction and confidence scoring.