Like it or not, the current one is heavily influenced by the Federal Reserve. And the Fed is not alone. Almost every central bank around the world is raising rates – and doing so as quickly as possible.
The Fed raised rates by another 75 basis points at yesterday's FOMC meeting, bringing the year-to-date total to three percentage points of tightening. And they are not done yet. That was the message Chair Powell delivered and that was the message received, reluctantly at first, by the market.
The four previous times that the Fed raised rates this year, the S&P 500 was up sharply on the day of the announcement, with daily gains ranging from 1.5% to 3.0%. Without those gains, S&P 500 would be down close to 30% YTD (versus the actual 20% decline). That changed yesterday, as the S&P 500 closed down 1.7% (after being up on the day going into the FOMC announcement).
Investors lose money and look to others to blame for their mistakes. It's human nature; it takes less mental fortitude to pin the blame on an externality rather than adopt responsibility and work on yourself.
In bear markets, conspiracies are born, and hatred is often devised.
"If it wasn't for the Fed, my equity curve would still be sloping up."
"Wall Street and the wealthy are conspiring to make me poorer."
In my short stint in this industry, I've noticed a lot of this self-destructive behavior.
One particular notion I've seen catch traction in recent days is that the CME Group -- operator of the world's largest financial derivatives exchange -- is actively trying to suppress Bitcoin from global adoption.
In our cyclical portfolio, we are shifting our global equity exposure, shortening the maturity of our fixed income exposure and getting out of the way of the break down in gold.
Eventually, even thick skulls like mine get the point.
Pretty much all summer long, the team here at All Star Charts has been mentioning Enphase Energy $ENPH as a strong outperformer that is on the verge of a potential epic breakout. During today's internal Analyst meeting, the team agreed that now is finally the time to get involved.
JC and I did a video on a possible trade in $ENPH ahead of today's Fed Reserve Interest Rates announcement. We did just get into it moments ago. Enjoy this video to get a great idea of why we like this trade and how we'll play it:
Key Takeaway: With last month’s rally behind us and the June lows quickly approaching, investor attitudes are beginning to sour. Bears on the II survey now outnumber bulls for the first time since mid-July, and the Consensus bulls continue to decline. Despite this pessimism, investors have been slow to take action. They have kept equity exposure elevated and equity ETFs actually saw $20B of inflows last week (after the two preceding weeks saw $11B of outflows). Increased pessimism at this point is the most significant sentiment risk for stocks. Investors (and their portfolios) have been bruised by a perceived lack of alternatives to stocks but with short-term bond yields now at their highest levels that could be changing.
Sentiment Report Chart of the Week: Safe Havens Haven’t Been Safe
Anything can happen over the final 3+ months of the year, but so far 2022 has been a disappointing year on many fronts for most investors. The portfolio drawdown experienced by the average...