The View from 5th Avenue

The View from 5th Avenue – 11 August 2023

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Part two of the inflation data came today via the PPI and University of Michigan Sentiment (after yesterday’s CPI), and investors were made uncomfortable by more than just the heat of the summer sun. This week’s economic data pitted the two sides of the inflation argument against each other. Inflation bulls looked at the shelter component of CPI yesterday, which is turning negative, and implies downside inflation pressure. Meanwhile, bears were watching drivers of disinflation turning higher (S…

The View from 5th Avenue

The View from 5th Avenue – 10 August 2023

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It’s the middle of August (or almost) and the next FOMC is still 41 days away but that has not deterred investor interest in inflation. Of course that has been a major driver of participant analysis, as well as Chairman Powell’s, and each CPI print is diagnosed for future probability of Fed action. Today’s datapoint was helpful in that it increased 0.2% m/m (inline with estimates) while the y/y increased 3.2% (better than expected while higher sequentially). Markets cheered the improvement and…

The View from 5th Avenue

The View from 5th Avenue – 17 July 2023

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Today was the great wait as markets head into a busier earnings season. With the Fed in its quiet period, very little economic data, and no earnings, volume in the US fell to its lowest level in three weeks. But the path of least resistance is higher currently, and traders kept to that script. While the Russell 2000 (RTY +1.04%) outpaced the S&P 500 and Nasdaq, all three indexes closed with gains. The RTY has been trying to close the ytd performance gap versus the bigger two indexes, but that i…

The View from 5th Avenue

The View from 5th Avenue – 11 July 2023

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The stage is set for the big event tomorrow. Last week’s ADP versus NFP has been largely shrugged off as investors are planning for the potential tailwind of declining inflation. After Treasury yields spiked last Thursday, the 2-yr is back down to 4.88% and the 10-yr 3.98%, and equity indexes are not far from ytd highs. For a third day in a row, the Russell 2000 outperformed both the S&P 500 and Nasdaq, and finally closed above 1900. It has not done that since March 3rd and sets up for a test o…

The View from 5th Avenue

The View from 5th Avenue – 5 July 2023

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With the 4th of July shortened trading week, markets were searching for direction as participants returned to their desks. Q2 returns were solid for the US indexes, but each new economic datapoint that shows some weakness, adds to the debate of how much higher equities can go in the short term. ISM manufacturing data on Monday was weaker than expected, and that was followed by factory orders that fell sequentially today. Alone these are not enough to cause concern for investors to take profits,…

The View from 5th Avenue

The View from 5th Avenue – 30 June 2023

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Q2 is now in the books, and it has been solid. The S&P 500 finished with an 8.3% gain, Nasdaq 12.8%, and even the lagging Russell was up 4.9%. And in appropriate fashion, markets rallied today adding boosting those Q2 gains. Economic data has been supportive to the pushed-out recession theme (next year?) and has given some tailwind to increasing equity exposure. While today’s Personal Spending was lighter than expected (+0.1% vs estimates of +0.2%), PCE data also fell sequentially, albeit with…

The View from 5th Avenue

The View from 5th Avenue – 22 June 2023

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Mid-June has been a busy month for central bankers, and the world received another batch of hikes today. While the SNB raised 25bps (in line with estimates), both the Norges Bank and BOE were more aggressive in their approach and moved benchmarks higher by 50bps (not consensus). Inflation remains the central theme for most of the world’s economy, and investors seem content for now that central bankers can manage a smooth outcome. After three days of losses, US equities resumed their climb getti…

The View from 5th Avenue

The View from 5th Avenue – 15 June 2023

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On June 1st, the S&P 500 finally broke through 4200, and a quick 10 trading sessions later, it closed above 4400. While many have been pointing to a narrow leadership for the gains, that has broadened recently as shown by the Advanced/ Declined lines, and the percentage of stocks above their 50/200d moving averages (for the SPX, 68% and 61% respectively). Even with the Fed’s hawkish skip yesterday that still has a couple more hikes planned (our economist Melissa Davies sees 6% in the Fed’s futu…

The View from 5th Avenue

The View from 5th Avenue – 7 June 2023

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Smoke filled skies over the East Coast gave an eerie feel to the day (https://www.earthcam.com/usa/newyork/worldtradecenter/?cam=skyline_g), but that was not the reason for the investor rotation out of mega-tech. The NYFANG added 17% to its year-to-date performance in May and has single handedly supported the S&P 500 (and Nasdaq), giving traders a reason to take some money out of the group and add to some of the underperformers. The easy mark is the Russell 2000, and the index added another 1.7…

The View from 5th Avenue

The View from 5th Avenue – 25 May 2023

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$184bn. That may be off by a billion or two, but that eyewatering number is what Nvidia added to its market cap today. It also sums up what is currently happening to the US markets. Mega-tech/AI is driving the current performance, while the rest of the sectors are searching for the next direction. With the Nvidia (+24.3%) story driving gains in the Nasdaq and S&P, investors continue to monitor the ongoing debt ceiling negotiations. Both sides seem to be working towards a deal, especially after…