Short Term
May 26, 2024 | Daily JAM, Short Term |
I expect Wall Street’s last rate cut bulls to get gradually less bullish. With means, expect to see interest rates (and Treasury yields) continue to rise, and the consensus on when the first cut in rates from the Federal Reserve to continue to move later in 2024. This past week economists at Goldman Sachs threw in the towel on their projections for a July interest rate cut by the Federal Reserve. The investment company moved its forecast for an initial cut to September.“Earlier this week, we noted that comments from Fed officials suggested that a July cut would likely require not just better inflation numbers but also meaningful signs of softness in the activity or labor market data,” the economists wrote in a note.Goldman Sachs had been one of the last banks on Wall Street betting the Fed would start lowering interest rates in July. JPMorgan Chase and Citigroup are among the few holdouts still forecasting a July move. Goldman is still predicting two interest rate cuts in 2024. The swaps market now fully prices in a December cut. The odds of a second reduction in 2024 stand at less than 30%, compared with about 70% last week. At the end of 2023, the first Fed cut was expected as early as March.
May 14, 2024 | Daily JAM, Morning Briefing, Short Term |
Granted that the remarks weren’t delivered at the most high profile venue–a panel discussion at the Foreign Bankers Association meeting in Amsterdam–but I read Federal Reserve chairmen Jerome Powell as saying that the U.S.central bank might hold interest rates steady for longer than now expected by WallStreet. Ahead of new inflation data from the Consumer Price Index for April due tomorrow, anyway. On the day before the meeting economists were expecting the annual inflation rate at both the all-time and core levels to have dropped by 10 or 20 basis in April
May 12, 2024 | Daily JAM, Short Term |
I expect more inflation news. What else? On Wednesday, May 15, the Bureau of Labor Statistics will release its report on Consumer Price Index (CPI) inflation for April. Even though the CPI isn’t the Federal Reserve’s preferred inflation measure (that’s the Person Consumption Expenditures (PCE) index, which won’t be released (for April) until May 31), Wall Street is looking for a trend in the CPI report that will point to the inflation rate moving lower convincingly enough so that the U.S. central bank can begin to cut interest rates at its September meeting.
May 4, 2024 | Daily JAM, Short Term |
The U.S. economy added 175,000 jobs in April, the Bureau of Labor Statistics announced on Friday. That was the smallest number monthly new jobs in six months. The unemployment rate ticked up to 3.9%. And traders tried once again, to get ahead of the data. Concluding that slower job growth, meant the Federal Reserve would be more likely to cut interest rates sooner–in September, say, rather than November or December–bonds rallied and yields fell. The yield on the 10-year Treasury dropped 7 basis points to 4.5%. The yield on the 2-yer Treasury, which had been flirting with 5% earlier in the week, fell to 4.82%. Stocks climbed with the Standard & Poor’s 500 up 1.26% and the NASDAQ Composite gaining 1.99%. Trouble is that these moves were the exact opposite of gains and losses earlier in the week.
May 3, 2024 | AAPL, Daily JAM, NVDA, Short Term, Videos |
Today’s video is Go Away in May? Historically, the months between November and May were much more profitable than the months from May to November. The saying “Go away in May” came from that distribution of returns, suggesting investors should get out of the market during the less profitiable May to November period. This advice holds particularly true for tech stocks, which have very clear seasonal revenue patterns. For example, in March of 2023, Apple (AAPL) earned $1.52 per share, in June earnings per share went down to $1.26, in September they went back up to $1.46 and then the company blew it out in December to $2.18. While this isn’t indicative of the entire tech sector, it’s a good example of this seasonal pattern, especially for technology stocks with big consumer businesses. So what about this May? I’d say, you can probably “go away”–but maybe a little late than usual. NVIDIA’s (NVDA) earnings come out on the 22nd of May and will likely be giant. Current Wall Street estimates have earnngs per share at $5.14, up from $.88 a year ago. After that,the technology sector is relatively quiet. The next big tech event to look out for is Apple’s Worldwide Developers Conference in June, which could result in “buzzy” tech announcements about AI. After that, I don’t see a lot of reason to be overweight technology and I’ll look to take some profits. I think this amounts to a modest Go Away in May call.
May 2, 2024 | Daily JAM, Morning Briefing, Short Term |
On Wednesday, May 1, the Federal Reserve decided NOT to cut interest rates at its May 1 meeting. That was the decision expected by the financial markets. And Federal Reserve chair Jerome Powell tried his best to keep traders from speculating that the Fed would actually raise interest rates, rather than cut them, in the remainder of 2024.
May 1, 2024 | Daily JAM, Short Term, Special Reports, UNG, Volatility |
I think that rather than trying to hedge market or sector direction in the 2024 market, I’m going to look for plays on the long side that will gain even if the market goes nowhere or tumbles, In other words, in financial jargon, I’m going to look for sectors and stocks that are uncorrelated with market direction rather than looking for sectors and stocks that are anti-correlated (where my gains depend on a downturn in the market.) That’s the logic with Step #5 today. Go long natural gas ahead of what is shaping up as a really, really hot summer.
April 25, 2024 | Daily JAM, Morning Briefing, Short Term |
U.S. economic growth slowed in the first three months of the year, the Bureau of Economic Analysis reported today. Gross Domestic Product (GSP) grew at an annualized rate of just 1.6%. That’s a big retreat from the 3.4% annual rate in the fourth quarter of 2023. Just as important as the drop in the growth rate itself is the reason for the decline.
April 22, 2024 | Daily JAM, GLD, GOLD, Jubak Picks, Morning Briefing, NEM, Short Term |
Gold futures for June delivery closed down 2.92% on the Comex today. The metal closed at $2343.40 an ounce. The drop came on a lessening of fears that the exchange of attacks between Israel and Iran would quickly lead to a wider Middle East war. And on growing sentiment that the Federal Reserve isn’t likely to cut interest rates soon. The drop in the gold contract for June delivery was the largest since February 3, 2023 when it fell 2.8%.
April 21, 2024 | Daily JAM, Morning Briefing, Short Term |
I’m sure you’ve noticed. The technology sector, which led the stock market rally in 2023 and in the early days of 2024, is in a slump. The Technology Select Sector SPDR ETF (XLK) tumbled 6.27% last week and is down 7.16% in the last month. For 2024 to date, as of the close on April 19, the sector is at break even with gain of 0.19%. Quite a turnabout for a sector that is still up 30% for the last 12 months. This week brings a raft of tech earnings that could turn the sector’s trend around. Or not.
April 14, 2024 | Daily JAM, Short Term |
After Israel and its allies (with the help of some Arab states that don’t want to see a wider Middle East war and who aren’t thrilled with the growing power of Iran and its proxies) succeeded in shooting down almost all of the drones (170), ballistic missiles (120), and cruise missiles (30) launched by Iran against the country, will the two sides both declare victory and claim that honor is satisfied or will one or the other escalate the war with another round of attacks? As of early Monday trading in Asia, the oil and gold markets have reacted with concern but not panic. Gold, up 13% already this year to a record above $2,400 an ounce, moved higher but the gains were relatively modest. Spot gold climbed 0.8% to $2,361.92 an ounce as of 6:20 a.m.in Singapore. The global oil market opened to the upside but by less than 1%. And prices have been steady to slightly weaker since then.
April 12, 2024 | Daily JAM, Morning Briefing, Short Term |
West Texas Intermediate rose to its October 2023 highs, before pulling back, on fears that an Iranian retaliation for an Israeli attack on an Iranian consulate would lead to a wider war in the Middle East. International benchmark Brent crude surged as much as 2.7% to top $92 a barrel before retreating to close at $90.26 a barrel, up 0.58% on the day. West Texas Intermediate, the U.S. benchmark, is now up 19% in 2024. Bloomberg reports that Western intelligence assessments are looking for an Iranian attack in the next 48 hours. No one wanted to hold U.S. equities ahead of the weekend.
