Tech May Catch a Short Term Bid – But It’s Expensive

Stocks look set to rally a little in the near-term from oversold levels. However, act with caution, as they are looking expensive given the environment of expected EPS decline.

Wage Growth of 5.2% to Strengthen Fed’s Resolve

The US economy added 315K jobs in August. Good news. However, wage inflation ripped higher at 5.2% YoY. Based on this, it's likely the Fed will continue with a period of 'unusually high' rate hikes to reduce demand and wage inflation.

August Wasn’t Kind… Don’t Expect Sept to be Better

August wasn't kind for stocks - with the S&P 500 losing 4.2%. The market is now just 8.8% off the June 3636 low... expect this to be retested

The Case for Retesting the June Lows

It would be remiss of investors to rule out a retest of the June lows. This post explains my reasons not just technically (which has served us well) -- but more so fundamentally. Have we fully priced in the impact of where rates are likely to head in addition to QT?

Trees Never Grow to the Sky

Over the past three decades - I've developed a strong appreciation for market cycles. For example, I know that it's impossible to predict the future with any certainty. However, what I can do is prepare based on what I know to be true.

Powell Delivers a Blunt Message

If it wasn't already clear - it is now. Interest rates are going sharply higher and for longer. Powell's 8-minute Jackson Hole speech was carefully scripted - using words like "pain" to prepare the market for what lies ahead.

Don’t Fight the Fed

Marty Zweig's 1970 book "Winning on Wall Street" popularized the term "don't fight the fed". Today we have an environment where: (a) liquidity is contracting; and (b) rates are tightening. That's not conducive for higher prices.

The Pendulum Swings

When things are going well and prices are high, investors rush to buy, forgetting all prudence. Then, when there’s chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will ever be so - Howard Marks

Markets Big Bet on a Dovish Fed

The S&P 500 is pushing into an area of clear technical resistance. What's more - fundamentally it's no longer cheap at approx 18.5x forward earnings. My thinking is the market is not an attractive risk/reward bet at these levels... and are under-appreciating the task in front of the Fed.

The Bull vs Bear Battle Lines are Drawn

The bulls have market momentum supported by solid breadth. We are past peak inflation (it would seem) which lends itself to a more dovish Fed (in theory). However, valuations are high - trading 18.5x forward. What's more, the Fed is withdrawing liquidity - not adding to it. That's an argument for the bears.

The “Everything Rally” as CPI Comes in at 8.5% YoY

The market has now rallied to a zone of potential resistance (4200 to 4400). The next few weeks will be a strong litmus test for market. My guess is we roll over...

Do Upside Gains Easily Outweigh the Downside Risks?

With the S&P 500 some 14% off its lows - trading just below 4200 - at 17.5x fwd PE - what's the potential upside reward? And do those potential gains outweigh the downside risks?