It seems like a lot has happened this week and it’s only Wednesday morning. On Tuesday and Wednesday we got inflation reports from the producers as well as the consumers. One was warmer than expected while the other was a touch cooler. Still, although April looked a tiny bit better, year over year inflation remained well above 3% and nowhere near the Fed’s 2% target. Recall that I have been saying that 3% is the new 2% and until we get a full-fledged recession, inflation is not going anywhere near where the Fed wants it to be.
What did stocks do on Tuesday with the warmer inflation?
They rallied, of course, which had some people scratching their heads. Remember folks, I always write this; it’s not what the actual news is, but rather, how markets react. And Fed Chair Jay Powell poured cold water on any notion that the Fed is even remotely discussing hiking rates again. The Fed is higher for longer with an eventual rate cut. That is, as Mike Tyson used to say, until someone punches you in the mouth. Then all plans are off.
Do you know what else is happening this week?
Some of the major stock market indices are poised to hit fresh all-time highs. I’ll tell you this; the speed at which the market recovered from the April decline surprised me. Recall that my 2024 thesis was for a Q1 peak, Q2 low by Memorial Day and new highs by Labor Day. Those three events have been compressed. Also recall that I did not have high conviction in mid-April that the 19th low was the Q2 bottom. I thought it was a coin flip. It wasn’t until I wrote about higher highs and higher lows in the indices that it looked like the old highs would be challenged.
On Friday I will touch on the resurgence of the old Meme craze with stocks like Gamestop and AMC going crazy again as trading volume on the NASDAQ surges to nosebleed levels. It certainly looks like some big professionals were being taken out in body bags after being short GME and AMC. OUCH!
On Monday we sold some levered NDX. On Tuesday we bought more AMD. We sold some levered NDX.
