Ok, What Now? Wall Street Looks Around And Ahead
It's "Ok, what now?" time. Both for equities and the economy.
The summer stock rally stalled amid options-related flows and ahead of Jackson Hole, where Jerome Powell will presumably say something meaningful, although it's not clear what.
It was notable that the S&P's efforts to climb out of 2022's bear market were frustrated at the 200-day moving average (figure below). I'm not much for "magic" lines, but as former Lehman trader Mark Cudmore put it, "if we do fall back now, you’ll see l
It would be a laugh if everyone was wrong (we are not in the next bull and we are not going to correct significantly either) and the stock and credit markets meandered sideways with some short term volatility but little direction from here. I have not seen that forecast from any strategists but that is looking like my base case these days. (May you live in) Interesting times as the Chinese proverb says….
I will agree with Albert Edwards shock. I hadn’t seen that statistic of 20% youth unemployment in China before. It’s especially shocking since the one child policy means there aren’t that many youth.
Another comment: while it’s true it can’t be much of a black swan if everyone is worried about it, it can be dark gray if it seems the market isn’t pricing the risk sufficiently. A market pricing interest rate cuts in 2023 isn’t concerned about that risk.
This post is a winning concept for a regular after market Friday comment. A compendium of commentary to wrap up the week.
I’ll vote for that. Nice review.
H-Man, great summary with everyone’s two cents. I guess if you can’t sleep at night digesting all of this data, you should own short dated treasuries.
Thanks so much, H., for the around the horn perspectives…H., you are sooooo appreciated…!!!
Paul Saffo- Strong opinions weakly held….
Do hope these pundits take weather related effects on China’s economy into account.
“China’s Sichuan province, which has 94 million people, ordered all factories this week to shut down for six days in effort to ease power shortages in the region. The shutdowns came after reservoir levels declined and demand for air conditioning spiked amid the heat.”
https://www.cnbc.com/amp/2022/08/19/china-issues-first-national-drought-emergency-scorching-temperatures-.html