ANGLES.

Q2 and H1 2023 came to close on Friday. I’ll be releasing a full deep-dive review of the quarter in the financial markets in my feed in the next few days. For the moment, suffice to say that the TL;DR for the month of June is that it was defined by higher stock index prices but with a modest narrowing of the performance gap between the Super-Cap tech stocks and the rest of the market. Recent event...

US stocks endured a difficult holiday-shortened week amid concerns that higher interest rates could cause a slowdown in economic growth both here and abroad and a sense that stock market professionals may be starting to take profits on mega-cap tech and put the proceeds into bonds. There was also a feeling coming into the week that the recent rally had stretched short term valuations a bit and som...

It was quite an extraordinary week in financial markets and potentially a very consequential one. The S&P 500 closed on Thursday at a higher level than it was the day before the Federal Reserve first started raising interest rates in March 2022. In other words, the index has now officially erased more than a year of Fed-inflicted interest rate pain . By the time the Fed meeting wrapped up on Wedne...

According to Wall Street’s categorization rules, the S&P 500 index exited bear market territory on Thursday when it closed up more than 20% from its lows from October of last year after spending 248 days there - the longest bear stretch since 1948. However, it still ended the week 10% below its all-time high from January 3rd 2022. While there’s absolutely nothing in the rules that says we can’t ro...

Despite the best efforts of the whining Congressional arsonists on both sides, the Biden/McCarthy debt deal cruised comfortably through the House of Representatives and the Senate and straight to Biden’s desk for signature yesterday, bringing an end to the whole completely unnecessary psychodrama. Markets had briefly begun repricing the risk of there still being some kind of US government default,...

Note: this report was completed before confirmation of the debt ceiling deal reached by negotiators. See my subsequent post: “Debt Ceiling Update”. Stocks skidded lower most of the week, giving back a lot of the previous week’s gains, as there was minimal reported progress towards a debt ceiling deal between the White House and Congressional Republicans. Talks seemed to collapse and restart over a...

The S&P 500 is at exactly the same level it was at two years ago. That’s a lot of angst and stress expended for no net change in 24 months. As if to emphasize the point, the stock market spent large portions of last week just churning sideways on very low volume as traders monitored the reported progress in debt ceiling negotiations. These dreary spells were occasionally punctuated by bursts of ac...

Attention on Wall Street is shifting away from guessing future interest rates to the distinct possibility of an economic downturn. And that is encouraging investors to reward the strong and punish the weak. This is causing increasing divergences between the performance of different stocks within the same index or even the same sector. Winners offsetting losers is giving the impression of a quiet m...

Note: I have published an updated version of my recent article “Cash Is Interesting Again. And Safe.” to reflect the higher interest being paid on cash accounts starting tomorrow with millions of dollars in insurance by both Flourish (increased to 4.55% for Tier 1 and 4.25% for Tier 2) and Betterment (increased to 4.50%). The updated version of the article can be viewed here . Markets woke up on M...

With trading volumes contracting rapidly, the stock market - at least as represented by the major indexes - was acting early last week like it had already checked out for summer and it’s not even May yet. It was proving to be something of a snooze-fest with a generally negative tilt as far as the headline indexes were concerned. But under the surface, things were playing out rather differently. Ea...

It is said on Wall Street that the goal of the market is to extract the maximum amount of pain from the greatest number of people. What this is getting at is that when everyone is positioned as bullish, the pain trade is for markets to move lower. When everyone is bearish, the pain trade is for them to go higher. As such, the pain trade has been mostly inflicted on the bears so far in 2023 and is...

Last week was a busy one with plenty of economic data to chew on and lots of soundbites from International Monetary Fund (IMF) officials and Federal Reserve presidents. It also marked the opening of the Q1 2023 earnings season. Monday started out mostly jittery and trendless as the stock market tried to digest the Jobs Report from the holiday Friday before. Interestingly, the laggards were stocks...

The week and the month began with investors shifting their attention away from March's banking turmoil and back to the risk of a recession that could drag down consumer spending, thereby corporate profits and thereby stock prices. And the holiday-shortened week provided plenty for them to focus on. Unexpected output cuts from the Organization of Petroleum Exporting Countries (OPEC, see EXPLAINER:...

The S&P 500 ended the week, month and quarter sitting almost exactly in the middle of its range over the last year and a strange calm seems to have descended upon markets. No scary news from the banking sector last week allowed investors to focus on other things, such as earnings and economic releases, which were mostly pretty good. Traders started the week with a smile on their faces as they lear...

A decent gain in stock prices on Monday was put down to a combination of an oversold bounce from the anguish of the two prior sessions, UBS finally putting Credit Suisse (CS) out of its misery by buying their Swiss banking rival for less than half of its value as well as not-too-guarded optimism about what Federal Reserve Chair Jerome Powell might say in his press conference later in the week, spe...

A week following three major US bank failures that then saw two other banks sail very close to the wind ended with stock markets higher, the S&P 500 was up 1.4% for the week and the NASDAQ closed 4.4% higher. Anyone who claims they can correctly predict this stuff is such a liar. Monday was the largest trading volume day so far this year on US exchanges (a record that lasted until Friday, when it...

New features in the report (see below): - Weekly updates on the latest official average 30 year fixed mortgage rate with comps going back one week, one month and one year - FedWatch Tool information: What the latest important market expectations are on interest rates with comps going back one week and one month Federal Reserve Chairman Jerome Powell basically killed risk appetite on Tuesday with a...

February delivered a reality check to investors after a giddy January; the S&P 500 fell 2.6% for the month and the NASDAQ dropped 1.1%. Stock and bond prices had risen impressively in January on the ideas that i) Inflation was declining, ie., disinflation, ii) the Fed was almost done with rate hikes and iii) there wasn’t going be a hard economic landing (ie., we were going to get inflation conquer...

For all the different feel of this market in 2023, the price action is revealing that it is actually still broadly behaving much as it did in 2022. It’s still being driven by Fed expectations and those expectations are being determined by earnings and economic data. In January, the data was mostly better-than-feared and the market developed the view that the Fed was close to ending rate hikes and...

Those of us hoping for a clearer picture to emerge from the release of the January’s Consumer Price Index (CPI) measure of retail inflation and other subsequent data were left sorely disappointed last week. If anything, things just became more confused. Stocks drifted nicely higher on Monday as traders laid their bets ahead of the high-stakes inflation reports that would start arriving the followi...

“This process is likely to take quite a bit of time, it’s not going to be smooth, it’s probably going to be bumpy”, Federal Reserve Chair Jerome Powell said on Tuesday in a speech in Washington DC, referring to getting inflation back to the Fed’s 2% target. But he could just as easily have been talking about the road to an eventual end of this bear market and a transition to a more sustainably bul...

The Federal Open Market Committee (FOMC, see EXPLAINER: FINANCIAL TERM OF THE WEEK) surprised absolutely no-one by raising interest rates on Wednesday by a quarter of a percent to a target range of 4.50% to 4.75%. Fed Chair Jerome Powell dropped a few hawkish soundbites at his post-announcement press conference, all designed to be played out of context on CNBC, saying that monetary policy “does no...

The already-wide gap between what the Fed says will happen and what the market thinks will happen just keeps on getting wider. Fed presidents are out there barking at us at every opportunity that the Fed Funds rate that it controls will be around 5.1% by year-end, or a full percentage point higher than where we are now. The stock market, by means of the Fed Funds futures prices set by large instit...

Financial markets and the Fed are playing a game of chicken. The Fed continues to wheel out its own people to double-down on their position that interest rates will be shortly be raised to above 5% and will stay there for ages until inflation is unquestionably showing signs of being 2% again, like it was in the good old days. Financial markets, as shown by fed funds futures rates and trader sentim...

The highlight of the week, the all-important latest Consumer Price Index (CPI) measure of retail inflation numbers, came out before the market opened on Thursday and was right in line with forecasts, showing a continued cooling of inflation in the US. Headline CPI fell 0.1% between November and December, following a 0.1% increase the previous month. Over the past twelve months, the index is up 6.5...