Growth stocks take the lead, and the market dances higher.

It's like Batman: large-cap names rush to the rescue whenever the market seems to be on the verge of collapse. Generally, growth names, and more particularly, mega-cap names answer the call.

The flip side of this phenomenon is there is no safety in safe havens or oversold value, like Energy (XLE).

Breadth

Volume was very light on the New York Stock Exchange (NYSE), with more decliners than advancers on the NASDAQ Composite.

Market Breadth	NYSE	NASDAQ
Advancers	1,600	2,060
Decliners	1,221	2,142
New Highs	69	106
New Lows	39	96
Up Volume	1.62 billion	2.05 billion
Down Volume	1.86 billion	2.31 billion

Teflon

NY Fed President John Willaims resurrected ‘higher for longer’ yesterday; the stock market didn’t miss a beat.

Many on the Street believe Williams is Powell’s proxy for communicating the chairman’s ideas and thoughts on the economy and rates.

“I expect that we will need to maintain a restrictive stance of policy for some time to fully achieve our goals, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis.”

I’m sure he deliberately used the term ‘restrictive stance,’ which means higher for longer. Last summer, this kind of language would send the stock market swooning. The CME FedWatch Tool rate hike projection for March did edge higher.

Geopolitical Tensions

The market ignoring saber-rattling is one thing, but the situation in the Middle East is extremely worrisome.

The West seems helpless to stop the Houthis, who have become more brazen. Initially, the Biden administration was reluctant to mention Iran in the same sentence, but the world knows who’s pulling the strings.

Secretary of State Blinken is now confirming Iran’s role and lobbying the same warnings to avoid getting involved. That kind of fingerpointing and words like “don’t” are cute in Hollywood scripts (think ‘make my day’), but it's obviously not working in a world ruled by the ‘ability to use might.’

Not only did equity markets refuse to budge, nor did the oil market. 

Make no mistake, something harsh and swift will be needed to stave off something far more sinister.

Bitcoin & Street Cred

After all the drama and hijinks, all eleven Spot Bitcoin ETFs received a thumbs-up.

We are now bracing for the Consumer Price Index (CPI) report. 

All hands-on deck!

Portfolio Approach

We added a new consumer discretionary position in the Hotline model portfolio this morning.

Today’s Session

The CPI is out, and it's hotter than expected at +0.3% against the consensus of +0.2%.

CPI m/m	Actual	Consensus	Prior
Headline	0.3%	0.2%	0.1%
Core	0.3%	0.3%	0.3%

 

CPI y/y	Actual	Consensus	Prior
Headline	3.4%	3.2%	3.1%
Core	3.9%	3.8%	4.0%

 

Real Average Earnings y/y	Actual	Prior	Revised
Hourly	0.8%	0.8%	0.9%
Weekly	0.5%	0.5%	0.6%

 

Core came in at 3.9%, topping the consensus of 3.8%.

The initial reaction to this number is impressive.  Part of the reason futures held up is talking heads are trying to provide cover and assumptions that the housing data will eventually decline.

No doubt housing lags, but the Owner’s Equivalent Rent (OER) was supposed to come down months ago.

We have been more cautious and raised cash ahead of this number, anticipating the hot number that was delivered, but once again, the market is holding up (so far).

We will put some cash to work in names we like longer term through a potential near-term bounce in inflation reads and bond yields.

Tweet

 

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