Market Notebook
Discussion –
MARKET COMMENTARY
PRICE ACTION:
Equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND, closed higher on the week. Bond prices marginally so.
TECHNICAL ANALYSIS:
Both SPY and BND might be considered in an upward trend. Recent price action in BND suggests possible consolidation.
SENTIMENT:
The tight linkage between Federal Reserve rate policy, inflation, and equity market expectations remains.
During the last week, some market participants and pundits alike were commenting on the concentrated number of tech stocks responsible for the larger performance of the overall market. The last time such concentration existed was during and around the tech bubble and subsequent crash. Current conditions are not likely similar to the tech bubble period. During the tech bubble, companies were being valued on hope alone with virtually no revenue. The companies leading the charge higher today are mature companies with significant revenue. Nonetheless, we could easily see a significant pullback as market participants attempt to value these stocks.
ECONOMY AND FUNDAMENTALS:
Economic indicators within the Market Notebook remain mixed.
From a timeline perspective, market participants want to be on close lookout for recessionary conditions following the first rate cut after a tightening cycle. It seems likely that the first rate cut will be in 2024. To avoid recessionary conditions, the Federal Reserve will have to get the timing of rate cuts exactly correct. Thus far, the Federal Reserve has managed the economic cycle well.
Jobless claims are to be watched as an important indicator of a potential recession. Thus far, jobless claims are NOT indicative of a near-term recession.
All the best during the week ahead!
Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.