Financial News vs. Noise
Jim Cramer VS Technical Analysis
I made a point in yesterday’s note that I think is extremely important. The Fed was wrong about inflation being transitory, and they are currently wrong about policy being restrictive. Both mistakes led to policy being overly accommodative. So while some of yesterday’s rally was due to a relatively cool PPI, I also think investors are brushing off sticky inflation based on an expectation that the Fed is going to ease anyway. Reading that the Magnificent 7 accounted for 95% of the S&P 500 gain. Don’t think this is bullish as those names are used as a flight to safety.
Not happy about the rise in yields either
But do like to see this, VIX spiked only to end up at the lows
Remember though VIX needs a reason to stay elevated. I put much more stock in rates and the fact that yesterday was more about a rotation back into Mag 7 than it was a broad based rally. Seeing a lot of people all bulled up, maybe they are right, but I’d be a bit more cautious here. Big bank earnings today, so that could impact the narrative.
WSJ makes a great point here. Interest rate cut expectations have been going down, but perhaps they are being replaced by higher earnings expectations. Interest Rates Have Investors Worried. Profits Give Them Comfort.-WSJ
Stronger-than-expected economy portends fewer rate cuts this year and improving earnings
This could also be an issue. Iranian Attack Expected on Israel in Next Two Days-WSJ
Hard to see how a direct attack on Israel doesn’t lead to a much broader war in the Middle East.
Bottom line you still need to be buying the dips, but I suspect earnings season has to deliver.
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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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