Macro Strategy—Powell On A Mission: U.S. policymakers responded to the pandemic shutdowns with the most aggressive fiscal and monetary stimulus in over 75 years (Exhibit 1). As a result, monetary policy since the pandemic is most like that of the years right after World War II (WWII). Strong M2 money-supply growth in the mid-1940s was…...
So this just happened: The S&P 500 gained 3.9% from the day of the Fed hike through the following trading day. That is officially the best rally after a Fed hike going back to 1970 (Bloomberg data). Not only that, the S&P 500 kept going on Friday, finishing the week up 4.26 percent. The benchmark…...
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” ~Charlie Munger Side Note on Fed: I can’t see FOMC members appreciating the market’s reaction to their message, outlook and July rate hike.…...
Key talking points Aggregate retail inventories have been steadily improving as demand for goods moderates and supply chain bottlenecks ease. The retail inventory to sales ratio has ticked up from the Oct 2021 trough, yet it is still below the 2011-2019 average. That said, the story varies across sectors. At one extreme, general merchandise stores…...
It’s difficult to be too optimistic with another 75bps rate hike (almost certainly) coming next week, and especially given how the week ended for the markets. However, the S&P 500 (SPX) and Nasdaq (COMPQ) both finished above their respective 50-DMAs for the first time in 3 months, to complete the week. This is a positive…...
“Bear market rallies are labeled because things get so badly discounted they foster the idea that it has to get better from here. The bear market rally is validated with lower lows when metrics don’t deliver on the optimism of “from here”. Bottom line: “from here” demands work!” ~Seth Golden If you wish to watch…...
While Defensives are the clear leader, most investors aren’t there, leaving more upside potential as earnings cuts begin. Counter-trend rally may continue, but make no mistake, we don’t believe this bear market is over, even if we avoid a recession – the odds of which are increasing. Defensive leadership reigns supreme but few want to…...
A big WELCOME BACK to all of our Finom Group members, as we kick-off another monthly cycle of Research Reports and macro-market analysis. This past week found the major averages consolidating gains from the previous week, again. From large-caps to small-caps, and everything in between, stocks hit the skids once again, failing to find follow…...
A very strong US dollar provides yet another headwind for earnings. Meanwhile, from a historical perspective, this bear market may only be about half way done in terms of time and perhaps price, too. Our defensive recommendation has paid off this year and now represents a momentum trade; stick with it. Stronger dollar poses another…...
Cross-Asset Strategy: While growth risks are elevated, our base case looks for an acceleration in global growth in the second half of the year, led by China, and a moderation in inflationary forces that should allow central banks to pivot. Last week’s strong US jobs print should allay concerns that the economy has already slipped…...
