Powell and the Great Indecision
Michele Schneider | Apr 17, 2024 01:39AM ET
In today’s presser with Powell basically said what he typically says:
Higher for longer but maybe not as risks remain to the economy while inflation is too sticky.
Here are some of our thoughts on the overall macro and technical picture.
- All indices are below their 50-DMA and in caution phases.
- Inflation-yes stickier but not everywhere-grains down, sugar down, lumber down, gold, coffee, cocoa, oil, copper, silver up…
- But silver still well underperforming gold. Gold is right now more of a flight to safety. What will get gold to 3000-besides war?
- If silver at least starts to show us it can begin to outperform gold in the gold to silver ratio. For now, the theme is potential stagflation given weak manufacturing and housing, strong but nuanced labor stats, inflation pocketed, govt debt/spending soaring, and geopolitical uncertainty.
- This type of disjointed inflation read most likely leads to some rate reduction if LaGarde does it first as she suggests-which in turn could lead to
- A buy in emerging markets
- Topping action in the US dollar
- Long bonds finally bottoming out -but will that be good for the market? Here is where potential recession comes into play.
- Junk bonds flashed the warning on this sell-off as they always are best risk on/off indicator-now coming into major SUPPORT-which if breaks below will send stocks lower still. If these levels hold and HYG gets back over 76 will start to nibble some stocks
Meanwhile, back to the future…
- Consumer shifting spending-more on personal care than travel or homes-this is our vanity trade (based on the new diet drugs becoming more mainstream) and we still like
- Novo Nordisk (NYSE:NVO)
- ELF (NYSE:ELF)
- AbbVie (NYSE:ABBV)
But not buying until market stabilizes
- With money in fixed income, consumer is making more in the short-term interest-bearing assets than what the consumer debt is-only exception is new mortgages.
- Solar-unless oil takes out current highs, could still flounder-but at some point, TAN around 40 looks very cheap and appealing.
- Bitcoin-rangebound-must hold 60k and get back over 65k-the halving event appears priced in. Overall, gold is well underperforming in the longer term but near term is more of a store of value. While gold took out the 2021 highs-bitcoin has not.
- MY LONG-TERM prediction-gold has more upside but then in 2025 peaks out for a very long time and bitcoin resumes the future store of value.
Get The News You Want
For more picks and pans stay tuned…
h2 ETF Summary/h2S&P 500 (SPY) 500 next big support
Russell 2000 (IWM) 192 support
Dow (DIA) 372 the January low
Nasdaq (QQQ) 427 support
Regional banks (KRE) 45-50 range
Semiconductors (SMH) 205-206 support
Transportation (IYT) 67 pivotal with 65 bigger support
Biotechnology (IBB) 128 pivotal
Retail (XRT) 67.00 next support
iShares iBoxx Hi Yd Cor Bond ETF (HYG) 75.50 the 200 DMA
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.