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Posted October 25, 2024 at 12:00 pm
I’ve begun to wonder how many of you hit “buy ES” or “buy NQ” before brushing your teeth. We had the usual pattern this morning: futures with a modest move (higher today) when many US-based traders were waking up followed by a lift into the official open. After a three-day selloff, which was very out of character for the recent market environment, we saw a Tesla-led rally yesterday and a resumption of the “animal spirits” for the past two mornings. Today those market-based “animal spirits” were boosted by data from the University of Michigan, when it reported that Consumer Sentiment rose to a four-month high, and 1-Year inflationary expectations dipped to 2.7%.
As I type this around midday, some of the enthusiasm has ebbed. The S&P 500 (SPX) was up nearly 1% at its high, but it has given back about half its gains. Tech stocks are performing better, with all the Mag 7 stocks and most semiconductor stocks trading higher. As we recently asserted, “as go the semis, so go the markets”. There were headlines that the Nasdaq Composite Index (COMP) hit an all-time high. That said, the much more widely traded Nasdaq 100 (NDX) hasn’t yet topped its July 10 high, though it is just about 1% shy. Part of that is the ongoing push-pull between stocks and bonds. Treasury yields were a few basis points lower before the 10am EDT release but have now slipped back to roughly unchanged levels.
While it is certainly good news that inflationary expectations are cooling, we’ve noted before that the Michigan 1-Year Expectations seem highly dependent upon prices at the pump. For almost all of this year they have moved in virtual lockstep:
Source: Bloomberg
It would be pointless to be dismissive of a welcome economic development, but considering that it appears to be dependent upon an input that economists routinely leave out of their inflation analysis – they’re always focused on “Core” data, which excludes volatile food and energy prices, it’s understandable why the early enthusiasm for the Michigan readings faded. If bonds don’t like them, then stocks won’t like them as much either.
But there is no disputing the sentiment in the market’s most important sector – big tech. TSLA is a bit of an outlier when we examine its business relative to many of its other major peers – its main business involves manufacturing something other than semiconductors, even as they are trying to be a major AI leader – but its role in the market’s mindshare remains important. The TSLA earnings response seemed to rekindle enthusiasm for all things big tech. Thus, the rotation trade can wait a day. It’s once again about big tech, at least for now.
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I am simply reducing my trading horizon from several weeks to a few days. It is all about the election now. I am concerned that the result of this election may trigger an extensive selloff.
If a candidate that promised tariffs, admires Hitler, was convicted, wants to use the military against his political rivals, tried to steal the last election and bankrupted multiple times, win the election, nothing good can come from this. Bonds and currency noticed that. Next are the stocks.
I agree with the comment above – if Trump wins, the US economy is heading for a disaster with his absurd and barely thought out economic plan. IMO buy collars on any rally if that happens.
You guys have to be idiots as well…. Your Kamala does not even know how to answer a simple question so what good things can you expect from an ignorant lady for this country?
It is better not to answer questions than open his big mouth to admire Hitler. If you don’t that, it seems the idiot is you
Biden/Kamal. Lies piled on lies. Ex:
The border is secure.
The inflation reduction act will decrease inflation (what a joke — on all Americans)
The withdrawal from Afghanistan was a great success.
Joe Biden is extremely sharp; but only in private.
Paying off college student loans was fair and actually reduced inflation.
Not to mention the incompetent people placed in positions of power.
Hopefully what will come from the end of this election cycle is better comment sections.
I’m a non-American and just wondering why anonymous calls another anonymous an idiot without any basis. This country seems indeed extremely and sadly divided.
100 black ants and 100 red ants in a jar.
they are all fine.
then someone shakes the jar and they attack each other.
ask yourself who is shaking the jar!
Some City, USA, November 5, 2027 – Q: How did it turn out this way???? A: You voted for it!
On an interview with Joe Rogan recently, Trump touted that he wants to get rid of income tax completely and fund the government through tariffs. He backed this up with data from the 1800’s.
No matter what Harris wants to do with income taxes, she has to have better suggestions than Trump.
One thing no one is thinking about is that Tariffs will
bring back American jobs.
Yes some prices will go up but think about all the
Americans that lost their jobs because of cheaper
made forgien products.
Cars, Kitchen Appliance,s TV,s All clothing & Shoes.
Has anyone tried to buy a TV made in America lately?
Stocks would do great under trump just like they did last time
For pete’s sake EVERYTHING crashed under Trump. I’ve never done better financially than I have in the past two years
I’ve never done better financially than I did under trump. Crash like always, buy the dip like always, works like always
So, the original article gets “ratioed”?