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Another One Bites The Dust – ValueWalk

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S&P 500 gave up opening gains that could have lasted longer – but the bear is still strong, and didn‘t pause even for a day or two.
S&P 500 gave up opening gains that could have lasted longer – but the bear is still strong, and didn‘t pause even for a day or two. Defeated during the first hour, the sellers couldn‘t make much progress, and credit markets confirm the grim picture. There is a but, though – quality debt instruments turned higher, and maintained much of their intraday gains. Q4 2021 hedge fund letters, conferences and more And that could be a sign – in spite of the bearish onslaught driving the buyers back to the basement before the closing bell – that more buying would materialize to close this week, with consequences for S&P 500 as well. I would simply have preferred to see rising yields once again, that would be a great catalyst of further stock market selling. Now, the wisest course of action looks to be waiting for the upcoming upswing (one that didn‘t develop during the Asian session really), to get exhausted. Remember my yesterday‘s words: (…) The rising yields are all about betting on a really, really hawkish Fed – just how far are the calls for not 25, but 50bp hike this Mar? Inflation is still resilient (of course) but all it takes is some more hawkish statements that wouldn‘t venture out of the latest narrative line. Anyway, the markets aren‘t drinking the kool-aid – the yield curve continues flattening, which means the bets on Fed‘s misstep are on. True, the tightening moves have been quite finely telegraphed, but the markets didn‘t buy it, and were focused on the Santa Claus (liquidity-facilitated) rally instead – therefore, my Dec 20 warning is on. The clock to adding zero fresh liquidity, and potentially even not rolling over maturing securities (as early as Mar?) is ticking. And the run to commodities goes on, with $85 crude oil not even needing fresh conflict in Eastern Europe – the demand almost at pre-corona levels leaving supply and stockpiles in the dust, is fit for the job.

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