ANDIKA BULLETin 9 MAY 2024

Hawkish FedSpeak Slows US Stocks while the New mantra is 'Don't Sell in May, and Go Away"

ANDIKA BULLETin 9 MAY 2024

Mixed US Data overnight.

  • Macro (ugly wholesale sales print, implied US gasoline demand at decade-lows ex-COVID, GDPNOW up at 4.18%?),
  • Micro (TRIP exposed as M&A premium evaporates exposing reality of tourism business, UBER hinting at consumer pain, SHOP signalled more consumer pain, AFRM cut revenues forecasts as BNPL schemes falter - more consumer pain, TSLA tumbled on DoJ probe of FSD),
  • Geopolitical (Rafah invasion begins).

But perhaps the most important thing was Fedspeak, which continues to lean hawkish with Collins saying:

“The recent upward surprises to activity and inflation suggest the likely need to keep policy at its current level until we have greater confidence that inflation is moving sustainably toward 2%,” Collins said Wednesday at the Massachusetts Institute of Technology.

“The recent data lead me to believe this will take more time than previously thought,” she said.

Which (again) pushed rate-cut expectations lower.

Interestingly, The Dow managed to shrug this off and rose for the sixth straight day while the S&P and Nasdaq ended the day around unch.

Source: Bloomberg

USD up, Gold flat, Bitcoin down (tks to some small ETF outflows) while Oil ran up USD$2 on a surprise crude draw-down and MidEast tensions.

Last, I bet you didn't know this? (Neither did I until I read it myself!)

Finally, don't "Sell in May, and Go Away" this year, according to BofA's technical analysts... because Presidential election years can see big summer rallies...

June-August is the second strongest 3-month period of the year for all years going back to 1928 with the SPX up 65% of the time on an average return of 3.2%.

Source: Bloomberg

In Presidential election years, the SPX is up 75% of the time from June-August on an average return of 7.3%.

So there!

Happy Thursday!

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