The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
New highs
Overseas markets rallied and the Yen continued to strengthen, more than a percent today. S&P futures rallied about 18 points in the premarket and the index opened +15. Stocks rallied modestly through the morning and briefly set new all-time highs before lunch. The index treaded water for the remainder of the session. Gainers and losers split about 50/50 and tech led among the sectors, with the Mag 7 performing well. The yield curve steepened a bit and the probability of a Fed cut tomorrow is 3%.
Earnings season has just ramped up but the results aren’t capturing investor attention much. The reporting companies are mostly beating but if they guide below Street expectations, their stock gets creamed. Unlike past earnings seasons, there’s no narrative surrounding it. There’s no excitement for the next batch of reports. Neither is there concern about the next batch. We’re very neutral in aggregate and so there’s no trend at work during the season. I wonder if we need some Mag 7 reports to change that attitude. We only have to wait until after tomorrow’s close if that’s the case. MSFT, META, and TSLA report then.
In the world of Fed policy, the Fed announces its next decision tomorrow at 2 PM. The markets expect no cuts and neither do the strategists on the Street. For the first time in a long time, there’s not a lot of perceived risk in this FOMC decision. The Street will pay close attention, as it usually does but there’s not much that is likely to stir the pot. Maybe those words will haunt me but the economic case to drop rates is weak. The Street and the Fed both see it. Things are also stable and the Fed has made a sequence of cuts which work on a lag. It makes a lot of sense to wait and see and watch the data.
Data dependent policy decisions will be the common thread tomorrow and the Chairman is seasoned enough to stay on brand.
Then again, ya’ never know.
See you tomorrow.
-Mike
Visdom Market Commentary
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