S&P 500 celebrated inflation data coming in line with expectations yesterday, but the joy proved preditably short-lived as the realization that Fed would still not declare victory over inflation prevailed, and bond markets confirmed it.
Junk corporate bonds remain dangerously overstretched here, and a similar fate to EEM or IWM awaits. Note also the disconnect between KRE and XLF, pointing to increasing concentration in banking ahead still.
Q4 2022 hedge fund letters, conferences and more
Whenever Treasuries rise, the appeal of risk-free rate of return decreases, and deposit outflows take it on the chin – conveersely as we see today Credit Suisse in the spotlight again, that‘s risk-off as much as the upcoming data release with my projections thereof. The fact that USD is waking up – and increasingly more, doesn‘t bode well for stock buyers today.
Seems though that the focus now is on banking facilitated rush into dollars – ignoring PPI coming in better than expected as that together with manufacturing and retail sales down shows bad data (pointing to inevitability of recession, disproving the no landing thesis as a minimum) being correctly assessed as more important that misguided bets on the Fed not tightening even 25bp next.
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Let‘s move right into the charts (all courtesy of www.stockcharts.com).
Gold, Silver and Miners
Precious metals are to keep increasingly turning, and would recover from any hits due to liquidity / solvency doubts washing across the US shores.
Crude oil hasn‘t found bottom yet, and after $71 break, the next strong support would be $66 – black gold is reacting to unexpected deterioration in economic prospects, to signs of upcoming recession.
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