Great Assets Repricing

S&P 500 buyers didn't grasp at dovish overinterpretation of Powell even for a while, and 10y yield decisively breaking above 4.40% cements the asset repricing story as risk-free rate of return is moving higher.

Please pay attention to this 7-part tweet series summarizing what happened, why and what it means going forward, quoting my tweets verbatim:

1) #Fed convinced markets of being hawkish (in projections):
- smartly dancing around #recession vs. soft landing through widening outcomes
- upping #GDP growth through 2024
- erased two unrealistic 2024 rate cut
- 2% #CPI vision to 2026
Some of it is as contradictory as

2) NY Fed and $GS recession probability model.
#Fed thinks #jobmarket and general #economy strength allows for higher for even longer.
Would #unemployment really stop at 4.1%? I'm a bit skeptical but would watch participation rate, hours worked, nominal wages etc.

3) Other #inflation aspects such as crude #oil (unbroken, not crashing first as in sharp deleveraging a la J-F 2020) or $HYG (HYG:TLT) don't point to a definitive game changer via #FOMC.
Headline vs. core #inflation thus not addressed duly - US won't get infl stats similar to EU

4) It was sharp in market effect, but the tougher the first key player - #Fed - gets, the less room for the others - #ECB #BoJ #BoE - to pull off anything similar.
Yes, global #liquidity has turned south a while ago again - see intl trade for signs of nearing #recession 1H 2024.

5) Immediate aftermath net effect of the forward guidance on the markets:
- fine retracements of #yields #USD increases dialed back
- 10y pause around 4.30% not on the table
- #USD to keep rising with greater ease than long end of the curve
- hammering #stocks, reversing #gold

6) What's been left unsaid, is what I view actually as more probable than those growth upgrades while introducing recession possibility…
#stagflation 2024

7) The non-pause of 10y #yield also has the effect of taking the risk-free (natural in economic parlance) rate of return higher.
This conclusive break of 4.34% without prior retreat to 4.20s% has profound effects on both risk assets and future cash flow discounting
Bearish!
#ES

I‘ll cover more in individual market sections and chiefly in real time on both Telegram channels and on Twitter – as the 10y yield approach to 4.50% proceeds. Intraday Signals subscribers have opportunitistic short gain of at least +19 pts locked in, and more would be a pleasant surprise (for you my dear premium subscribers, it‘s it‘s only a $20 upgrade via Patreon, and not the full $49 price).

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 1 of them.

S&P 500 and Nasdaq Outlook

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4,482 held only till the conference started, and now we‘re dealing with the question whether stocks close today below 4,432 or not. I think they would – I‘m not looking for stark IWM outperformance that would pave the way. Yields on the long end are to keep grinding higher, affecting pretty much everything else, tech foremost. 4,385 though seems closer as more realization about squeezed profit estimates seeps into stock prices, affecting multiples too – I‘ll be covering chiefly on Intraday Signals Telegram, and then some on Twitter of course.

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