Stocks-Dead Ahead- QQQ REBALANCE-Fed HIKE-M2 RISING-Bank Loss Reserves UP-RU Set? Read!
OPINIONS & OBSERVATIONS
July 15 2023
BIG WEEK for stocks and news with bank EARNINGS coming in above estimates BUT lousy PRICE ACTION. CPI came in light (take off June 2022 #’s get a lift) BUT CORE is still 4.8% which means Fed Funds is only slightly ABOVE Core! We believe Fed Funds MUST get well ABOVE Core & stay there as it did with Volker. YIELDS did come off but they were OVERBOUGHT after the ADP shock (500K new jobs) and since they handle actual payrolls, they may be more reliable. WAGES are RISING & 3.6% jobs rate won’t kill inflation. Energy prices are RISING-OPEC cutting so forget about lower gasoline inflation. HOUSING is back on fire so OER should be supported as BUILDERS enjoy no inventories on existing homes for sale AND they play games with prices by providing better mortgage rates & just LOAD the difference into the asking prices. People are just interested in the immediate payment just like when they lease a car-It’s VERY DIFFERENT!
BANK Earnings were mostly beat so why the lousy price action? Simple. They are EXPLODING their LOAN LOSS RESERVES ahead of commercial OFFICE building losses (San Fran ect) AND CREDIT CARD losses that are coming off RECORD ($1 Trillion+) in Credit Card DEBT. Add in student loans need to be paid again a decline in residual money from Covid and AFTER Summer could get very interesting. Should we get GROWTH in the economy (popular belief) & WAGES-JOBS numbers stay good- maybe all’s well ends well
About 9 months ago, the S&P 500 was 3500 ( Now OVER 1,000 Points HIGHER), Nasdaq was 10,500 (Now OVER 50% HIGHER), IWM-Small Caps were 162 (Now 19% HIGHER). The POSITIONING of Investors has SWITCHED from UNDERINVESTED to large allocations (like Jan 2022). We are NOT the SAME as Oct 2022!
REBALANCING is coming to Nasdaq 100 as the SEC Diversification Rule limits the aggregate weighting of the largest stocks with 5%+ to 50%. We got a taste of what may be in SHORT TERM store with NVDA. Since JULY 1st, NVDA has JUMPED from $4210-$420 to OVER $480! In a matter of HOURS, we saw NVDA DROP about $50 bucks on Friday! On AUGUST 23rd, NVDA announces their EARNINGS & the FORECASTS EXPECTATIONS are thru the ROOF! This stock is the MOST OVERBOUGHT it has been from LT MA’s EVER.
OUR RSI DIVERGENCE signal FLAGGED a SELL on NVDA on Friday AND OUR Moving Average confirmed a SELL at $476-Not Bad! You should TEXT US at 725-254-6423 and set up a time to let us EXPLAIN it to you
Finally, WE TOLD EVERYONE WHO WOULD LISTEN that M2 money supply growth BOTTOMED in April at -4.84%, in May it was -3.99% and June was -3.01%. Is it on it’s was to ZERO or POSITIVE M2 GROWTH?
Well. The US Dollar has gone in the TANK (UNDER 100 DXY), Gold got a bid, Oil’s moving up, ASSETS UP! Is the Fed getting ready to PRINT? Do they see a LIQUIDITY Crisis ahead (Bank Reserve Requirements ect)
Many times the Market moves in a Direction to HURT the most people (this current rally KILLED the Shorts and Sideline Money-both were HUGE in Q4 2022!) NOW, who SEES a TECH Sell-off & VIX Spike!
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REMEMBER All investing involves risk of loss and it is not right for everyone. CONSULT YOUR BROKERAGE FIRM to determine your own risk tolerance and suitability. Past performance is not indicative of future results. OPINIONS & INFORMATION is provided for informational purposes only. It is NOT advice.
