Market Synopsis: Equities up, Treasury Yields mixed, Commodities up, Dollar down, Crypto down
Past Week Events:
- The Consumer Confidence Index was released this past tuesday. As the index’s name implies it serves as a measure of how consumers feel about the economy. The index measures how much consumers are spending in order to determine their confidence. The index posted a decline dropping confidence to a three-month low. The decline in confidence is rooted in recessionary fears as a potential economic downturn looms because of an aggressive Federal Reserve.
- The Federal Reserve Board of Governors consists of seven members who are selected on the highest level. They oversee the activities of the Federal Reserve at the municipal level in order to achieve the Federal Reserve’s mandates. The key takeaways from the three governors were the theme of higher for longer. Both the Atlanta and Minneapolis Federal Reserve governors are leaning towards a higher terminal rate and for longer. This is not good for stocks as a potentially more restrictive Federal Reserve means slower growth.
- The Federal Reserve Board of Governors consists of seven members who are selected on the highest level. They oversee the activities of the Federal Reserve in order to achieve the Federal Reserve’s mandates. A few Fed members will speak next week. These are extremely important for investors, as Fed Powell testifies to the house and senate which will be extremely anticipated.
- The unemployment rate will also be released next week. The unemployment rate is the number of people who are unemployed but are actively looking for work. Generally as inflation increase the unemployment rate decreases. The unemployment rate has been decreasing since covid, and despite recent quantitative tightening (increasing interest rates to slow cash flow in the economy) unemployment has stayed low. Investors will see if this trend will continue or if there is a possible shift.
Market Snapshot:
- Markets had a bumpy start to the week as the S&P touched $3920. The reason for the rough start was due to a decline in consumer confidence which underscored the looming concerns of a recession. Furthermore, a number of Federal Reserve Governors spoke giving some of their insight into current macroeconomic conditions. The underlying theme was not great as they highlighted the idea that a higher terminal rate may be necessary. However, near the end of the week markets rallied substantially. The reason for the massive run-up is somewhat elusive and complicated but essentially it did not have much to do with any actual major catalyst.
Quip of the Week: "The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett
U.S Equities:
Indexes(Week)
SPX 4,045.64(1.90%), DJIA 33,390.97(1.75%),
NASDAQ 11,689.01(2.58%), RUT 1,928.26(2.00%)
Sectors
- As the broader market rallied into the end of the week all sectors except for Consumer Staples and utilities were able to close in the green. Materials closed the week up the most out of any sector. Consumer Staples and Utilites underperformance highlights a shift away from defensives.
Treasuries:
- Treasury yields were all up this week except for the 30 year treasury which actually dipped below 4%. There was a solid run-up in yields on Thursday with all of the hawkish sentiment coming from Federal Reserve Governors reiterating higher rates for longer. However, with the massive stock market rally on Friday yields tumbled with the 30 year treasury actually closing down on the week.
Commodities:
Oil
- Oil rallied higher on the week but with extreme volatility. The WSJ reported midweek an issue with the UAE and OPEC had come up. It was rumored that the UAE was considering withdrawing from OPEC. This news sent oil tumbling but within an hour of its release, it was clarified that the rumor was false. The clarification sent oil rallying.
Gold
- Gold rallied quite nicely on the week closing up 2% above $1850.
BTC -22,296, -3.61% ETH - 1,564.21, -2.42%
- Bitcoin dropped quite rapidly on the week to about $22,000. This was in large part due to fall out from Silvergate Bank. Silvergate Bank is one of the major banking institutions serving as a major hub for cryptocurrency businesses. Because of issues that Silvergate is facing a number of cryptocurrency exchanges are cutting ties with the bank. This has raised concerns for the crypto community.
Europe:
Stoxx 600- 464.26, 1.43% DAX -15,578, 2.42% FTSE 100 -7,947, 0.87%
Chart of the DAX (5-day)
- In a survey conducted monthly, the majority British public sees a near future will high inflation still corrupting the market. Although it seemed believed that inflation is cooling down due to the ECB’s aggressive efforts to stop it, it still seems like it is still affecting the public. The Bank of England sees a goal of a drop to 4% inflation by the end of the year, but the question remains wether this is attainable and how the market will respond.
Asia:
XJO (Australia)-7,283, -0.32% Shanghai 180 Index-8,755, 2.17% Nikkei 225- 27,927, 1.73%
XJO 5-day Chart
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