Morning Commentary
Fed minutes show plan for 60% greater monthly shrinkage than last QT $60B Treasuries and $35B MBS.
I’m watching the NASDAQ closely today. It was up almost 0.50% pre-open, but it has begun to drift lower. I would like to see the 200-day hold and I think that huge gap will be filled soon.
If the 50 doesn’t hold, there is not a lot of support below, and we will hear calls for another test of the February and January lows.
Portfolio Approach
We took profits in Communication Services yesterday afternoon in our Hotline Model Portfolio.
Today’s Session
Initial jobless claims continue to come down sharply – hitting 166,000 against consensus of 200,000.
Interestingly, the stock market got weaker after the number, which takes us back to that period when Wall Street rooted for weaker economic data.
This is the perfect session for the market to try and reverse into the close – it’s a tall order right now, which makes it a perfect test condition.
Quantitative Tightening
The notion the Fed will remove $95.0 billion a month in accommodation drove the market wild yesterday, as its 60% more than the last QT effort. But the market is a lot higher, and the balance sheet is also trillions of dollars higher.
The last time the Fed began QT, the market still moved higher, and it only stumbled hard when Powell made a series of verbal gaffes, and too many rate hikes in 2018.
The market has to get over the shock – but it’s getting cheaper each day, and by the way, good news is always good news in the long run.
Comments |
Right now I'm like the proverbial "deer in the headlights". Not sure if the bus is going to run me down or miss me. Bill Frohberg on 4/7/2022 9:59:05 AM |
The bus should zoom right past you but you are right - everyone becomes more paralyzed and that means the market becomes more vulnerable. We know this is the period to "play in traffic" taking advantage of the weakness but we don't have to be heroic and guess bottoms. The good news is each session more good stocks become even more attractive. CP Charles Payne on 4/7/2022 10:07:42 AM |
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