Narratives are a mishmash – as variables mostly haven’t changed this week. In the new week, the status remains rangebound for now; and subject to news of course; although even the softer Consumer Sentiment had little impact.The Survey Friday was a downright ‘miss’; so while I’m not going to contradict the Fed as making more ‘mistakes’, I have a hunch shared the other day, that it may be a set-up so the Fed can drop rates sooner than the revised dot-plots suggested. … as they can reverse their policies, accordingly with more impact.We are still certainly vulnerable to correction; but it needs to be Nasdaq and include the so-called mega-cap darlings. It might take a hiccup in the AI story, or not; but as I’ve said before, most are massively volatile stocks insane even to consider buying at these heights; so I think it’s institutional fiduciaries or for that matter annuity managers; and they hope the stocks do little while they try the easy route, which is owning the stock and writing Call options. That limits gain but unless they’re hedged, creates vulnerabilities if such stocks ‘tank’.It’s not ‘whack-a-mole’, but seems the opposite so far, with rotational pops up out of neutrality and then the crowd shifts soon to another mega-cap. It’s not a common anthology for a market, but it is what this ‘bifurcated’ market has and continues to contend with.Market X-ray: We can’t directly say ‘the Fed is driving the economy’ lower; or that a recession is occurring or their fault. However, the phony jobs report (as it pretended new jobs equaled more worker demand and it did not … most were part-time and reflected both two-income needy families and single workers as have to hold down two jobs to make ends meet) … that report and Friday’s new Consumer Survey evidence what I’ve talked about and it’s not ‘overheating’.In fact the surprise to the market would be an earlier Fed rate cut based on a reality that they don’t want to be ‘too late’ rather than ‘too early’ as speculated by the Fed Chairman. To me this is ongoing ‘stagflation’ for months now.We’re in a bull market for S&P only by virtue of narrow mega-cap leadership. I think it’s important for the Fed to realize ‘inflation is not transitory’ it’s ongoing as the Fed ‘sort of’ walked that back a bit. Inflation is about where it was prior to the Pandemic. Plus there are new problems; like the French political chaos.I do believe pressure is out there to get the Hamas terrorists to abandon their situation, if not their cause (which is the opposite of righteous so long as they hold their own civilians hostage … a majority of which foolishly voted them in). I think the United States primarily wants a Israeli-Saudi security deal to arrive; and (but likely never mentioned) continuation mostly of Dollar denominated Oil sales between OPEC and ‘most’ Asian and European countries.If we can get a ceasefire in Gaza, Oil will drop, even if temporarily. That will be well-received by the market. In Russia Putin commented about negotiating a peace today; and nothing he said seemed viable. He didn’t mention Crimea.Nobody’s thrilled with this market, except perhaps the handful of mega-caps. The market is not assuming all is fine, nor even that we’re in a traditional bull market; because (interest rates are part of it) small stocks aren’t participating. Bottom-line: distortions and proclamations regarding the U.S. economy were slightly sorted-out by the Univ. of Michigan survey; though not a ‘holy grail’.Next week should be choppy and broken-up by a holiday; then I’m going on a 3-4 day cruise; nothing spectacular plus I’m hesitant anyway. Cheers!More By This Author:Market Briefing For Tuesday June 11
Market Briefing For Monday June 10
Market Briefing For Thursday June 6