Wall Street Strategies
Hello! Sign in or Register


Morning Commentary

FORGET CHASING & FOXHOLES Ė TIME TO MAKE MONEY

By Charles Payne, CEO & Principal Analyst
11/30/2023 7:39 AM

Money raced out of traditional ‘safe’ sectors, but not into growth sectors.  Yesterday was about being opportunistic. Real Estate (XLRE), Financials (XLF), Materials (XLB), and Industrials (XLI) led the way.

Image

Within the financial space, regional banks are acting well. The SPDR S&P Regional Banking ETF (KRE) used a breakaway gap opening to clear the trendline, and yesterday, it climbed off the 200-day moving average. It could be an oversold bounce, but the charts suggest more to the upside.

Chart

The overall KBW Bank Index (BKX) has a similar chart; coming off a perfect double bottom and smashing above the 200-day moving average (see green arrow), there looks to be more room to the upside.

Chart

Massive Losses Mount

So, what about those unrealized losses that initially sparked the bank panic? They keep growing, and the assumption is those assets will be held until maturity.

Image

Bonds Keep Bouncing

The ten-year bond yield has gone into freefall mode, and bond investors are eating it up (stock investors, too). Check out the pure parabolic move in the Bloomberg Bond Index (AGG).

Chart

Chart

The Economy Is Slowing Down

I'm a rolling thunder, pouring rain

I'm coming on like a hurricane

My lightning's flashing across the sky

You're only young, but you're gonna die

‘Hells Bells’ AC/DC

The Beige Book revealed that two-thirds of regions experienced slowdowns over the past month.

Key Word Association:

A screenshot of a computerDescription automatically generated

There is no way the Fed will hike rates, but simultaneously, the so-called ‘lag effect’ could come rolling down like thunder.

Portfolio Approach

There is no change to the sector weights in the Hotline Model Portfolio.

Today’s Session

A bunch of economic data is out this morning.

PCE (inflation)

The latest inflation read came in slightly better than expected on the headline number for both year to year and month to month. But core inflation was only ‘in-line,’ and maybe, that’s why the market yawned and gave back some pre-opening gains.

PCE Y/Y

Actual

Consensus

October

Headline

3.0%

3.1%

3.4%

Core

3.5%

3.5%

3.7%

 

PCE M/M

Actual

Consensus

October

Headline

0.0%

0.1%

0.4%

Core

0.2%

0.2%

0.3%

 

More Stubborn than Sticky

Core inflation at 3.5% from a year ago is seen as ‘sticky’ to some, but the monthly trend is encouraging. The change has been +0.3% or less, and the trends is to the downside. More stubborn than sticky. 

Image

Personal Income and Spending

The monthly increase of 0.2% on income and spending are in line with consensus. This might be the tale of savings depletion acting as a governor on spending.

The savings rate edged up to 3.8% from 3.7%.

 

A white sheet with black text and numbersDescription automatically generated

Revisions

Income was revised higher for September and August, but spending was unchanged.

A screenshot of a graphDescription automatically generated


 

Log In To Add Your Comment


Home | Products & Services | Education | In The Media | Help | About Us |
Disclaimer | Privacy Policy | Terms of Use |
All Rights Reserved.

 

×