The buyers are back in banks and big-tech overnight despite an avalanche of hawkish talk from Fed speakers. An ugly consumer credit print at the end of the trading day offset the fact that the US trade deficit narrowed last year by the most since 2009 as the value of imported goods declined and the services surplus increased.
The algos only had one thing in mind - S&P 500 hitting 5,000... and they managed to get to 4999.89 before the front-running failed.
The narrative is clearly being shifted back to 'higher for longer'.
Six Fed speakers overnight - all saying the same thing - don't expect cuts any time soon...
KUGLER: MAY BE APPROPRIATE TO HOLD TARGET RANGE STEADY AT CURRENT LEVEL FOR LONGER
KASHKARI: WE CAN TAKE TIME TO ASSESS DATA BEFORE CUTTING; SEE 2-3 CUTS THIS YEAR AS APPROPRIATE RIGHT NOW
BARKIN: "IN THE WORLD OF ELEVATED UNCERTAINTY,... IT'S A REASONABLE IDEA TO BE PATIENT"; LOW RESPONSE RATES, REVISIONS MAKE YOU WARY OF DATA
COLLINS: THERE IS A RISK THAT INFLATION PROGRESS STALLS, REASONABLE CHANCE RATES SETTLE HIGHER VS PRE-PANDEMIC
Yesterday we had:
KASHKARI: "WE'RE NOT ALL THE WAY THERE YET" ON INFLATION
MESTER: EXPECT FED TO GAIN CONFIDENCE TO CUT "LATER THIS YEAR"; POLICY IS IN A GOOD PLACE, MISTAKE TO CUT RATE TOO SOON
And that followed Powell on Sunday who very clearly confirmed that 'higher for longer' view (no matter what 60 Minutes editing/voice-over said).
Of course, all that hawkishness hits the fan if a bank or two collapses...
COLLINS: OVERALL, I SEE BANKS AS WELL-CAPITALIZED
KASHKARI: WE'RE WATCHING CRE VERY CAREFULLY, CRE ISSUES APPEAR LIMITED TO INDIVIDUAL BANKS
REMACHE: FED TO WATCH MONEY MARKET CONDITIONS AS RRP USE FALLS
And today's overnight session was all about NYCB (which is/was the 35th largest bank in the US) as it oscillated from total failure to heroic resurrection...
Some context might help...
The overall Regional Bank index rebounded solidly (but I note that we have seen this kind of rebound three times now in the last week and we're still a lot lower)...but ended the day lower...
Nasdaq outperformed on the day, followed closely by the S&P 500. The Dow managed solid gains but Small Caps battled 'unch' in the last hour (and lost)...
Oh, and while you're celebrating, this analogy just keeps chugging along...
Source: Bloomberg
But hey, the nice people on CNBC said 'buy stocks, this ain't anything like 1990!'
Happy Thursday!
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