Category Archive

There is a lot of trepidation about markets in September. The seasonals worry investors (one of the toughest months), coupled with midterm election uncertainties (not resolved until November) and the painful three-week downtrend in stocks adding to the misery. Stocks are approaching the “no bid” situation seen in June 2022. In investor conversation after conversation, many tell us they see …

Countertrade consensus into and after Jackson Hole We think Fed Powell’s speech at Jackson Hole at 10am ET (8/26) is a buyable event. That is, under any of the following 3 scenarios, we are buyers of equities: Powell hawkish –> speaks of need to stay tough on inflation and markets might weaken. But we buy equities as leading indicators show …

Sentiment among our clients has not changed much. The plurality of our clients remain skeptical and see a multitude of problems ahead (see discussion below). But our view remains that we see a 2H rally leading to new highs for the S&P 500. We believe this will be led by FAANG/Large-cap Technology and Growth. And while we like Energy for …

The rally seen in equity markets post-CPI has been largely met with skepticism. This is essentially true of the gains seen over the past week and past month. Below is a comment from a sellside strategist and is emblematic of the pushback we get from clients (keep in mind, the sellside often mirrors what institutional investors broadly are saying). As …

Investors remain broadly cautious on equities. This is completely understandable given the carnage in markets this year, along with the great uncertainties associated with the trifecta of rising inflation, Russia-Ukraine war and “negative shocks” delivered by Fed hawkish policy. But as a counterpoint, one can be constructive if one believes some combination of below: inflation proves to be less “sticky” …

The biggest takeaway for me on events of this week? Convincing and arguably decisive evidence the “bottom is in” — the 2022 bear market is over. this was a big data week, with FOMC, 2Q GDP, housing and PCE (today) a huge miss on GDP, yet markets rally Fed raises +75bp and says focus remains on inflation, yet markets rally …

We are starting to see strengthening internals for equity markets, including key leadership improvements from Technology ($QQQ) and small-caps ($IWM) and measures such as advance/decline lines. Thus, from the perspective of our Head of Technical Strategy, Mark Newton, this is the healthiest expansion of participation all year, and a key reason he believes the “bottom” for 2022 is in. skepticism …

Despite a flat out bad June CPI report, equities starting to see “less bad” In the 36 hours since the horrific June CPI report, equities have managed to better with Technology stocks managing gains. initial “hawkish” market reaction was to price near 100% odds of +100bp for July hike but as the Fed funds futures chart shows, this was reversed …

Incoming economic “hard” data (over next few weeks) may not necessarily confirm the increasing signs of softening of inflation There will be several incoming “hard” data points that will impact market views on inflation and economy and therefore impact Fed policy. Paramount remains inflation pressures and while many “soft” (surveys and market implied) and leading indicators (commodities, etc) have softened …

Cooling of inflation (“i”) aka disinflation is Fed primary focus and in 1H2022, the sole focus of markets. Obviously, there remains the question of how quickly inflation can cool, and this lack of visibility unsettles markets. But as we discuss below, energy prices have dropped sharply in the past few weeks with Natural gas down -45% and oil -14% and …