Financial News vs. Noise
Red day yesterday, led by China, and red morning so far, also led by China. Most important news out of yesterday was probably Fed head Waller saying 3 cuts would be appropriate this year vs. the market expectations of 6 or more.
Fed’s Waller sees interest-rate cuts this year, but nothing ‘rushed’-MarketWatch
“When the time is right to begin lowering rates, I believe [the rate] can and should be lowered methodically and carefully,” Waller said in remarks to the Brookings Institution.
While in many past cycles, the Fed cut rates quickly and by large amounts, Waller said that this year he sees “no reason to move as quickly or cut as rapidly as in the past.”
@zerohedge: Goldman: "Comments by Governor Waller today raise the risk that the first cut could come later than our forecast of March and that the pace of cuts could be quarterly from the outset, rather than our forecast of three initial consecutive cuts followed by a switch to quarterly."
My expectations coming into this year were that this argument would eventually come to a head, not unlike it did last year when the pivot bro’s where disappointed. So far it is playing out much earlier than I thought. I have also been wrong so far on the idea that money would move into commodities, small caps, and emerging markets, but right in that you want to buy the dips in Magnificent 7. Right now MSFT and NVDA are holding this market up. AAPL and TSLA continue to be the weakest, and not coincidentally the ones with the largest China exposure. Weakness in China is also impacting a lot of the commodity names.
Looking at the market you see what could be a double top in the SPX:
I suspect the 4700 number will be important support.
IWM is the weakest and has filled the gap from December.
Profitable tech and consumer staples look to be the areas of strength right now, while everything else looks like crap.
Meanwhile the 10 yr is now back above 4%
I don’t see any real reason for a significant sell off at the moment, but we have come a long way since the start of November, which I have to figure was based on a higher rate cut projection that is currently being signaled. So not really seeing a catalyst for a major leg upwards here either.
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