TECHNICAL RECESSION ARRIVES, FED HIKES RATE • MARKETS OPTIMISTIC, VOLUME LIGHT • SLOWDOWN OCCURING, IMMINENT
KEY TAKEAWAYS
July has been the market’s calmest month volatility-wise, and it has been quiet in terms of active trading (volume).
In a week where we both entered a technical recession (2 consecutive quarters of economic contraction) and the Fed hiked interest rates another 0.75%, stocks shrugging these conditions off does not appear to us to be based on any valid, stable market narrative.
In a week where we both entered a technical recession (2 consecutive quarters of economic contraction) and the Fed hiked interest rates another 0.75%, stocks shrugging these conditions off does not appear to us to be based on any valid, stable market narrative.
The market is forward-looking and its current assessment of the second half—its sanguine view of the chances of a soft-landing (avoiding recession), the reduction in inflation, and the Fed’s dovishness—does not track with the data we’ve been observing this week.
Inflation remains high and the Fed has not minced words about devoting all of their attention to beating it regardless of whether or not this pushes us deeper into recession.
We will also be deploying the bench to increase the number of assets, increase the number of check dates, and therefore increase the number of overall opportunities to reenter this market as lasting trends are uncovered.
This has been a frustrating stair-step rally with more ups than downs so far and with disappointing volume. Conviction, therefore, may be lacking.
Our tactical positions stand prepared to deploy should conviction strengthen and trends sustain upward momentum.
Back to January levels.
MARKET CHARTS
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