Strong day yesterday with some give-back as the Mexico tariff thingy ended. We walk into another gap to the upside this morning as yields back up and money is deployed.
An amazing more than a “V” shaped move back up off of one thing…OUR FED once again crapping in their pants about a correction in the markets and changing their stance from “patience” to “lowering rates.” This after going from “raising rates a few times in 2019” to “having patience.”
Tech…which was a wreck into last Monday…straight up…and we mean straight up.
For those asking. BEYOND MEAT (BYND) got the valuation downgrade from their underwriter this morning. The stock is currently down $18 but valuation was a joke $100 points ago. Remember, price is what someone is willing to pay but eventually…eventually, valuation will matter.
The SEMIS led down and now leading back up. Remember, they have been leading markets up and down forever.
We could say markets are near-term beyond overbought but with the fed next week…
CRM buying DATA…software names that were breaking down last Monday…that ramped on the 2nd Powell, up strong on the news. Fake meat companies soaring on losses…but strong sales. UTX buying RTN. No Mexico tariffs…duh…we told you it would not happen.
Bearish markets used to take time turning…no longer as again, the Fed could not even stand a 7-10% correction before changing their tune. And…the market’s default setting is to just buy it all. It happened in December…and it is happening now.
There is a reason India just lowered rates. There is a reason Australia just lowered rates. There is a reason China just added another $70 billion after adding almost a $trillion to its system. There is a reason Europe just announced they may lower rates even though rates are negative…and also said they could print more money. AND NOW…there is a reason why our Fed cannot even stand a 7-10% correction. The answer: debt and leverage. There is so much debt and leverage in the system that they know what happens if they lose markets. Keep in mind, it is these central banks that enabled all of it and Wall Street that forgot everything about 07-08.
So enjoy. Markets are beyond overbought and frothy in just days off a low.
Never say the fed doesnt matter. Another pivot and another turn. We expect the fed to cut rates in either June or July. Markets repairing some of the recent damage. We will know more by how things pull back when they pull back. But not this morning. Even with continued talks on tariffs, market is up pre-market.
Speaking of tariffs. There will be no 25%, no 20%, no 15%, no 10%…maybe we get 55 for short term but no chance it goes further. That’s our thoughts and will stick to them. We know. We know this president is different but he knows what happens if he goes all in on this. But again, dont worry. The fed is to the rescue once again…not for the economy but for markets.