January 22, 2024
Good morning,
Last week’s economic data eased some recession concerns, eased market expectations for March rate cuts, and, on Friday, decoupled the direction of equity prices from the direction of bond prices for the first time in almost 3 months. Bonds were down hard last week, off almost -1%, which is a big move in bond-land. Stocks however, finished the week up +1.17% after jumping +1.23% on Friday. The notion of “What if there is no landing” was making its rounds on trading desks late last week. New highs in the S&P 500 and NASDAQ Composite were a stone’s throw away – algorithms and technicals did the rest.
Fixed income should ultimately have something to say about the-sky-is-the-limit for stock dreamers now that all-time highs in SPX and NDX have been broken. However, there is little in the way of macroeconomic input today, so the equity market can indulge its fantasies about how far to rally.
What if there is no landing? It likely pushes out rate cuts and pushes out a recession (again). That doesn’t seem like the recipe for a run-away bull market for stocks. See you Thursday.
Be well,
Mike
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