Worst 6-Months to Start a Year Since 1970It's becoming increasingly likely we will see a recession next year (maybe before). And there's one thing that every recession has in common post 1950 -- aggressive Fed tightening into a slowing economy.
Will Falling Commodities Help Drive Inflation Lower?Commodity prices are well off their peaks. In theory, this should lead to lower CPI in coming months. But is this more an indication of a recessionary risk? I think so...
The Bear Roars… Markets Price in 75 bps HikeWhen it comes to the market - there are (a) times to make money; and (b) times not to lose money. Now is the time for the latter... the past decade was the time for the former.
We Haven’t Seen the Lows for 2022Consumer Price Inflation (CPI) continues to run at a 41-year high 8.6%. It's not hard to explain - look no further than monetary and fiscal policy. From mine, the Fed has no choice but to remain very aggressive - where a 75 basis point raise is not off the table. This is not conducive for higher stock market prices in the near-term
Don’t Be Fooled…CPI for May is expected to come in at a red-hot 8.2%. Anything north of 8% will not change the Fed's aggressive stance. In short, inflation is not likely to go away soon... look no further than energy and food prices. Here's why the Fed will hike straight into a recession.
Core PCE Rises 4.9%… But Is it Peaking?Is inflation peaking? If we knew the answer to that question - markets would be in a very different place.
The problem is - we cannot know for sure. However, there are positive developments...
Market Still has Work to DoThe market is likely to experience a technical short-term bounce. But don't expect it to be sustained. Whilst we may have formed "a low" - I don't think it's "the low" for 2022... here's why
Bear Market Rally… For NowThe S&P 500 has lost ground 7 weeks in a row. We have not seen that since 2011. At its low - we are 20% off the high. Is this the bottom? I don't think so. Whilst I expect a near-term rally - lower lows are possible this year.
Tech Pummeled… But “Fear Index” Still LowIn three sessions - we've seen over $1 Trillion of market cap wiped off mega-cap tech names. And whilst we're closer to a bottom - where valuations of some companies are attractive - there's likely more downside yet.
M2 Money Supply Still Far Too High Heading into the Fed decision - some feared we could see a 75 basis point rise. However, Jay Powell soon put those fears to rest. But the relief didn't last long... the 10-year treasury ripped above 3% as the market digested what a combination of (far) higher nominal rates.
