S&P 500 refused further decline, but picture is far from impending rebound strength. One though can‘t get rid of the impression from Kashkari’s speech (the Fed is happy about the marlet reaction to Powell‘s FOMC speech), that this stock market rally isn‘t looked at exactly the same way as the summer one.
Still, short-term caution rules as real assets haven‘t yet recovered, and the dollar relief rally had been confirmed as having started – I‘m looking for relatively uneventful session prior to Powell‘s yet another speech – speech which would give direction for the remainder of this week, till Friday‘s consumer confidence (yes, unemployment claims are likely to come in strong.
Q4 2022 hedge fund letters, conferences and more
Bringing up yesterday‘s extensive analysis:
(…) So, stocks are correcting, but the short-term picture is far from clear – while the defensives are refusing to decline, financials haven‘t rolled over yet (and regional banking acts still OK). Neither value nor tech reversed on rising volume, indicating that this storm could be over in a couple of days, no matter the disastrous earnings thus far (yes, AAPL and beyond the tech layoffs) bringing negative surprises to -5.3% so far.
Markets aren‘t fearing a hard recession, but stocks are uneasy – in the very short-term.The stunner creeping in is that the Fed somehow pulled it off, that soft landing – and job market data were taken as a proof, which however has consequences for services inflation even commodities, precious metals are nicely consolidating.
Had been, till Friday – but that appears as a buying opportunity when deterioration in economic data sends yields and the dollar down. Summing up, I continue to think the soft landing thesis would be disproved by end of Q2 2023, and that a mild recession is ahead.
Let‘s say that the soft landing calls would come to bite back those acting on them, and that real assets (oil defended the $81-83 zone by the way, and copper is back above $4 – precious metals are waiting for USD and Fed green light, but haven‘t rolled over into a bear) will correspondingly rise once it becomes apparent that the Fed hawkish path of newly three 2023 hikes with deferred easing, isn‘t going to be without consequences / prove doable. The bond market will decide.
See you on my feed later today, and throughout for the Powell speech!
4,105 – 3,995 is the key support zone, followed by 4,070 – reaching which would require bond market weakness with junk bonds leading the decline. That‘s not likely to happen now, for I view the consequences of Powell‘s speech to be rather positive for TLT, and not feeding excessively into the USD relief rally (well worth watching it with Bollinger Bands displayed, to see where the low hanging fruit was). Chart courtesy by www.stockcharts.com.
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