The University of Michigan Survey of Consumer Sentiment was started in 1952, containing 70 years of data, and the reading it gave today was the worst ever in the history of the survey. Worse than the Kennedy Assassination, Financial Crisis, Vietnam, Sept 11th, Iraq Wars, and CoVid. Powell is using these consumer data reports to determine if people are expecting Inflation to drop, or not, and if consumer expectations are at record lows it means people are NOT confident food, energy, etc., prices are going to come down. This increases the chances of another 75 pt Fed Rate Hike.
Next week is OpEx, and a lot of brokers will be rebalancing their books, etc., and this often causes a rally into expiration like last May. Right now the positioning of SPX and NDX could allow for a drift up, but it is NOT likely that this is the bottom of the market, so use this run up into OpEx to reposition your stocks if necessary, and to cut ties with what’s struggling, and you can buy back in when prices resume to the downside.
Now the other thing this is only the second up week in 12, and the Dow Jones Industial Average in over 120 years of data has NEVER recorded a market with 10 down weeks out of 12 weeks, so this market was very, very oversold, which supported us in this little bounce up, but please be careful in overstating that we’ve hit a bottom. This is a very aggressive down market.
Now, we have talked A LOT about the yield curve inverting, where the short end (fewer years) sky rockets in comparison to the longer end (10, 20 or 30 years). The two year bond yield needs to tell us that they believe the Fed is going to keep raising rates, and right now the two year is at near 3%, whixh means the bond market believes the Fed will stop raising rates in September. That is NOT what the Fed wants bond purchasers to believe, which will keep the Feds hand to the fire. The Fed needs to see the two year bond rate really skyrocket, and the 10 year or 20 year yield to drop in comparison so that we really see an inverted yield curve, and that would mean the bond market understood the FED IS SERIOUS.