adriant

adriant

  • Joined: December 24, 2025
  • Articles: 502

Powell Won’t be Bullied

As we started this year - I felt the market was getting ahead of itself. Not only was the tape approaching an overbought zone - it also assumed as many as six rate cuts (possibly seven) before the end of the year. What's more - it also priced in that earnings per share (EPS) would grow 12% year on year. It felt like a contradiction. For e.g., either the economy was reeling and needed (emergency) rate cuts; or the economy is expanding strongly (supporting earnings growth)? Today Fed Chair Jay Powell pushed back on the former. Markets should not expect rate cuts as early as March... stocks didn't like it.

Has Tesla Lost its Halo?

This weekend I was reading The Art of Thinking Clearly by Rolf Dobelli. The book has a chapter called "The Halo Effect" - and references the company Cisco (CSCO) during the late 90s / early 2000's. It was timely - as it drew parallels to my post comparing the former market darling to Nvidia (NVDA). I demonstrated both technical and fundamental similarities. However, another company came to mind. Tesla (TSLA). For the past few years - TSLA had what Dobelli calls the 'halo effect'. However, is that now wearing off? And what implications does this have?

Core PCE Softens – Giving the Fed Scope to Cut

If there's one inflation indicator the Fed tracks more than any other - it's Core PCE (personal consumption expenditures). The PCE price index looks at U.S. inflation by measuring changes in the cost of living for households. It tracks the prices of a basket of goods and services, each with different weightings, to reflect how much a typical household spends every month. Today we learned that Core PCE continues to soften - which is good news. Question is does this give the Fed further scope to cut rates sooner rather than later?

Lessons from 1999/2000

Momentum is a powerful force. Bet against it at your peril. John Maynard Keynes was believed to have said "...the market can remain irrational longer than you can remain solvent". Sound advice. Those expecting (or worse betting) the market would reverse to start 2024 are probably questioning their decision. It's been one record close after another. Higher highs beget higher highs.

Will Earnings Deliver on the Hype?

Q4 2023 earnings are starting to hit the tape. From mine, if the market is to continue rallying - it's less about inflation and the Fed - it's whether corporate America will deliver on 12% earnings growth in 2024. Coming into earning's season - my view 12% felt ambitious - given the slowing economy and relative health of the consumer. This post talks more to the concentration in the market - the relative influence from NVDA - and why diversification will be key this year.

Equal Weight ETF to see Mean Reversion

The euphoria in markets continued last week - with the S&P 500 notching a new record high - taking out the 4817 high from Jan 2022. Thanks largely to the Fed signaling peak rates in combination with inflation trending lower - markets now believe a 'soft landing' is possible. That is, inflation ultimately trends back to the Fed's objective (2.0%) without any negative impact to the broader economy (e.g. widespread job losses). We will see how that turns out - as the Fed is attempting to thread a narrow needle. From mine, a soft landing remains a lower probability outcome. However, I believe there is still opportunity... and it's not with large cap tech stock.

EPS Growth of 12% with 6 Rate Cuts? Really?

Over the past couple of months - I've been trying to reconcile the following: (i) can the market achieve 12% EPS growth; and in parallel; (ii) see the Fed cut rates 5 or 6 times this year? I ask this question as that's what the market is pricing in. It feels like a contradiction. Can we achieve both? For example, if the Fed is forced to cut rates aggressively - what does that tell us about the health of the economy? I would assume it signals an economy in need of emergency assistance.

Market Confident on Imminent Rate Cuts Despite Inflation Print

Today we received the final monthly inflation report for 2023 - ahead of the Fed's next policy meeting Jan 30-31. Markets were expecting very good news... but did they get it? On the surface, both prints were slightly higher than expected. However, we saw a mostly muted reaction in both bond and equity markets. Bond yields fell - with the market maintaining its 68% expectation of a rate cut as early as March.

Weighing Risk(s) More Useful than Forecasting a Number

Around this time of year - a wrath of 'experts' forecast where they believe the S&P 500 will finish the year. For me it serves little purpose. For one, most of the time forecasts are typically wrong (and by a wide margin). Second, as time goes by, more information will come to hand which often changes our view. From there, forecasts should be updated. Third, there are almost always random events which reset the game. What happens to forecasts then? They are typically tossed out the window. With that, let's look at what the market "experts" believe we will see this year - and I will offer my approach.

Jobs Data: Choose Your Narrative

Today we learned that December added 216K jobs. CNN reported it as a "red hot" print. Was it? From mine, the headline number offers us very little. For example, what I want to know is the following (a) where are the jobs are being added (e.g. public vs private sector and what sectors); (b) what are people being paid per hour (is it rising or falling?); (c) are people working longer hours (as part time work doesn't pay a mortgage); and finally (d) what's the prevailing trend (as one month's data doesn't account for much). The headline number doesn't provide this detail - therefore we need to dig a little. My quick take - this report is weaker than what the headline suggests.