Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Betting on Hawkish Fed

Stock-Markets / Stock Market 2021 Nov 24, 2021 - 04:31 PM GMT

By: Monica_Kingsley

Stock-Markets

S&P 500 reversed from fresh ATHs as spiking yields sent tech packing. Value didn‘t soar, but held up considerably better – still, stock bulls are getting on the defensive. Markets have interpreted the Powell nomination as a hawkish choice. I‘ve written the prior Monday:

(…) the Fed is still printing a huge amount of money on a monthly basis, and it remains questionable how far in tapering plans execution they would actually get – I see the risks to the real economy coupled with persistently high inflation as rising since the 2Q 2022 (if not since Mar already, but most pronounced in 2H 2022.

Inflation hasn‘t moved to the Fed‘s sights, and yesterday‘s rection in yields and precious metals is a bit too harsh. While rates are on a rising path as I‘ve written yesterday, precious metals overreacted. True, the bullish argument for the dollar stepped to the fore as yields differential between the U.S. and the rest of the world got more positive, and at the same time, various yield spreads keep compressing. That‘s a reflection of less favorable incoming economic data. Just as much as Friday‘s reaction was about corona economic impact projections, yesterday‘s one was about monetary policy anticipation.

Inflation expectations though barely budged – the decline doesn‘t count as trend reversal. CPI isn‘t done rising, and the more forward looking incoming data (e.g. producer prices) would confirm there is more to come. All in all, it looks like precious metals (and to a smaller degree commodities), are giving Powell benefit of the doubt, which I view to be leading to disappointment over the coming months. Should Powell heed the markets‘ will, the real economy would weaken dramatically, forcing him to make a sharp dovish turn – and he would, faster than he flipped since getting challenged in Dec 2018.



We‘re experiencing an overreaction in real assets – as stated yesterday:

(…) the Fed would have to reverse course once the tapering effects start biting some more – not now, with still more than $100bn monthly addition. Cyclicals and commodities that had massively appreciated vs. year ago (oil doubled), are feeling the pinch of fresh economic activity curbs speculation in spite of the polar shift of U.S. strength in energy of 2019 and before. Begging the OPEC+ to increase production might not do the trick, and with so much inflation already in (and still to come), the key investment theme is of real assets strength.

Precious metals have broken out, are no longer an underdog, and the inflation data will not decelerate for quite a few months still. And even as they would, it would come at a palpable cost to the real economy, and the resolute fresh stimulus action wouldn‘t be then far off. As I wrote in Apr 2020, it‘s about the continuous stimulus that‘s the go-to response anytime the horizon darkens, for whatever reason. Wash, rinse, repeat.

Let‘s move right into the charts (all courtesy of www.stockcharts.com).

S&P 500 and Nasdaq Outlook



S&P 500 bulls lost the momentary upper hand, and value recovery isn‘t yet strong enough to carry it forward. A less heavy move in bonds – temporary yields stabilization – would be needed to calm down stock market nerves.

Credit Markets



Treasuries held up best, and that‘s characteristic of a very risk-off sentiment. The low volume in HYG isn‘t a promise of much strength soon returning.

Gold, Silver and Miners



Precious metals turned sharply lower, and haven‘t stabilized yet. Bond market pressures are keenly felt even though inflation expectations didn‘t follow with the same veracity. The next few days will be really telling.

Crude Oil



Crude oil bulls have made a good move, and more strength needs to follow. The fact that it would be happening when the dollar is strengthening, and many countries are tapping their strategic reserves, bodes well for black gold‘s recovery.

Copper



Copper springboard bulding goes on, and the CRB Index isn‘t tellingly yielding – the hawkish Fed bets better be taken with a (at least short-term) pinch of salt.

Bitcoin and Ethereum

Bitcoin and Ethereum are still going sideways, and today‘s resilience is a good omen – across the board for risk assets.

Summary

  1. S&P 500 bulls need tech to come alive again, and odds are it would with a reprieve in spiking yields. While bond markets are getting it right, yesterday‘s fear in corporate bonds was a bit too much – the Fed isn‘t yet in a position to choke off the real economy through slamming on the breaks. Markets are prematurely speculating on that outcome, which would be a question of second or third quarter next year. Treasuries have though clearly topped, and stocks do top with quite a few months‘ lag – we aren‘t there yet. Enjoy the commodities ride, and confidence gradually returning to precious metals.

Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for both Stock Trading Signals and Gold Trading Signals.

Thank you,

Monica Kingsley

Stock Trading Signals

Gold Trading Signals

www.monicakingsley.co

mk@monicakingsley.co

* * * * *

All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in