Growing Quality Morning Market Feed 05.03.24

During pre-market markets looked to be happy with the comments made by Powell. As we got closer to market open, bond yields started to tick up which resulted in a number of stocks giving back the nice green numbers shown before the markets opened. So what happened yesterday?

- Digesting Powell’s speech

As investors were busy digesting the comments made during the press conference after the rate decision, or perhaps lack thereof as they stayed flat, analysts started to look for takes that conformed their biases, so how good have they done their job?

We must say quite well, what I started seeing were reports stating how Powell dropped his comments about a rate cut this year, quietly quitting that stance. This is something I don’t find any bit surprising because during the last rate hike cycle to which the one we have been going through is compared, inflation came back for a second punishment. Expecting to go from almost 10% inflation, down to 2% without any bounce simply sounds absurd to me, but that doesn’t mean the bounce must be all too significant, or create new panic.

At the point of you reading this, I am fully done with the digestion and….. You can fill in what follows there. But I have taken my stance and my views on what I expect from the markets. I will tease you a little bit however and take you through the day first before I will give you my ideas, just so you can think of it over the day, or weekend.

- Moody’s Corporation

Moody’s Corporation posted earnings. These earnings beat estimates across the board, despite the beat across the stock initially fell some 3% when markets opened. This happened due to a slight increase in spending expectations.

- Yesterday’s Catalists

Yesterday, we saw some economic data coming out. Jobless data came in better than expected, with less job cuts, and less initial jobless claims.

As for earnings, before market open only Kellanova (Kellogs) gave a decent surprise, but this is not a stock that I want to look at before breakfast..

Now there has of course been 1 other apple that has reported, a sour one as analysts called it going into the release, but for comments on those earnings, you will have to go to my youtube channels as I will cover it in a video that will be released after the market closes, I will give one hint about them, they bought themselves out of bad headlines. If you know what I mean, check out the video.

- Wrapping up the FED comments

So as we are wrapping up this Morning Market Feed, it is time to come back on my promise and give my opinion about the recent comments by the Federal Reserve. Let me start by painting a picture so you know how I view the economic data points that are coming out. Then I will explain my stance on rate cuts, just to make it understandable. I will make it quick.

As mentioned before, I find it rather illogical that something can shoot up as inflation did, drop as it did, and fall flat on its face. In my mind, it simply doesn’t make sense. This is also a stance I hold going forward, I will keep a close eye on the economic data points, as I wouldn’t be surprised to see inflation get a second wave. I will however not fight the fed on this as I don’t know why people do this.

I also have the view that you generally shouldn’t want rate cuts. That might sound a bit strange, so why not? Cutting rates means 1 of 2 things, hopefully. Either inflation, at this point, jumps down to 2%, however seeing such a jump might not be ideal due to the likelihood of the number going down further, or the jobs market is diving into muddy waters.

Now, a soft landing can be possible, I have faith in Powell that he can pull this off, but it won’t be easy or a straight glide down in my opinion. So now that the FED has acknowledged these numbers, yet still expects to have the first-rate move be down, that sounds rather dovish in my ears, and made me turn bullish but cautious. As I also said, analysts have been looking for hawkish points to sell their headlines, and they found that Powell did not mention that he expects rate cuts this year. We could then draw the conclusion that he does not expect the economy to heat up too much, or fall flat on its face. Overall good, just need to wait for people trying to sell headlines greed, and fear to understand that as well, which may also not happen from one day to the next.

- Anything up today?

Trying to head into the weekend in ways which will boost Hershey’s earnings that will come out today will not come as relaxed as you might want, as we are expecting Average Hourly earnings numbers.
Economists are looking for a 0.3% MoM figure and 4% YoY. We will also have non-farm payrolls. Then as markets are opening, we will see the S&P Global Composite PMI and Services PMI final number, as well as the ISM services PMI, so if the markets start swinging after the 30 minutes of market open, check on these numbers.

That was it for this morning, if you want to check in for my video this afternoon which, amongst other subjects, goes over Apple earnings, I’ll see you then.
If not, have a great weekend and you will see my emails re-appear next Monday.

Bye!