One can think of the current stock market in real estate terms – it’s a building with wonderful curb appeal, but its pleasant facade hides some structural issues that might be compromising the edifice’s overall integrity.
Outlook
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A roundup of news from across the globe - majors pile in to Venezuela, Canada looking at an associate member of the Eurozone, and an opportunity in Japan.
Stocks advanced last week as the broad market looked past inflationary pressures and focused on falling oil prices, declining bond yields, and ongoing diplomatic efforts in the Middle East.
The move in yields last week was significant but not entirely unexpected. What was surprising was seeing such a large repricing in a single day following economic data that does not ordinarily generate this kind of market reaction.
Stocks are now positive in the seasonally unfriendly month of September following a trio of favorable foreign affair developments.
The Fed raised rates 25 basis points to 3.75%–4.00%, validating bond-market expectations as persistent inflation pushed Chair Warsh to finally ‘walk the walk’ on his hawkish rhetoric.
The Fed seems to be less inclined to push yields lower this time. In November 2023, it changed its statement to refer to “tighter financial and credit conditions”, rather than just “tighter credit conditions”.
The Health Care sector is showing renewed momentum after several years of relative underperformance. While the sector’s recent outperformance during market volatility may look characteristically defensive, its longer-term opportunity is increasingly being tied to innovation.
Stocks were mixed last week as markets continued to navigate geopolitical concerns and new signals about short-term interest rates.
There is the idea that energy is destiny. If this is true, the major countries of North America each have circumstances to contemplate when considering their future energy needs.
A hawkish Warsh speech lifts Fed hike odds, Canada records broad second-quarter gains, and Australia’s July inflation data strengthens expectations for another rate hike as September comes into view.
The most important thing heading into this week is not only the economic data and its potential impact on the Fed’s September rate decision and Treasury rates, but also Broadcom’s results