The View from 5th Avenue

Watch and wait were the directives for today. US Equities mostly tread water at/above the breakeven throughout the session before drifting to the lows into negative territory in the final 20minutes as we awaited Alphabet and Tesla earnings after the bell to give us Big Tech’s first look at an updated bill of health (spoiler alert: you might not want to hold your breath…). With depressed summer volumes taking hold, a rather “interesting” US political backdrop afoot into elections, the Fed in t…

“Head on the swivel” as they say in sports or when simply walking throughout the bustling streets of Manhattan, it is the same approach we must have towards markets during the current environment. As we ALL received the alerts on our phones yesterday afternoon/evening regarding President Biden bowing out of the race….our heads must remain on a swivel as we undergo unprecedented times during US politics, while managing Q2 earnings (according to FactSet 138 SPX companies are set to report this we…

It’s been an interesting week for US equities, and despite another all-time high for the S&P500 on Tuesday and positive breadth improvement, the past three closes deep in the red serve as a stark reminder that change, or in this case rotation, can be painful. In terms of what sparked such the seemingly sudden shift – prevailing market sentiment has turned decidedly dovish in the past few weeks. It’s widely known but sometimes overlooked that the goal of the Fed is to be boring. Yes, they will b…

The British Open kicked off this morning and the allure of this tournament fairly often is the impact weather can have on the tournament (in UK golf parlance, this means poor conditions i.e., wind/rain). Without that exogenous effect, the courses can be a bit docile. Markets have been without much ‘weather’ for long stretches this year and we’ve seen new all-time highs being set fairly frequently. That has changed of late, with rate cuts expected soon, a significant rotation at play and a fresh…

It was a bad day for chipmakers after it was reported the Biden administration was considering restrictions that would limit ASML’s ability to service its tools in China. The rule that the US is considering is seen as severe by many allies and could impose controls on any foreign products that use US technology. This move is far from confirmed but US officials plan to speak with other foreign representatives about their growing concern over China. As a result, Adv Micro Device (-10.2%), Applied…

Earnings + FOMC Implied Rate Cuts + Return of the Small Caps + US Presidential Elections equals up and to the right for US equites!

Another UP day for US Equities. The stats are impressive, so let’s take stock. 9 out of 10, or more broadly, 18 out of the last 26 sessions for the S&P500 have ended in the green. Today narrowly missed clocking a record-breaking 38th new all-time high this year on a quiet fade into the close from the mid-morning highs amidst a rather ‘mundane Monday’… UP days have, however, become the new status quo. Expectations are now tipping the scales rather decidedly for a 25bps rate cut in Sept to 91…

The doves really took yesterday’s CPI to heart as an opportunity to show some love to previous laggards as evidenced by a major mean reversion (enter: the Russell 2000) that carried on into today’s session, undeterred by a hotter PPI reading. The data showed an increase from 2.2% to 2.6% YoY and a rise in core PPI from 2.3% to 3.0% while the odds of a September rate cut sit comfortably near 90% according to the CME Group FedWatch Tool. On the whole, economic data has been encouraging (borderlin…

I’m not a huge soccer fan but can drum up a healthy interest during the sport’s biggest events. And it doesn’t take much to get caught up in a ‘moment.’ Exhibit A: last night The Killers were performing at the O2 but put their show on pause as the English national team tried to advance to the Euro finals. Immediately upon scoring the go-ahead goal with little time to spare, as the venue went bonkers, the band immediately launched into Mr. Brightside. To say the vibes were at an all-time high wo…

This is a big week for the markets and so far, investors have received what they are looking for. Powell’s testimony to Congress has alleviated some questions about if rate cuts are coming as he acknowledged yesterday that inflation was not the only concern the Fed had. While he did not dial back his conservative dovishness today, he adeptly did not put a time frame on when he thought that first rate cut may come. CME futures continue to price September as the date (70% expectation), but by now…