Financial News vs. Noise
Market continues to be about as expected. Small caps were the best performers yesterday, worst pre market. Rates were down, this morning they are up. China was up big yesterday, down big this morning. In the Magnificent 7 the two laggards, TSLA and AAPL, were the top performers. TSLA also doing well pre market, perhaps it has bottomed.
Not a lot of data but a parade of Fed heads. One thing to keep an ear out for is any mentions of the neutral policy rate. One school of thought is that with economic numbers rising in the face of higher interest rates, current policy is not in fact “restrictive”. Last week Powell said this about the neutral rate:
"...we don't know with great confidence where the neutral rate of interest is at any given time." Later in the press conference he also expressed his greatest doubt on record as to whether it has changed. "But at the same time, you look at the economy and you say this is an economy that grew 3.1% last year. And you say, what does that tell you about the neutral rate?"
Kashkari gave a speech yesterday and said:
"It is possible, at least during the post-pandemic recovery period, that the policy stance that represents neutral has increased."
A few others gave comments as well. This is important because if the neutral rate is higher then policy is not as restrictive as the market thinks and the Fed may have to be even more cautious about easing. It would be another sign that the market is off on their expectations about the amount and timing of rate cuts this year.
I continue to believe this is a counter trend market until we get some clarity one way or the other. I also continue to believe you buy dips in the Magnificent 7 and you can add TSLA back in. Would like to see it move back above it’s 10 day and then the 191.25 low.
I am not currently in MSFT but I like the way it is holding the 10 day and that could be used as a stop to go long.
I have been waiting for industrial metals to move all year, and they did yesterday, probably mostly on the China move. They look red with China this morning. I continue to think we see money move into commodity names this year and will continue to trade these names for now, but will take them off my watchlist if this move never materializes.
Yesterday the crypto names did well, especially CLSK which I continue to own. Bitcoin hasn’t really budged much and all the hype around the spot ETFs seems to have died down a bit. Keep an eye out because this is the type of environment where you could see a big move.
I have been talking about NYCB a lot lately. Did a last minute Spaces yesterday with Yang Tang. Looks like the slide is continuing. Moody’s Cuts NYCB to Junk, Extending Sharp Decline in Shares Downgrade is latest blow to bank seeking to shore itself up after acquisitions, property losses-WSJ
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