ANGLES.

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...

The calendar may have flipped, but the song remains the same. Last week was something of a microcosm of 2022; a steady downward grind for the most part, occasionally punctuated by a sharp spike. Last year these spikes all failed to trigger a true turnaround, always eventually fizzling out and leading to subsequent further new lows. It remains to be seen if that pattern will continue or benefit fro...

To reiterate what I said last week, the absolutely key question when it comes to financial markets in 2023 is: Will inflation fall faster than economic growth and earnings? Mark your calendars for when we will get the next hints at an answer .. * Thursday, January 12th when the US Consumer Price Index (CPI) measure of retail inflation is released. Why It’s Important: The key for the next CPI repor...

The much-anticipated Santa Claus Rally window came and went last week with only more volatility and a lot of lower prices to show for it. With hardly any discernable meaningful catalysts and a lot of end of year tax-loss selling going on, there simply wasn’t much to stop stocks from rolling over early in the week. Wednesday (good) and Thursday (bad) basically cancelled each other out. Friday was a...

The Transition from the primary market driver no longer being the expectations of what Fed interest rate policy will be and instead turning to tangible, evidence-based economic growth and inflation levels officially began last week with stocks trading on the back of growth and inflation perceptions rather than just reacting to Fed rhetoric like obedient lemmings. That’s something that will likely...

Over the past few weeks, the macro environment has generally become “less bad” and that does justify some kind of a rally, but it’s important not to confuse “less bad” conditions with actual “good” ones. It’s also important not to mis-interpret year-end seasonal factors and positioning, combined with a sudden burst of optimism, with the implication that this has sown the seeds for a sustainable ra...

Watching a grandfatherly, white-haired 69 year old man doing performative dance doesn’t sound like something hot-shot Wall Street traders and stock market professionals would choose to spend their time doing, but they very much are and that somewhat elderly gentleman is by far the the most important influence right now on the immediate trajectory of your net worth. We are talking, of course, about...

It was a quiet week, so let’s take the opportunity to zoom out a bit, look at the bigger picture and see where we stand in the ongoing saga of this bear market .. There wasn’t too much to take from a choppy, vacation-shortened week with increasingly thin attendance and extremely low volume (see EXPLAINER: FINANCIAL TERM OF THE WEEK as well as UNDER THE HOOD below) ahead of and right after the Than...

Apologies once again for last week’s report, or the lack of it. I am safely back in the US now and very much recovered. Thanks for all the good wishes that I received, they are very much appreciated. Towering over last week’s market activity was the extraordinary and shocking fraudulent collapse of the FTX crypto exchange. For many, this was a watershed moment where the whole crypto eco-system was...

In a horror movie, it often happens that the poor young person being chased in the house gets right to the front door and is just about to escape onto the street when the killer suddenly jumps out and grabs them. As an audience, we are teased with the prospect of good news when, suddenly, that hope is snatched away. That’s pretty much what happened in the stock market last week, specifically with...

There was such a torrent of market intel to try to absorb last week that it was hard to keep up at times. It also meant that leads got buried all over the place as news and data points that would usually be the focus of market attention for a matter of days were eclipsed within hours or even minutes by yet another surprising earnings report, economic data release, geopolitical development, global...

A Wall Street Journal report on Friday by Nick “The Fed Whisperer” Timiraos reported that, while the early November Fed meeting will still most likely result in another 0.75% increase in interest rates, it could well be the final one that showcases a hike of that magnitude and that committee members are now actively contemplating easing up in December and beyond. Interestingly, on the same day, Sa...

The market spent the first three days of last week just shifting about in a bumpy, lethargic, generally downward-trending trading pattern, simply waiting it out for the main event in the form of the Consumer Price Index (CPI) inflation number release due on Thursday morning. There was certainly no sign that the buyers from the week before were looking to capitalize on their brief success and take...

Bad news is often good news for investors these days, who have to perform mental gymnastics as the economic picture comes into focus. Traditionally negative indicators of a weaker economy such as rising unemployment or falling consumer spending tend to result in lower inflation, which likely means the Fed can take its foot off the gas with monetary tightening, which should mean less pressure to ra...

KEEP AN EYE OUT FOR THE MY INAUGURAL QUARTERLY MARKET REVIEW WHICH I WILL BE SENDING TO ALL SUBSCRIBERS IN THE NEXT DAY OR TWO, TAKING A DEEP DIVE AND LOOKING BACK OVER AN EVENTFUL (TO PUT IT MILDLY!) Q3 2022. Dearly beloved, we are gathered here today to mourn the demise and end of the summer stock market rally which finally expired last week, as the entire set of gains since the June 16th prior...

For years, corporate America and stock market investors could rely on the Federal Reserve to have their back. Ridiculously low borrowing costs turbo-charged stock prices - especially those of profitless (and sometimes mindless) tech companies. The Fed’s interests were aligned with those of the likes of Apple, Tesla and Microsoft but also with those of regular people pouring money in their 401k eve...

Monday was mostly just about positioning going into the next day’s inflation print (although the surprisingly effective counter-attack by Ukrainian forces also came into play somewhat). A narrative slowly built throughout the day that maybe future inflation might not be as elevated or persistent as was previously feared and that we might expect to see an appetizing Consumer Price Index (CPI) numbe...

A holiday-shortened week began uneventfully with little of interest coming over the newswires and markets simply drifted along the path of least resistance, which is currently downwards. Things soon began to pick up steam to the downside though, as the Chinese city of Chengdu extended COVID lockdowns for the majority of its 21 million residents due to rising infection numbers, dimming the demand o...

How quickly that half-full glass I talked about last week has emptied. A third consecutive week of stock market losses ended with a thousand point fall in the Dow Jones Industrial Average on Friday as Federal Reserve chair Jerome Powell, talking at the Fed’s annual jamboree in Jackson Hole, Wyoming, ferociously doubled down on the central bank’s commitment to raise interest rates as aggressively a...