Morning Markets | JPM Says 'Stay Long Stocks', But Bloomberg Likes Gold More

Podcast: why stocks continue to drop through Fed Eyes

May 10, 2022

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Market Rundown:

Good Morning. The dollar is down 7. Bonds are unchanged. Stocks are firmer up between 50 and 120 bps. Gold is currently up $2 and Silver is up 7 cents. Crude is whippy ranging from up 50 cents to down $2.00. it is currently down $1.00. Natural gas continues to decline after a torrid run, down 27 cents now. Grains are stable and a little firmer. Crypto isvery strong in sympathy with stocks and o ntheabck of the Luna/Terra “rescue” yesterday.

DATA TUESDAY, MAY 10
    11 am Real household debt (SAAR) Q1 -- 2.5%

Post Excerpt

Gold Gaining Upper Hand vs. Stock Market, Fed

Fighting the highest inflation in 40 years, the Federal Reserve is likely to remain vigilant until the stock market drops enough to signal a rate-hike end game, with implications for gold. It may take the Nasdaq 100 Stock Index to breach the minus 8%, 52-week rate-of-change threshold to mark a gold-to-stock-market inflection. (05/09/22)

JPM Still Bullish Stocks

We stay pro-risk, with OWs in equities and commodities and UWs in bonds and cash. The past week’s sell-off appears overdone, and driven to a large extent by technical flows, fear, and poor market liquidity, rather than fundamental developments….
While we expect growth to soften, we continue to push back on a base case assumption that the global economy is headed for recession, an outcome that is increasingly being priced by markets. We see supports for our pro-risk stance from COVID reopening, policy easing in China, strong labor markets, light positioning, distraught investor sentiment, and healthy consumer and corporate balance sheets. It also appears that we’ve reached peak hawkishness from central banks.
Also: Overweight Commodities and Energy stocks (given our supercycle thesis, geopolitical risks, and Energy stocks pricing in long-term oil well below spot prices)