ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
The landscape of inflation and monetary policy continues to change fast. The June inflation numbers disappointed expectations once again for peak inflation. A surprise 1% point rate hike by the Bank of Canada combined with this hot inflation accelerated the timeline for peak interest rates from the Federal Reserve. Instead of a 75 basis point … Read more
That sigh of disappointment was Wall Street looking for signs of a weakening labor market in the June jobs report. Instead, that report showed job creation remains robust in the economy. Not only did the unemployment rate remain steady at a low 3.6% with the economy adding 372,000 jobs (far more than “consensus” expectations), the … Read more
After presenting my conditions for bottoming across the collection of ARK funds, the funds suffered a serious setback in the bottoming process. Some funds hit new lows and others cracked critical support levels. The stock market’s rebound from oversold conditions helped turn the tide and sentiment on the ARK funds. Interestingly, performance relative to key … Read more
Stock Market Commentary The edginess of the stock market continued this week. After “turnaround Tuesday” delivered broad based gains for the market, Fed Chair Jerome Powell’s testimony in front of Congress produced a familiar fade in the shadow of a bear market. Surprisingly, the buying was enough to end oversold conditions. Yet, the major indices … Read more
Stock Market Commentary The rumors were true. The Federal Reserve decided to pump up interest rates by 75 basis points (bps) (0.75%) instead of the 50 bps originally anticipated by financial markets. The historic move was the largest point increase since 1994. During the press conference explaining the latest decision on monetary policy, Chair Jerome … Read more
It is easy to forget that the months going into the COVID-19 pandemic were filled with fears of a recession. In response to mounting economic and political pressures, the Federal Reserve, led by Jerome Powell, reversed course on the Fed’s 3-year effort to slowly normalize monetary policy with what he called a “mid-cycle” rate adjustment. … Read more
Stock Market Commentary: Despite recent bouts of trading in or like a bear market, market breadth has somehow managed to avoid closing in oversold conditions. In fact, the last “official” oversold period was 518 trading days ago. Yet, since the NASDAQ topped out in November, market breadth has dropped into and out of oversold on … Read more
Two recent studies from the Federal Reserve say a lot about its core concerns for inflation. These studies were released back-to-back just one week following Fed Chair Jerome Powell confirming the new religion at the Fed for (aggressively) fighting inflation. Researchers at the St. Louis Federal Reserve identified housing services (aka rents) as a core … Read more
Stock Market Commentary: How many times and how many ways does the Fed need to communicate its seriousness about normalizing monetary policy and fighting inflation? Apparently, the answer for Fed-speak is many times and a LOT of ways. Fed Governor Lael Brainard delivered one way with a speech on Tuesday titled “Variation in the Inflation … Read more
Housing Market Intro and Summary An aggressively hawkish Federal Reserve has changed the game for the housing market. After falling behind the curve and failing to start the rate hike cycle last year, America’s central bank is now desperately scrambling to catch up without causing a recession. The housing market is ground zero for the … Read more