- Moving the markets
Fed chair Powell sounds like a broken record. He keeps saying he won’t cut interest rates anytime soon, no matter how much Wall Street begs and pleads. He has many allies who back him up on this stance. But Wall Street is in denial. They think Powell will cave in and turn soft.
Today, Powell dashed their hopes again when he said, “more restrictive policy is still to come,” and hinted at more rate hikes in the future. He also said he didn’t expect inflation to reach 2% this year or next. Ouch.
Powell was not speaking to some random audience, but to a group of influential central bankers from around the world at a European forum in Portugal. His words sent a clear signal: “higher rates for longer”.
But the markets didn’t buy it, and the major indexes barely budged. Yesterday’s short squeeze fizzled out today and had no impact on the overall market. Bond yields fell, the dollar bounced back, and gold lost some shine.
The AI craze seems to have peaked, as this chart shows, and I wouldn’t be surprised to see the markets tumble down, as this bubble pops. What could cause this? Maybe a tougher crackdown on chip exports to China, which could hurt the tech sector big time.
- “Buy” Cycle Suggestions
The current Buy cycle began on 12/1/2022, and I gave you some ETF tips based on my StatSheet back then. But if you joined me later, you might want to check out the latest StatSheet, which I update and post every Thursday at 6:30 pm PST.
You should also think about how much risk you can handle when picking your ETFs. If you are more cautious, you might want to go for the ones in the middle of the M-Index rankings. And if you don’t want to go all in, you can start with a 33% exposure and see how it goes.
We are in a crazy time, with the economy going downhill and some earnings taking a hit. That will eventually drag down stock prices too. So, in my advisor’s practice, we are looking for some value, growth and dividend ETFs that can weather the storm. And of course, gold is always a good friend.
Whatever you invest in, don’t forget to use a trailing sell stop of 8-12% to protect yourself from big losses.
- Trend Tracking Indexes (TTIs)
The markets moved sideways as Fed chair Powell repeated his tough stance on monetary policy, which prevented traders and algos from extending yesterday’s gains. Our TTI’s ended mixed, with the domestic one slipping slightly and the international one rising a bit.
This is how we closed 06/28/2023:
Domestic TTI: +3.65% above its M/A (prior close +3.82%)—Buy signal effective 12/1/2022.
International TTI: +6.93% above its M/A (prior close +6.65%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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