The cross currents are incredible. According to a Havard/Harris Poll, 72% of respondents support DOGE objectives. The breakdown is as follows…9 out 10 Republicans surveyed support DOGE…70% of Independents and 60% of Democrats.
As written several times, the President’s agenda has increased uncertainty in the markets, albeit this uncertainty has not yet translated into greatly higher volatility.
Yesterday’s data indicated that Consumer Confidence fell this month by the most since August 2021 on concerns about the outlook for the broader economy, chief amongst are tariffs, inflation and future labor market conditions.
The measure of expectations for the next six months also fell by the most in three and a half years while a gauge of present conditions declined “only modestly.”
Inflation expectations over the coming year increased to the highest since May 2023 and long-term inflation expectations almost matched the University of Michigan’s level that was released last week, a survey that indicated inflationary expectations are now at the highest level in almost three decades.
This survey reinforces other surveys that consumer and business sentiment is waning after an initial surge of optimism immediately following the election.
The President is trying to change the status quo. What will be the outcome? Only history will answer this question.
The Treasury market was very strong yesterday as prices rose and yields fell by a considerable amount, the result of the Consumer Confidence number which suggests a possible slowdown in consumer spending.
Treasuries totally ignored the inflationary expectations sub index, a direct contradiction as to how bond prices are dictated…inflationary expectations are a major variable of debt prices.
At the time of this writing, the bond market is again discounting to interest rate cuts in 2025. Several weeks ago, the narrative was increasing that the Federal Reserve may need to increase the overnight rate.
Wow! Talk about a rapid change in sentiment.
Led by the mega sized technologies, equities declined modesty. This is the sixth consecutive day that value has outperformed growth, the longest stretch since early 2022.
The infamous Magnificent Seven, the seven companies that has contributed to the vast majority of the gains in the S & P 500 during the past two years, is now down over 10% since December 17 according to Bloomberg.
Bloomberg writes TSLA has led the decline, down about 37%, AMZN, MSFT and GOOG are all down over 10% AAPL and NVDA off about 3% while META is the only one that is positive since December 17, up about 5%.
Is this just profit taking after humongous gains, or the start of a trend? Only history can answer that question.
For what it is worth department Bloomberg reports several leveraged ETFs concentrated in the Magnificent Seven companies are down over 40% in about three days.
Ouch!
After the close, NVDA posts results. Dow Jones writes that it could move 10% in either direction following its release.
Last night the foreign markets were up. London was up 0.62%, Paris up 1.41% and Frankfurt up 1.69%. China was up 1.02%, Japan down 0.25% and Hang Seng up 3.27%.
Dow and NASDAQ futures are up 0.25% and 0.50%, respectively, ahead of NVDA’s earnings. The 10-year is off 2/32 to yield 4.31%.
