QuiCQ 18/12/2024
Highly Illogical
“To boldly go where no man has gone before.”
— Captain Kirk
So, we constantly hear how overbought the (US) stock market is. Consider this CNBC headline from last night:
9-day losing streak …
And even without that headline, I have been asking for a while now how bearish it really is if everybody is bearishly pointing out how bullish everyone is.
I realize it is a complex sentence, but get a coffee and then read it again and you will understand.
Anyway, yesterday’s session saw weaker stocks with weak breadth, with further profit taking ahead of today’s FOMC probably partially responsible for the slight risk-off mood.
And talking FOMC meeting, the 25 basis point cut seems to be a done deal. Hence, focus will be on any updates on the Dot Plot, where the current path may see an upward revision:
But one of the bigger macro stories of the past few days is Brazil’s central bank multiple interventions on the FX market, trying to halt the fall of the Real. The BRL was down well-over 25% since beginning of the year before the so far only relatively successful interventions:
Let’s stay with troubled currencies for a moment by taking a look at the loonie (aka Canadian Dollar):
An already falling CAD accelerated further on Monday after the countries finance minister suddenly resigned. Consider Trudeau out rather (very) sooner than later.
The corporate news of the day is regarding the merger talks between Nissan and Honda - is this the beginning of a new M&A around amongst carmakers around the globe? For sure, most share price performances over the past few years should be a motivator for such a merger wave …
The headline shown above highlighted the nine consecutive down sessions for the Dow Jones Industrial index. It is actually even worse for the S&P 500 equal-weight index or the Russell Value index. The chart below, courtesy of the Financial Times and brought to my attention by the fantastic Paul Fraynt at K2 Advisors, shows this consecutive streak in historic context:
We are literally in uncharted territory and ready to boldly go where no man has gone before …
