Morning Comment: The Fed is not just trying to tame inflation.


There will be a change to how my daily and weekend pieces are published quite soon. I'll have the details in the near future.



We caught a portion of an interview this morning with the President of the World Bank, David Malpass. In it, he touched on the thought that the Fed wants to get interest rates back to “neutral.” The line of questioning that followed missed the point. Mr. Malpass was telling them that the Fed needs to get asset prices back in-line with their underlying fundamentals. He talked about how interest rates around the globe have been…and still are…extremely low. However, the line of questioning continued to focus only on inflation…and how higher interest rates would hurt the economy.

In other words, in his answers, Malpass was saying the same thing we’ve been saying for some time now: The Fed’s goal is not just to tame inflation, it’s ALSO to get interest rates (and thus other asset classes) back to a “neutral” level…one where they can trade on their own!

The divergence between what the leading narrative is on Wall Street today…and what the real situation is right now…is creating a situation where too many investors are focused too much on the issue of inflation. Don’t get us wrong, the issue of inflation IS a VERY important one. If inflation is not tamed, it will create a lot more weakness in the economy than we’ve already seen. However, the Fed was ALWAYS going to tighten policy…whether inflation became a problem or not! They HAD to get the financial system off of the steroids that their zero interest rate policy and their massive QE program had provided.

Therefore, asset prices were always going to have to come back down from levels that could only exist with artificial steroids (zero ...

Read More
Comments

Morning Comment: What a day for a "quadruple witch" expiration.


Quick Note: There will be a change in the publication of the daily and weekend pieces, I'll have more details soon!


We got another day where the stock market declined more than 1% yesterday...as investors continue to worry about the ...

Read More
Comments

Morning Comment: Beware of a break below the early September lows.


A late-day bounce saved the stock market from closing on its lows for the day yesterday. That would have been very disappointing for the bulls. During the summer, every sharp decline in the stock market was followed (pretty much immediately) ...

Read More
Comments

Morning Comment: 10yr yield is testing its June high, so stocks should test their June low before long



The stronger than expected CPI data clobbered the stock market yesterday…as the S&P 500 fell more than 4% and the NDX dropped more than 5%. The decline came on breadth that was absolutely horrible. It was 99 to 1 negative ...

Read More
Comments

Morning Comment: When considering the "positioning" in the marketplace, what about the Fed's balance sheet?



The stock market saw some nice upside follow-through yesterday…and the advance came on solid breadth (5 to 1 positive on the SPX and 4 to 1 positive on the NDX). However, the volume was quite light…at just 3.65mm shares for ...

Read More
Comments

Morning Comment: Is volatility going to creep into the currency markets as well?


It really is amazing how the much the market can move on a piece of economic data. In fact, it’s a bit ridiculous sometimes…given that some of the data we get is quite questionable. For instance, every month, the employment ...

Read More
Comments

THE WEEKEND REPORT (Formally, "The Weekly Top 10")


THE WEEKEND REPORT


Table of Contents:

1) With liquidity being drained (more aggressively), multiple compression will cause markets to fall further.

2) This is not a normal tightening cycle. The Fed is fighting more than just inflation!

3) A few ...

Read More
Comments

Morning Comment: The dolla is due for a decline of more than just a few days.


As many people were focused on the sad news that Queen Elizabeth II had passed away, the stock market had a tough time getting its bearings yesterday. It saw four different moves of over 1% during the day, but it ...

Read More
Comments

Morning Comment: AAPL.....Chairman Powell.....but don't forget about Bitcoin


The stock market fell yesterday…which makes it 4,372-days in a row that it has declined…….Okay, okay, it’s only been seven days in a row for the Nasdaq (and 6 out of 7 for the S&P 500), but it sure SEEMS ...

Read More
Comments

THE WEEKEND REPORT (Formally, "THE WEEKLY TOP 10)



THE WEEKEND REPORT


Table of Contents:

1) History tells us that the first down leg of a bear market is not the worst part of the “bear.”

2) High inflation always leads to recessions…which always leads to earnings declines. ...

Read More
Comments

Morning Comment: Near-term targets for the S&P 500 and NDX 100.


We were out of the office and almost completely away from the markets yesterday…and it looks like we missed a very active day. In fact, the composite volume was in line with the busiest days of the past two months. ...

Read More
Comments

Morning Comment: Getting "clean" from the "liquidity addiction" was always going to be a painful process.


The narrative around Wall Street changed significantly last week when Chairman Powell confirmed what his colleagues have been saying for many weeks. In other words, Mr. Powell took the “pivot” off the table (or at least they took it off ...

Read More
Comments