Morning Markets | Goldman Does the Safety (Stock-Pick) Dance
FED HAWKISHNESS BEING TESTED
Market Rundown:
Good Morning. Today so far markets are not behaving as if they fear a recession. They are behaving as if in anticipation of increased Chinese re-open demand. For our money, it makes sense to just look at things as a game of chicken now. The Fed has to get inflation under control. The market will periodically test their resolve to see how committed the fed is to its new found hawkish stance.
Also keep in the back of your mind that Elon Musk not only called out the Fed saying we were i n a recession, but he also said inflation is too high. That might be giving them fits as the MSM now can latch on and make it a talking point.
As of 9am the dollar is very weak down 77. Bonds are softer. Stocks are up anywhere from 1.3% to 2.0%. Gold has caught a bid up $14 but off its highs. Silver CTA shorts got squeezed again this morning and are licking wounds, but that’s not a clear for take off comment. The selling now is likely deep pocketed banks to them covering. We shall see.
Plenty of Fed speakers today to talk tough. Let’s see if the market respects them or dares Powell to actually do a surprise hike or not.
As of this writing, Bullard, who has been the toughest recently (Bear-ard?) has not stopped the rally. Maybe Powell will be bad cop today.
Today's Fed Speakers:
08:00: Bullard
09:15: Harker
12:30: Kashkari
14:00: Powell
14:30: Mester
18:45: Evans
Post Excerpt:
Goldman is putting out its safe stock list now.
We identify a screen of 20 stocks that offer a “Margin of Safety” for equity investors. The constituents of our screen have three characteristics: (1) Size and liquidity, (2) balance sheet strength, and (3) attractive valuation based on our metric: The P/E multiple after applying a 20% haircut to expected 2023 earnings is below the forward P/E at the bottom of either or both of the two most recent bear markets: March 2009 and March 2020. The typical stock on our list today trades at an adjusted 2023 P/E of 12x compared with the S&P 500 median of 20x…
***CONTINUES AT BOTTOM***
While the narrative always makes sense. we just want to remind readers that it was Goldman that under-reported inflation for months last year adn is now telling us it will continue to rise.
So what to believe? Believe this, Goldman has been very hot in comodities and does them very well historically especially with their super-cycla narrative. Regarding stocks, we do not know as much about them, but can say that these companies will probably get a bid relative to the rest of the market for a while from this. So eother they will do well, or less poorly.
Good luck
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