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Earnings for the Magnificent 7 haven’t started out well. We had the TSLA debacle last week and last night was GOOGL and MSFT. My inclination is that you want to buy this dip, but we have FOMC at 2:30 which could be a game changer, so I would sit on your hands until then. Here’s the latest from Nickileaks:
At a minimum, the central bank’s policy statement is expected to lose its so-called “tightening bias” that has signaled an increase is more likely than a cut. That is in part because nearly all Fed officials have indicated they don’t think they will need to raise rates again, so maintaining the tightening bias could be confusing.
In recent days, investors in interest-rate markets have put the odds of a rate cut at the Fed’s subsequent meeting on March 19-20 at around 50%. With guidance in the policy statement watered down, the focus will shift to how strongly Powell pushes back against those expectations.
So the key point seems to be whether Powell signals a March rate cut, or investors get a better sense than 50/50. Don’t forget QRA at 8:30 also.
While I think you want to buy dips in Mag 7 names I do not think they will be anywhere near last year’s performance and if the rally continues I believe it has to broaden out. Coming into earnings where things are price for perfection, it will be interesting to see if money starts to rotate into other areas—value, commodities, small caps, etc.
TSLA moved above the $191.25 low I have been watching yesterday, but is now back below pre market. Lot still going on with Elon.
@CNBC: Tesla shares slide after (Delaware)judge voids Elon Musk's $56 billion compensation
@elonmusk: Never incorporate your company in the state of Delaware
@zerohedge: Musk now getting the Trump judicial treatment. Defamation lawsuits next.
Emerging markets are interesting. We continue to be short China and we flipped short on EEM yesterday, which is mostly China. On the other hand I added longs in Argentina (GGAL) and Brazil (PAGS). If this rally does broaden out I think it moves to EM, however, I think you do need to be selective and I prefer Argentina and Brazil at the moment.
Lots of data still to come this week. Yesterday I speculated that Monday’s gains may limit the possible upside we have for the rest of the week, but anything could happen here. I would be looking to cautiously buy dips, without trying to catch a falling knife.
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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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