All We Want Is More Data
Same as it ever was… which is fine.
I don’t even think it’s a case where Minnesota Fed President Neel Kashkari likes the sight of his name in financial media headlines.Take this, for example, from Bloomberg during the lunch hour on Tuesday: “Fed’s Kashkari Does Not Rule Out Rate Hikes If Needed.”
There’s a lot of heat but little light there. Effects were similar elsewhere.
MarketWatch went with “Fed’s Kashkari doesn’t rule out a rate hike.” Yahoo! Finance offered nuance: “Fed's Kashkari cites high risk inflation is ‘settling.’"
Of course there’s a lot more to what Kashkari said during his conversation with New York Times reporter Jeanna Smialek at the Milken Institute’s annual conference.
But it all boils down to “we’ll keep watching the incoming data.”
“It’s a little too soon to declare that we’re definitely stalled out,” he said about the Fed’s progress toward its inflation target.
“We’re in a good place right now, the labor market is still strong, we can take our time to get more data to see if disinflation is going to continue. If it does, great, if it doesn’t, then we need to take that on board.”
Kashkari also said the most likely scenario is “we sit here for an extended period of time” until central bankers are convinced inflation is trending toward 2 percent.
Investors, traders, and speculators seem to appreciate the status quo as of Thursday, Friday, and Monday and continued to bid up stocks early Tuesday, though momentum stalled and the major indexes closed flat-to-mixed.
Carson Group’s Ryan Detrick shared “Reminder No. 861” on X on Tuesday “that higher volatility isn't what you want to see if you are bullish.”
Detrick notes that Monday marked the S&P 500’s first three-day gain of more than 3 percent all year. “For reference,” Detrick writes, “2022 saw this 26 times and stocks lost 20 percent.”
It happened three times in 2019, when stocks were up 30 percent.
Jeffrey Hirsch, the editor of the Stock Trader’s Almanac, gets even more granular:
Over the last 21 years, the first three days of May have historically traded higher, and the S&P 500 has been up 18 of the last 26 first trading days of May. Bouts of weakness often appear around or on the fourth, sixth/seventh, and twelfth trading days of the month while the last four or five trading days have generally enjoyed respectable gains on average, but the last day of May has weakened noticeably with only NASDAQ gaining ground.
This kind of stuff is useful for short-term players looking to exploit inefficiencies, with big downside moves inviting for investors looking to go long on new positions.
The song here remains the same, though: Stick to your plan, if you have one, and if you don’t have a plan, get one.
(Participation, people, is the thing – participate and you will learn. Participate early and your money will work for you for a long time and help you build something decent.)
Will wholesale inventory data for March rock stocks today? Probably not. Will Federal Reserve Governor Lisa Cook roll markets? Maybe!
More telling ought to be what Toyota Motor $TM, Uber Technologies $UBER, Airbnb $ABNB, Anheuser-Busch InBev $BUD, and Shopify $SHOP say about their respective operating and financial results for the three months ended March 31.
First-quarter earnings are up 5 percent year over year, beating the 3.2 percent consensus forecast and the strongest growth in nearly two years, amid what’s shaping up to be a pretty good reporting season.
And even more telling than recent results will be the guidance they share for upcoming quarters and years amid a halfway decent fundamentals-driven long-term bull run.