The Case for Retesting the June LowsIt 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 SkyOver 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 MessageIf 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 FedMarty 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 SwingsWhen 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 FedThe 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 DrawnThe 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% YoYThe 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?
Stay Patient – Pullback ComingWhen prices are rising (as they are today) in a bear market -- all too often sentiment will shift prematurely. It's called a bear-market trap. And I think this is what we are seeing...
It’s All About Bond YieldsThe market is currently being led by one thing: what we see with bond yields.
Why Bad (Jobs) News Could be Good NewsA 'bad print' for the number of jobs created (or lost?) over July could actually be good news for stocks. On the other hand, a strong number only amplifies the Fed's resolve to hike
