| | | Re: Trump nominates Kevin Warsh as US Fed Chairman
I've read a couple things on this... Apparently Warsh has been pretty hawkish (i.e. higher interest rates to control inflation) in the past. Of course Trump is vocally dovish (i.e. lower interest rates to spur growth). I'm sure they discussed their views ahead of this nomination, so I wouldn't expect them to be at odds as much as the above characterization might make it sound. My expectation is that Warsh is willing to lower rates but isn't going to dive into it blindly - he will act as the data dictates.
The market reaction to the nomination is interesting, as it hints at what the market participants have been thinking. Gold and silver were down a TON, reversing most of their gains for the YTD. But that trade naturally draws investors who are worried about "debasement", so it isn't necessarily reflective of broader market sentiment. This still suggests that this segment of investors is less fearful than before.
DXY ticked up today, possibly indicating greater confidence in the US than that indicator has expressed over the last two weeks. Of course DXY is also driven by what is happening in other countries (there's a lot going on in Japan), so both the weakness and today's modest rebound could have nothing at all to do with Warsh. Tough to say.
We're seeing a lot of idiosyncratic movement in the stock market this earnings season, which is a healthy sign. Companies that had been in the dumpster are being rewarded for even moderate strength. Those that had been flying very high on fumes are getting punished if they fall even a little short. Good to see the bulls battling the bears rather than just seizing the bit and charging forward. Mixed markets are best for both value-driven strategies and those focused on identifying operational strength. It is clearly no longer as simple as "buy growth tech on dips". Not when the software sector is getting crushed like this.
The S&P500 is no longer dominant. Wasn't last year, either, and that has continued into January. Your typical "blended" portfolio of domestic, international, and bonds continues to match the S&P500 for performance with significantly lower volatility.
I'm seeing a lot more positives than negatives in the earnings, even among stocks that are getting hit in reaction. The MSFT earnings (and boost to the outlook) did not in my opinion justify a 12% share decline. I'll take it, of course, but I think it was irrational. Keep calm and own strength - that appears to be broadly outperforming "deep value" or "aggressive growth" here. Not that I'm much at either of those styles.
GLTA |
|
