Economic conditions have yet to match downbeat market expectations. The mismatch only adds to the uncertainty, which has fueled large scale ‘risk off’ positioning out of equities and into bonds. Fed fund futures are pricing in another 50bps of rate cuts this year. Bond yields
Over the last several days, markets had priced in a 50bps Fed rate at the 3/18 meeting. Today’s off-schedule decision to move this forward by two weeks is getting less-than-positive initial market reaction for two reasons: 1) off schedule rate cuts feel a bit like
Rising expectations for policy support and short-term oversold conditions deserve credit for this morning’s bounce. Fed fund futures pricing now implies 50bps of rate cuts this year and trending toward 75bps. Powell’s unscheduled Friday press conference seemed to endorse present market expectations for a rate
Tomorrow’s release of official China PMI’s has consensus looking for manufacturing at 45 (down from 50 in January) and services at 50.5 (down from 54.1). Manufacturing matters most and anything between 44 and 46 would be considered ‘in-line’ given the circumstances, while a sub-43 number
MSFT became the latest US large cap name to lower the bar based on supply chain disruptions, while Nestle’s decision to restrict overseas business travel with US companies undoubtedly considering similar measures.
The CBOE Equity put/call ratio is a reliable measure of investor sentiment. And like all sentiment indicators, it’s meant to be contrarian with high numbers reflecting increased bearishness from a highly emotional and levered investor class.
The S&P 500 has slipped into our 3150-3210 range of strong technical support (December breakout range). Closing levels much below ~3150 would challenge the bullish short-term technical picture and could push out expectations for new record highs in the second half of 2020.
The coronavirus narrative over the past four weeks had assumed the economic fallout from coronavirus would be severe, but still largely confined to Q1 and China. Weekend news of rising infection rates outside of China challenge that assumption with Italy’s regional travel restrictions acting as
Our note from January 17 and January 23 discussed the increased probability for a 2-4% pullback in the SPX based on decelerating price trend momentum and elevated bullish sentiment. A six-session long, ~3.2% pullback ended on January 31, but the ensuing ~5% rally in the
In the long-run, currency exchange rates are mostly influenced by an economy’s current account balance. The ‘current account’ is simply the trade balance plus net income and direct payments. The currencies of countries with a current account surplus are supposed to trade at a premium
