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The recent rise in stocks have last year’s wish for a “soft landing” coming back to people’s minds.
With the positive data this week, many believe it is more achievable.
Others believe it will give the Fed more reason continue aggressive tightening measures.
Ten-year Treasury yields declined more than 80 basis points from early November to mid-January.
This can be attributed to less hawkish stances by the Fed recently regarding a looming recession.
Are markets getting complacent? The VIX (right) says yes.
Cathy Wood’s famous innovation fund seems to be breaking its long-term downtrend, forming a bullish “reverse head and shoulders” pattern.
This fund represents some of the more innovative, but also some of the most speculative names and industries in the market.
These names traditionally perform poorly with higher rates, since they are required to borrow for funding R&D at less favorable rate due to there unproven track records.
This move off the bottom suggests risk sentiment is beginning to shift and potential “bargain hunting” is beginning.
In the latest sign European equities are winning fans among investors this year, the biggest US-listed ETFs focused on the region’s stocks is set for its largest monthly inflow since June 2021.
Since the “winter crisis” never occurred, and “infarction” is curbed so far, these funds have added $700 million this month alone.
Economic risk-reward had flipped for the euro and bearish for the dollar, due to divergence in economic growth indicators.
As euro-zone gauges outperform expectations at the same time US readings underwhelm, this trend may continue.
As demand for driving slows in the winter months, inventories are building.
This can eventually put pricing (and margin) pressure on the energy sector, particularly the smaller producers.
Recent overall gains in markets have kept energy names higher (for now).
Global flows into ESG-related funds dropped by more than half last year from a record in 2021, and more volatility may be in store for 2023.
In contrast to the popular narrative pushed by money management firms who create these products, the plunge was likely driven by terrible performance.
“Concentration Risk” is a primary concern as too money much is chasing the same group of stocks.
The wage premium of unionized workers in the US verses non-union shrank last year to the lowest in more than 2 decades. Unionization overall has declined 6%.
This tight labor market has artificially boasted earnings, as bottom lines increased despite slower demand for some goods and services.
Homebuilders are beginning to signal that the worst is behind them as confidence rose in January after falling every month in 2022.
This may be good news for the broader economy, as mortgage rate ease and the market is trying to put in a bottom.
Skeptics believe although there may be pent up demand, it does not mean the bottom is currently in place.
