The View from 5th Avenue – 24 August 2022

Indecision seems to be the name of the game ahead of Jackson Hole as headlines of all kinds are impacting sentiment in regard to the trajectory of rates. One such example is of the “Fed Whisperer” Nick Timaroas at the WSJ today who noted that "Several former Fed officials who have worked closely with Mr. Powell say he is likely to err on the side of raising rates too much, rather than too little". Despite the hawkishness, markets moved off opening lows and spent most of the day in the green. Tech was able to find its footing, as positive headlines boosted names like Peloton (PTON,  20.36%), who will now sell equipment on Amazon (AMZN, 0.13%). Travel & Leisure was also strong, as government data showed that commercial aircraft bookings climbed. This space has been on our 3m relative low list so this could be a welcome changing in the tide, but the recent trend here says different. Meanwhile, an announcement that President Biden will be forgiving some student loans sparked a lot of opinions, but did little for companies like Sallie Mae, as some analysts noted the company remains well-provisioned for today’s announcement. Also worth noting that the EUR/USD broke parity this week, reconfirming the downtrend. Our team thinks the next stop is 0.9, although it could go as low to 0.82, the 2000 low. As we turn our attention to the rest of the week, the parallels between 2008 are hard to ignore. The market stopped just short of it’s 200 day 2 weeks ago like in ’08, and we remain below that level. Although the VIX was down 6% today, with the last trough at 8/15, the 50 day cycle is calling for the next peak on 9/20 (and on an annual seasonality basis the VIX picks up this time of year). Friday will be critical for sentiment, but we can’t glaze over the plentitude of data between now and then – GDP, Initial/Continuing Claims, and Personal Consumption data, all tomorrow.