Fed Minutes Indicate a Shift in Attitude towards Tapering

The risk-off trade is dominating investor sentiment. One place where this is clearly evident is in cryptocurrencies which are undergoing a savage correction. Meanwhile, the US Central Bank, aka the Fed Reserve, is beginning to pivot from its accomodative monetary policy. The latest minutes show some of its members are more open to discussing the tapering of asset purchases. The implication of such is

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Market Rally Legitimate or a Dead Cat Bounce?

Was today’s trading session a legitimate rally or a dead cat bounce? There were certainly some notable catalysts supporting its legitimacy: 1) the CDC announcement to lift mask requirements for anyone fully vaccinated; 2) Fed bankers defiantly jawboning for lower interest rates in the face of “transitory inflation” data evident in producer prices; and 3) the ongoing improvement in the US labor market. Does anyone sense a “but” statement forthcoming in this analysis?

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CPI Data Reignites Fears of Inflation and Market Risks

Today’s CPI report reignited inflation fears and the economic ramifications. Truth be told, this market has been overbought and technically overextended and accompanied by decelerating momentum and volume. Now we are witnessing early signs of capitulation. This is healthy and creates the ideal environment for a relief rally.

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Inflation Fears Drive Shift to Value

In the midst of rising inflation expectations, i.e. 10-year breakeven inflation targets climbing to a new 8-year high @ 2.59%, investors are increasingly shifting their preferences to value. The Dow 30 Industrials escaped today’s selling almost unscathed. As inflation indicators signal rising risks, tangible assets, e.g. commodities and real estate, are likely to benefit, along with stocks representing sectors in energy, materials and financials.

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“FOMO” Trade in Deceleration Mode

US stock markets ended an unimpressive session in positive territory and continue to consolidate their recent uplegs. The wide breadth of positive earnings and a better than expected GDP growth for Q1-2021 had little impact. In fact more signs of distribution selling appeared. Approximately 73% of today’s…

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Sit Tight to Wait and See

Market Moving Event: News and information normally regarded as market drivers had little impact today. The overwhelming majority of companies reporting positive earnings surprises nor the upbeat housing and consumer confidence data were…

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Investors Fear “FOMO”

While there were no major economic data releases and the majority of earnings were positive, investors appear to be adopting an aversion towards risk…

…Realization that the global rise in Covid19 infections could slow down the rate of economic recovery more than expected was being reflected in…

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