Housekeeping: Last week Tom Luongo graciously invited this author onto his Gold, Goats & Geopolitics Podcast to revisit previous concepts discussed and add new ones. Chief among those were the evolving lenses we use to evaluate markets with a hattip to Danielle DiMartino Booth's work. Speaking for my experience: enlightening, impassioned, and educational. Podcast link here
Vince Lanci (VBL) joins me for another conversation about what’s right and wrong about current financial analysis. Vince and I make the case that it’s important to remember everyone’s background colors how they view markets and how difficult it is to retrain yourself to see things through a different frame. EPISODE 143
Full Analysis— BOA, Hartnett, TD, Debt Ceiling Straight talk
1. Market Summary
This past week saw an awakening across asset classes as everything was sold in favor of the dollar as safe-haven. A late Friday bounce pulled Nasdaq green on the week but The Dow and Small Caps lagged along with the S&P
ZeroHedge summarized sentiment:
Higher inflation expectations, weaker sentiment, regional bank crisis growing (deposit data after the bell Friday), and record high risks of a debt-ceiling event appeared to finally break through the sentiment shield in stocks this week as Washington does what it does best - nothing until the last second.
Despite nine Fed rate-hikes and sliding actual inflation and market expectations, UMich respondents haven't been this worried about inflation since 2008 (the red region is Biden's administration). Full Story
Sectors/Technicals
Ignoring Google and Amazon, which had company announcements, the whole market rotated hard from inflation to recession
The behavior was as if the Market did not think the Fed cared about weaker inflation.. To twist a phrase, there might be no pause from the wicked
Consumer defensive earned its keep as did a few utilities
Commodities:
The dollar soared this week - its best week in 3 months
Industrial commodities took it very badly.
Oil started strong due to smaller funds buying to cover shorts from the previous Thursday’s swan dive; then followed with everything else lower
It is worth noting that above-ground-stocks, especially at storage sites linked to CME and LBMA have fallen steadily
AS: No B.S. Debt Ceiling Analysis:
When I start to think about the debt ceiling debate, I have to start with one premise: Politicians love the debt ceiling!
Hartnett on Fed Pause:
Maybe not a good idea for the Fed to pause when inflation is 5%, maybe June risk isn’t debt ceiling fears but another month of “rate hike” jobs & inflation data.
