2023-11-17 06:30:21
Although the markets are not giving up and the American indices refuse to fall even half a percent, there are two or three economic news which make us ask questions, which make us wonder. wonder if we didn’t go a little too high and a little too fast. But even if some people tend to think so (including me), we still sense an impressive strength on the part of the Bulls – I don’t know what doping products they took, but it seems like they will not give up on buying as long as they are convinced that rates will fall in 2024 – especially since now there is a lit that is even starting to talk about March 2024.
The Audio of November 17, 2023
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Deceptive immobility
The most interesting thing about yesterday was the fact that there was really something to eat and drink, but we still decided to take the positive side of things. And when you think that 17 days ago we were on the edge of the abyss considering leaving finance to open a guest house in Provence, it’s impressive. With the news we had yesterday, there was plenty to put the market on hold, but for the moment, we are insistently focusing on the subject of inflation which has been defeated and the rate cut which is coming. . This news which has been with us for several days, refuses to grow old and we refuse to move on.
Last night, there was even Mr. Jeremy Siegel, the Wharton School professor who is more often on TV than in his classrooms – as you know – so Siegel came on TV and said the thing next :
“I really think the next step will be lower rates, even if there’s no recession, just because we’re in a downturn. It could take place as early as March next year. I want Powell to invert this yield curve!!! »
Well, there is no reason to rush to buy the market by borrowing money – Siegel is almost as correct as Roubini in his forecasts, but still we see that there is a sort of underlying enthusiasm. fairly strong underlying that circulates in this market.
No recession
The theme that is starting to come up now is also to know and see if rates will trigger a recession or a simple slowdown – as we saw with Siegel, we are talking more about a slight slowdown rather than a recession . Goldman Sachs estimates that there is only a 15% chance of a recession coming. UBS thinks the economy will slow down and push the FED to cut rates by 3% – but doesn’t even imagine that we could see American GDP go negative. “SOFT LANDING” and the drop in rates are on everyone’s minds. This is also why it is not decreasing… On the other hand, still take a look at the graph below:
Jobs in the trucking sector – Via GameofTrades
This is the graph which represents the number of employees in the truck transport sector in the USA. The gray areas you can see represent recessions – you don’t need to be an aeronautical engineer to understand that with every wave of layoffs since the 90s – a recession looms right behind. And we are in a wave of this type. So yes, you will tell me that this time it’s different, because it’s not the same, but let’s say that we should perhaps keep this graph in mind. Afterwards, to be reassured, I can also find the counterpart of this graph which says that when we are up in November, we are up in December and that in election years, we never go down. But still keep this graph in the back of your mind.
Yesterday’s day
Still, yesterday the S&P500 ended up again – an anemic rise – but a rise nonetheless, the Nasdaq was FINALLY falling, because Cisco was being taken down and in the retail sector, Walmart was literally being taken down. explode following statements that were super scary. Not enough fear to bring down the market as a whole, but super-fear nonetheless. The world’s largest supermarket published figures that were online and even raised its guidance for the next 12 months. But in their press conference, they made a statement that shook the sector…
They said American consumers were spending MORE cautiously because of inflation. We clearly didn’t like it. There was no contagion – which is quite crazy, once again – but the stock took 8% in its teeth, as if the consumer was only cautious because of inflation ONLY AT Walmart. And then it didn’t stop there. In England, there was a profit warning at Burberry’s which said they were not sure they could meet their annual targets. BAM! The raincoat manufacturer plunged 11%, taking the luxury sector with it. LMVH and Hermès also contributed to the ad.
But we don’t give up
Despite this mixed news, despite the fact that there are clear signs of a slowdown – hopes of lower rates are medicine for everything else. Industrial production numbers were also below expectations and Jobless Claims which were FINALLY above expectations even reinforced the idea that the economy is slowing and rates will never rise again. Besides, I love the interpretation we put on Jobless Claims! For weeks the figures have been weaker than expectations and now all of a sudden, over a week it is stronger than expectations – which means that MORE PEOPLE are appealing for unemployment – and we find that it This is a very strong sign that the FED’s strategy is working.
In short, we are in “OPTIMISM” mode and we are not going to complain about it. But as usual, when you gain confidence, you always end up regretting it. As Warren Buffet always says:
“I’ll tell you how to get rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful”
In conclusion of yesterday’s session; we are no longer afraid of anything and we only see the glass half full. For now. We didn’t even hear the people from the FED who spoke yesterday to tell us that it was “a little early” to declare victory on rates and inflation and we didn’t even see the statistic that says that since the start of the inflation crisis, each time we anticipated a change in monetary policy from the FED, we were wrong. Currently, this is the seventh time that we are CERTAIN that the FED will turn DOVISH… How did they say? Never six without seven?
Water temperature this morning
This morning we are talking about China again. Alibaba shows the way south by plunging 10%. The e-commerce giant has abandoned plans to spin off and list its cloud unit.
They cited uncertainties over the supply of chips needed to develop artificial intelligence, after the United States recently tightened its ban on AI-related semiconductor exports to China. Alibaba’s move highlighted a similar problem for other Chinese companies, which now face the challenge of developing artificial intelligence without the cutting-edge technology provided by U.S. companies, including Nvidia. As a result, the Hang Seng plunged by almost 2.2%, China fell by 0.3%.
For the rest, Biden’s declarations that Xi-Jinping is a dictator have not had too much influence on the markets or on geopolitics, but on the other hand, there is a video circulating which shows the head what is Blinken – the American Secretary of State – doing when Biden says this sentence? We can clearly see that he can’t stand his boss’ stupidity anymore and that if he has to wait 4 more years, I think he’ll look for a job at UBER to avoid that. That aside, oil continues to fall, and the more bullish the market, the more it falls. WTI is currently trading at $73. Gold at $1987 and Bitcoin is at $36,300. And then IBM withdrew its ads from “X” because Musk would be linked to anti-Semitic comments. I’m not a Musk fan – but imagining that he could delve into such stories seems a bit complicated to me, but hey, there’s so much nothing to say that we have to keep busy.
Figures of the day and weekend
In terms of economic figures, there will be Lagarde who will speak, the CPI in Europe, building permits and construction starts. And then there will be Daly from the FED speaking. Probably to say that we shouldn’t sell the bear on rates, but no one is going to listen to him anyway. At the moment, futures are up – as usual – and it’s Friday.
As for me, it remains for me to wish you a very nice weekend and an excellent weekend. See you again Monday morning, as usual too.
Good day.
Thomas Veillet
Investir.ch
“Inspiration comes from within yourself. One has to be positive. When you’re positive, good things happen.” —Deep Roy
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