Monday proved to be another setup day with muted activity and volumes, not not SuperBowl related, but with a fresh, and clutch, CPI print on the horizon for tomorrow, little incentive to add additional risk. The path of least resistance led us higher on the margin today, but think it is fair to call it rangebound trading currently. Our charts team citing this the fancy way: S&P has had seven 1% swings in the last 5 days, including two 2% swings, but we’re back to where we were 5 days ago and e…

A week of wobbles, but nothing much has really changed in terms of the bigger picture (yet). The Dollar remains in a downtrend (though DXY was slightly stronger +35bps today) and the SPX, though below 4100, did not reach its February lows of 4048.50. The RTY remains above its significant 1900 level as well. However, we have seen a divergence of real yields higher and Nasdaq outperforming the S+P ((rather than the Nasdaq underperforming when real yields are higher) – a sign of vulnerability. Its…

You know what ‘they’ say… “Don’t fight the Fed!”… But the market really has been more of a fighter than a lover lately in this regard. For today, however, the fighters ultimately conceded as fatigue set in- even despite a strong setup out of the gates- sending the S&P lower on the day to close below 4100. Markets traded in a traditional upper left to lower right formation, ending the day near session lows albeit on more muted volumes. Perhaps simply a healthy pullback as we try to grapple wi…

Back in July 2001 my family and I were heading to the local theatre for movie night. We were going to see the new Steven Spielberg movie and as fan of many of his previous directorial releases, most notably Jaws, everyone was excited. The movie was A.I. Artificial Intelligence, and it remains today, in my opinion, one of the worst movies ever made. Was Google’s release of its AI search assistant Bard as bad? No, but Mr. Spielberg’s movie did not wipe $100bn worth of market cap away. Bard’s inc…

After last week’s hyper economic data releases, investors have had to suffice with a quiet week so far. While Fed heads have been released from their pre-FOMC quiet period, there has not been a rush by them to speak their minds. That quiet changed today for a brief period as the markets heard from both Kashkari and Powell, the latter having the most impact. Traders are battling the Fed about peak rates and when potential cuts may come, and after the Nonfarm payrolls Friday, the Fed seems to be…

I thought Tik-Tok was China’s surveillance tool, isn’t a balloon getting just a little greedy? Not to mention lazy; worst covert op ever? At least we know one thing that’s going to have a hard landing. As for the market, the debate continues, participants toggling back and forth between hard and soft when it comes to the economy and by extension the market. At least until Friday when the bonzo jobs report brought ‘no landing’ into the lexicon. Predictions for H1 ’23 were far from sanguine, and…

It may be cold outside, but that’s not enough to cool the scorching hot job market. The markets were shocked today when the change in nonfarm payrolls reported a gain of 517k, blowing out the estimate of 188k. The unemployment rate is now 3.4%, the lowest since 1969 while the ISM services index jumped to 55.2. The case for the Fed to make an early pivot seems to be fading as economic data remains strong and inflation lingers. Rates skyrocketed (US10Y 3.53%) on the backs of the job data. CME data now shows some traders are predicting a Fed terminal rate above 5% and others pushed their cut predictions back to December 2023.

It has been a tumultuous twenty-four hours for the markets, and that will continue to be this week’s theme as investors wade through the AAA earnings, and Nonfarm Payrolls. Markets have been watching the deteriorating eco data recently and have decided that the Fed will not only terminate its hiking cycle at 5%, but also start cutting at year end. First it was only a 25bps, but after yesterday’s FOMC meeting, that has grown to 50bps. In Powell’s defense, he did reiterate the Fed’s intent to be “appropriately restrictive” until inflation is under control, but acknowledged that investors needed to do their thing.

Ok then, this year seems hellbent on disproving the theory that objects in your mirror are closer than they appear. Last year is starting to feel like a distant memory rather than merely one that ended a month ago.. A quick stat to provide some context: a > 5% move in January after a down year the year before has happened only 5 times. The S&P 500 has been up EVERY time and by an average of a whopping +29.7% (45.0%, 23.1%, 20.1%, 31.5% and 28.9%). That’s a SPICY meat-uh-ball.

January made its mark today —the first green Jan since 2019, as the S&P and Nasdaq rallied 1.5% and 1.7% respectively, positively punctuating the first month of ‘23. It was the Nasdaq’s best month since July and some say as January goes, so does the year. But that hasn’t been accurate in the recent past, so best to take that one with some electrolytes. Nevertheless, investors interpreted today’s easing labor cost data as supportive of inflation cooling, and therefore also supportive of the potential for easing in terms of hike magnitude and pace. And maybe even halting just short of a terminal 5%, despite what has been preached from the Fed pulpit prior.