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Like always. Thanks for spending the time to record this weekly video. I do understand that macro-economics is important, but the short-term downtrend sentiment of the market is not a good feeling. I do believe that everything will work itself out at the end. If we were to have a recession, tech companies like Meta will get hit pretty hard. However, hopefully tech companies can rebound in the short term.
ReplyDeleteAlways my pleasure Sam. As I know you already know, bear markets and corrections are inevitable -- and ultimately healthy -- phenomena. But you're right, they can feel lousy when they occur.
ReplyDeleteThings will get ugly before they get better. I just listened to Frank Ian Luntz from CNBC. He suggests that we are 13 days away from a huge surge of inflation rate. Americans typically spend a lot of money buying food, filling up their tanks, and traveling during the July 4th holiday. Because of that, inflation will get much worst and may not peak yet. If that is the case, we should expect another 75 basis point or much higher interest rate increase next month. As far as for the short term, I do agree that we may see a bull rally by next Wednesday if not by next Friday when we see the Michigan Consumer Sentiment Index.
ReplyDeleteHey Sam, indeed, July 4th will see a ton of spending. But keep in mind, if indeed it's simply a seasonal phenomenon the Fed will couch it as such and discount it in their calculus. As they fully realize that such an event would result in quite the month-on-month decline (as it settles back in) post the holiday... And while I do believe inflation has either peaked or is near peaking, I hold no delusions that it will decline to nearly the point that would have the Fed seriously lighten up, unless, that is, we fall into recession (which is a growing possibility by the day)... With regard to a near-term rally, no doubt one is in the offing (it's always just a "when"), although the options dynamic that involves a rare setup only seen a few times over the past few years (each preceding a substantial rally), it appears that if a dealer-short-covering-rally comes at all, it'll be mild relative to those past events. Looking at the commitment of traders report for S&P futures today, speculators have just switched from net short to net long , i.e., looks like a lot of short-covering has already occurred... Plus, if puts are simply rolled to near the money strikes (as opposed to notably down and further out of the money), the dealer-covering-rally dynamic gets significantly muted... Suffice to say that there's net distribution (as opposed to accumulation) occurring at the moment, which, added to the unique inflation/fed policy/waning liquidity backdrop, has traders quickly fading the rallies (like last Wednesday's)... As I type (Saturday evening) crypto is getting smashed to the point that smacks of a liquidity event (at least in that space)... Should that translate to other asset classes (it has been notably correlated to the Nasdaq Index this year), it bodes very poorly for stocks come early next week... Right now in what I'll call "off-index" trading this weekend, stocks are selling off as well (but not the extent crypto is)...
DeleteAnyway Sam, so much going on right here, and as the macro setup deteriorates, amid a Fed determined to tightened (Waller sounded completely undeterred today), that 3500 target of ours is looking thinner by the day... Near-term rally or not...
Quick followup with regard to the crypto correlation. Mid-day today some huge buying came in and pushed btc for example up by more than 10%... For the moment, futures are rallying. Keep in mind, this is all very short-term stuff, only marginally meaningful for our purposes (although our hedging of late has been fairly short-term duration). Longer-term it's broad, global, general conditions/setups that we're primarily concerned with...
DeleteThanks Marty! Thanks for all the hard work from you and your team. Your hard work is noticeable. As a client, I am very appreciative to have you as a financial advisor.
DeleteThanks so much for all of your feedback Sam! We love what we do. We're honored and humbled by the trust our clients place in us; we take our responsibility very seriously. And we appreciate you as well my friend.
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