Financial News vs. Noise
Wow. If I had to guess I would have thought Powell would come out somewhat hawkish given the easing of financial conditions we have seen over the past few weeks. By some calculations I have seen, the easing in conditions we have seen the past month has eradicated the impact of all the rate hikes. Instead, he gave the market an early Christmas present. One could argue that the Fed is clueless, or bowed to political pressure, or both. One could also argue that Yellen is now dictating Fed policy and not Powell. For investors at the moment it doesn’t really matter. Will it matter next year? Maybe.
Pretty much anything to the long side worked yesterday, but the biggest winner, outside of the shitco’s, were precious metals and miners. A bit painful there for a week or so if you were long the space, but vindication yesterday. Remember, the miners are volatile and the best time to buy them is when nobody else is. Think you need to have a position, but taking some profits wouldn’t be a bad idea, nor would buying any dips.
The Magnificent 7 names all rallied, except MSFT which was basically flat. However, they didn’t rally nearly as much as everything else. I still think you have to buy the dips in these names, but as I have said before, something has to give. You can not have a sustained market rally in just stocks, either they have to come down to meet everyone else, or everyone else has to come up to meet them. Looking like the latter at the moment.
A week or so ago I was talking about a potential rotation into commodity stocks. Turned out to be a one day wonder move, or was it? Now they are perking up again. A name like AA that has been extremely disappointing for example, may be ready to get going for real.
I would also love to get back into VALE. Not just for the metals exposure but also EM and Brazil specifically.
Forget what I sad about oil stocks yesterday, we bought COP as oil also seemed to like what Powell had to say.
I took profits on Bitcoin miners, but will look to buy dips. MARA closed within a couple of cents of it’s recent high and is getting into double top land.
I also mentioned a few days ago that we could be getting into a spot where you would want to go long oil companies and short airlines. I did take a very small short in DAL. I emphasize, very small. Don’t fight the Fed.
We are back in an everything rally so I think you could really throw a dart at a board here. My focus will be mostly the commodity names, including oil, dips on precious metals if I can get them, dips everywhere else.
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News vs. Noise
Jerome Powell Makes His Inflation Pivot-WSJ
Investors were no doubt looking at the Fed’s famous “dot plots,” which track the estimates of Fed governors and bank presidents about future inflation and interest rates. The monetary mavens think inflation is conquered, even if Mr. Powell won’t say it.
Jim Grant: We've Yet To Feel The Full Consequences Of The "Era Of Free Money"-Zero Hedge
I think that the consequences of more or less 10 years of proverbially free money are going to play out in the credit markets.”… Grant is describing a long-term trend of high inflation, low economic growth and high interest rates — in a nutshell — stagflation…
Oil Prices Higher on Fed Signals, U.S. Storage Withdrawal-WSJ
Probably nothing. Here’s what the COP28 pact to phase out fossil fuels means for oil-MarketWatch
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