Multiple catalysts for decline were in-the-works well before crosscurrents of the moment, which typically relate to reversing the growth spin; debating a need for expediency by the Federal Reserve dealing with softening economic stories; and of course the reality of ‘crashing’ the over-promoted mega-caps.Individual stocks were crazy; got a mid-day and late stabilization without any significant sustainability, which is about what I anticipated in earlier remarks I made on ‘X’ (formerly Twitter, and by the way aside the ‘App’ now ‘X.com’ can be used on a computer.. I am not contemplating expanding comments there; just pointing it out.. ‘X’ overall is a maze of information but also some lunacy and more radicalism that I had contemplated before getting familiar with it.. it also tends to be loaded with typically multi-level promoters for crypto, often as I once mentioned, from people I would not expect to be involved in that).
Anyway the extremes were from Intel losing over a quarter of valuation; more and it becomes interesting, but there are so many techs getting creamed. Of the big stocks, AMD & Texas Instruments recovered somewhat; and may be beneficiaries (some think) of the pressure on Intel; but I see them different.
Market X-ray: multiple rate cuts are on the horizon now; and that silver-lining to this market’s Index fiasco, which overall was anticipated, should be noted.Tropical Storm ‘Debby’ (if they name it) is likely to skirt West & Central Florida and I am not evacuating for basically a rain event. However, if power outages are a factor disrupting Monday reports, I would update via ‘X’ (twitter) since it’s usable with a cellular-only connection; should basic fiber internet be down. I’ll be here normally if there’s no disruptions, floods where I live, or similar fiasco.Meanwhile the primary weekend issue is whether Iran & Hezbollah hit Israel, as they might figure they have to move quickly before the U.S. reinforces its ability to help defend Israel more than is already prepared (about 12 US Navy ships said to be forward-deployed in the Eastern Mediterranean at this time).
U.S. 10 year Bills are at their lowest rate of the year; and as suspected, the crowd starts to ponder an inter-meeting Fed rate cut; or even a 50 basis point cut either twice or two smaller increments. Monetary policy has lagged in both directions (too low for too long and now too high for too long over the year); a fact that I pointed-out in hope they would realize their folly sooner; to no avail.The Fed again will be tardy and reactive; had they been pro-active they’d cut well before the serious deterioration was evidenced in public data. Anyone is able to see it when obviousness becomes apparent, like now. They are paid a lot to have more clues than the rest of us, and once again they failed. But we know why, and to that extent give them some slack. It’s because the Fed tries to help the Treasury by keeping rates high to attract funds to our Auctions, as is absolutely essential if we’re going to have a chance at keeping debt service capabilities, given the extraordinary and obscene current debt levels.
On the equity side, there’s a big question mark about the other obscenity; that being the overblown (somewhat AI-related) excess mega-cap valuation levels we’ve talked about for several weeks. We already had a bubble bursting in the AI / mega-tech segment; then a recent rebound as a snap-back and was not a beginning of a new leg up. That’s why I called for late July and August woes.As to worst-case scenarios, that’s sort of limited because of massive rotation, which really didn’t get going sufficiently before flak hit the wall. That narrative was something I concurred with (the need to rotate) and partially why even in the current scenario, I don’t envision the ‘broad-market’ crashing, since mostly it never had a chance to advance all that much. The mega-techs; well they’re plunging with intervening rebounds, and that’s the pattern we’d anticipated.
Not that it impacts markets; but two issues merit noting politically: one will be Kamala Harris picking her running mate. The VP scheduled a Philadelphia rally for Tuesday, so wouldn’t it be unusual to do that if the pick was other than PA Governor Josh Shapiro? So I think it’s probably him; he’s very articulate.Second, the Washington Post has a long story of Egyptian President Sisi, and an order to Cairo’s bank to bundle 10 million dollars in bags that went to a mysterious destination. WaPo then notes Trump added 10 million Dollars ‘of his’ to the 2016 campaign and WaPo tries to make linkage. FBI presumably looked at it years ago; got nowhere plus now ‘statute of limitations’ applies. So I do not know if allegations have merit or not, or matters; let’s call it politics. At the same time we do know that President Sisi, good job at keeping peace as he has done, is somewhat corrupt; aka: the presents to Senator Menendez.
Bottom-line: it’s very complicated if one insists on discussing gamma, delta, the VIX moves or all that. I don’t need to; price, volume, and history is enough for me. We have rates dropping; and some commodities plunging too; so we’ll withdraw ‘softish’ from the landing terminology, although we hope the Fed will move belatedly soon enough to impact the mood, which superficially is dire.I find it tough to get excited about this; because we argued against chasing all the big stocks during the expected early July upward surge, and particularly a realization prevailed that hardware sales really aren’t sustainable unless they find sufficient ‘application software’ to benefit from the capability. It’s coming of course; but none of it fast enough to generate the cash flow desired, as yet.Also, ‘if’ we get through the weekend without war, perhaps there will be a new rebound try after carry-trade margin-calls and Monday washouts and so on. It is unlikely any rebound could carry higher than the breakdown point zone (for sure the S&P 5400 area is obvious); while downside to 4900-5100 as I have discussed for some time now, seems attainable as the pattern evolves, with a great sensitivity to news.
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