Stocks continue to recover after Tuesday's sharp drop following hot US CPI data. A stronger-than-expected drop in US retail sales is giving stocks and bonds an additional tailwind as it raises expectations that the Fed will cut rates this year despite concerns about more stubborn inflation.
With yields falling again after Tuesday's massive spike, we see further tailwinds for equities, as well as for yield-sensitive gold.
Although the market is now reacting strongly to retail sales, I wouldn't read too much into it as we have seen a strong holiday shopping season in the US – meaning that some of the perceived weakness is due to the strength of retail sales in December.
However, the overall positive momentum remains intact and the unexpectedly high inflation rate earlier this week is now seen more as another sign of strength in the US economy and the US consumer.
In reality, equity markets have recently paid less attention to fundamentals. Much of the ongoing rally is due to very positive momentum / market sentiment – particularly hopes that the AI revolution will mean further massive gains for the biggest tech companies in New York, which continue to lead the rally. On the other hand, the strong earnings show that optimism about further rapid revenue growth for S&P 500 companies (>10% YoY) is indeed the reality right now.
The decline in yields and weaker than expected retail sales have now caused short-term USD weakness. However, the strong outperformance of the US economy and slowing disinflation in the US will keep the USD in demand.
Oil and gas prices remain under pressure, but have now received a slight tailwind from the temporarily weaker USD. Gold remains in recovery mode after yields fell again.
👁 ROB'S MARKET OVERVIEW:
February 15, 2024
🌐/🇺🇸 Global/US Markets ↕️/↗️ (weaker than expected retail sales vs. hot inflation data will cause some confusion thus increased volatility)
Cyclical Stocks ↕️/↗️
Tech/Growth Stocks ↕️/↗️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️/↘️
Energy Stocks ↘️/➡️ (headwinds on lower oil & natural gas prices)
Materials Stocks ↘️
💱 Forex
AUD, EUR, JPY ↗️/➡️
CHF ↗️/➡️/↘️ (rebound from sharp losses, remains bearish)
USD ↘️/➡️ (headwinds due to sliding US Treasury yields / will stabilize towards second half of US trading)
CAD ↘️/➡️
GBP ↘️
⚒ Commodity Markets ↕️
Oil prices ↕️/↘️
Natural Gas prices ↕️
Metal prices ↗️/➡️
Gold ↗️ (benefiting from falling yields)
⚡️Cryptos ➡️/↗️ (remains in bullish price channel – likely to rise further towards $54K – $55K range in upcoming sessions)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
