Financial News vs. Noise
Nothing happened Friday to change our thesis that this market goes nowhere as long as the market and the Fed disagree about timing and amount of rate cuts. PCE on Friday didn’t give us any clarity as it came in as expected. Wednesday is FOMC and Treasury refunding so perhaps that will shake some things loose. We also have earnings from MSFT, GOOGL, AMZN, AAPL, and META this week, along with a bunch of other important names. Friday is jobs. Going to be a fun week.
Speaking of the FOMC, this was interesting this weekend from Nickileaks:
Instead, Fed officials are likely to take a symbolically important step this week by no longer signaling in their policy statement that rates are more likely to rise than fall. Ditching this so-called tightening bias would affirm that officials are entertaining lower rates in the coming months.
Normally, the Fed cuts interest rates because economic activity is slowing sharply. Not this time: Growth remained surprisingly robust through the end of last year. Rather, they are mulling whether softening inflation means real interest rates will be unnecessarily restrictive if they don’t act.
We run counter trend and trend models. I am a counter trend trader at heart but realize there are times when you want to grab a trend and ride it, right now is a time for counter trend trading. Friday we saw money rotate into the commodity names, crypto, and lets call them the Trump names. Magnificent 7 was mixed and precious metals were a bit weak. Given all the data this week it should be a target rich environment. You have Mag 7 earnings obviously and then small caps, ARK names, and anything commodity related is going to move a lot on interest rate policy.
Our weekly counter trend models are starting to pick up a lot of value names. I am not a believer in long term value investing. I think pre internet it was a thing as you could be smarter and work harder and uncover names before anyone else. Now we all have access to the same information, so I am dubious that anyone can consistently find things before anyone else. However, money moves around and from time to time value stocks will outperform. Interestingly Blackrock just moved a bunch of their model portfolios into value stocks, so something to watch.
@kgreifeld the quiet, heavy hand of model portfolios one-day flows: $IVE +$2.9b $DYNF +$1.9 $QUAL -$2.2b $OEF -$1.5b BlackRock is “switching the growth style over to value to reflect a bullish view on the economy and a soft landing” https://bloomberg.com/news/articles/2024-01-26/blackrock-s-model-portfolios-shift-billions-into-value-stocks… via
Crypto miners look like they may have bottomed.
Right now this year looks to be about FOMC interest rate policy, you can’t read anything into what’s going on in January. As goes January, so goes the year? History shows U.S. stocks are set to continue climbing in 2024 after strong start.-MarketWatch
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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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