This is a “No More Mr. Nice Fed” market. That much is clear from today’s early market action.
Equities are lower, gold and silver are lower, and oil is lower. Treasuries? Yep, a bit lower. And the dollar is higher.
Indeed, it’s REALLY sinking in on Wall Street that the Federal Reserve is not going to play nice. Interest rate futures are pricing in a higher peak for rates in this hiking cycle, and de-pricing a reversal to rate cuts later in 2023. That has risk assets in a lousy mood.
Some weaker growth or inflation figures might give the markets some relief. But we’re just not getting it. Today’s retail sales figures are a case in point.
Analysts expected them to rise 1.8% in January. They jumped 3%. The ex-autos number was also far stronger than expected at +2.3%. These are definitely “More Fed” kinds of numbers.
Meanwhile, I continue to see beaten-up technology names try to claw back after a lousy 2022. Airbnb (ABNB) is the latest example. It rallied after boosting its sales outlook. The stock was up 42% year-to-date through yesterday, but still down 33% over the last 12 months – just like many of its ilk.
For investors focused on last year’s hottest sector, energy, you don’t want to miss the latest global demand forecast from the International Energy Agency. It said oil demand should rise to 101.9 million barrels per day this year. Not only is that a record, but it’s also up 200,000 BPD from what the IEA expected last month.
