A Bloomberg headline read “Stocks Show Exhaustion After a Surge in Bullishness.” Bullishness among retail investors is viewed as a contrarian indicator. According to the American Association of Individual Investors, retail investors are bullish for the first time since April and the percentage of retail investors with a bearish view over the next six months … Read more
Things can now get really interesting. For all the market focus on the end to the monetary tightening cycle, Friday’s employment data refused to adopt this narrative. The data might be impacted by revisions and the like, but it is hard to argue with headline payroll growth that is literally off of the forecast chart. … Read more
Most are confused by the massive disconnect about the interpretation of FRB Chief Powell’s comments. The WSJ wrote “Mr. Powell could not have been clearer in his meeting press conference that he thinks inflation remains a problem and the Fed is a long way from done.” The word disinflation, the word that was a catalyst for the advance, … Read more
Today, it is widely expected the Federal Reserve will increase the overnight rate by 0.25%. The market is expecting the Fed will pivot sometime in early summer with the overnight rate being lower on December 31 than February 1. January’s stellar performance is predicated upon such an outlook materializing. As measured by the VIX, complacency … Read more
It is often penned the markets hate uncertainty. There is near unanimity today’s outlook is the opaquest in at least two generations facing a multitude of cross currents. Against this backdrop, Treasuries are posting the best start of the year since 1988. The NASDAQ is heading to the best start of the year since 1999 … Read more
The two-day FOMC meeting commences tomorrow, and a 25-bps increase is expected. As noted many times, despite consistent messaging from the Fed, there is a massive disconnect between what the Fed is stating and what the market is interpreting. The Fed has been adamant that it will increase the overnight rate to slightly over 5% … Read more
The economy grew at a faster than forecast into the end of 2022 but there were signs of slowing underlying demand as the steepest interest rate hikes in decades threaten growth. GDP increased at a 2.9% annualized rate in the final three months of 2022, after a 3.2% gain in the third quarter. About half … Read more
Markets reversed moderate gains, gains the of result data suggesting waning inflationary pressures, to fears that growth and profits may erode in the Fed’s quest to quell inflation. Equites were further spooked by comments from two Fed hawks stating monetary policy is “almost in restrictive territory but not quite yet,” interpreted as the Fed may … Read more
Equites were choppy on a reassessment of earnings and monetary policy. Bloomberg writes of the 33 S & P 500 companies that have posted results so far, 25 have beaten expectations, “the nascent trend of lagging buoyant surprises of the previous quarters.” The market is perhaps interpreting more downside profit reports. On the other hand … Read more
Fourth quarter earnings season will commence Friday with the release of Wells Fargo, Citicorp and JP Morgan’s results. Net interest margin is expected to surge given the most aggressive Fed in forty years. It is also expected the banks will add to loan loss reserves in anticipation of an increase in nonperforming assets later in … Read more
