Ah, darn. Those links must be in the chatroom. I don’t have access there.

Big, big developments on this front, Jeff.

https://rightsideofthechart.com/members/scott/activity/271809/

https://rightsideofthechart.com/members/scott/activity/271810/

You could be right. This banking failure sell-off today, though, makes me nervous that Powell has to come out even more dovish than he would have liked. God forbid they actually hold off on the much expected 25bps hike. I fear the upside. I’m positioned for the downside.

I appreciate all of your points and agree with most of them. Personally, I think if the Fed does announce a “pause” this time around, that will already have been priced-in. So many people have been trying to front-run the pause. I think when it finally happens, the market actually sells off. A “buy the rumor, sell the news” type of thing.

Fed funds rate staying at 5-5.25% after more than a decade near the zero-bound should not be bullish for risk assets, but the act of pausing is likely to cause a bullish response by market participants. And although they will “leave the door open” for higher rates, the fact that they are likely to change the language in a way that implies an immediate and effective pause will likely inspire more portfolio managers to put more money to work on the long side of equities.
Believe me, I want to be bearish. Most of the trades I have on are bearish. But I’m getting killed being bearish. So I’m turning my ear toward all of the potentially bullish catalysts that have existed since the October lows and may continue to exist into this summer, so that I can understand WHY stocks keep going up. I am in the same camp as EVERYONE else in that I do believe the US is headed for an inevitable recession that is likely to begin some time in the second half of 2023 or the first half of 2024, but I’m beginning to believe that markets do not (or do not any longer) price in future expectations as much as they are rooted more closely to the here and now. And for now, we are still far from a recession (at least on paper). Inflation is coming down, while at the same time unemployment is low and wages are high. Even regular folks feel a certain amount of “wealth effect” if they bought homes or other assets anytime before 2021. So far the recession we’re all worried about has only existed for a few regional banks and crypto brokers, while the public at large is still thinking that 29.99% credit card rates is just a normal thing. Heck, even when Fed funds rates were at 0, credit cards were still charging 29% APRs. It might take longer than would seem reasonable for the world to wake up to all of this. And before then I fear that the risk, the pain-trade, is higher still.

How is the Fed pausing at 5.00-5.25% bullish? They will leave the door open for a rate hike in June. Doesn’t mean they will do it, but since the market isn’t cooperating and PCE went higher, they will leave that possibility on the table. Either way, rates remaining above 5% is not bully. The charts on the other hand, still bully. The technicals haven’t aligned with the macro for most of this year.

thanks man

Best of luck to you, JimG! Please hit me up on Twitter some time if you’re ever on there. @SkilletHb is my handle.

end of an era of losing Randy trades for me. Closed out a bunch of positions at BE or a slight loss today as my subscription ran out. still stuck in a whole lot of spread positions that will slowly decay into oblivion as the market goes sideway to up into the fall. Then after all my positions are gone and losses fully realized we will get a crash in forth 1/4.. and Randy will have been right the whole time… just a touch early. Good luck peeps. moving on.

Most of the decline in HYG today is due to ex-dividend. All of the bond ETFs go ex-dividend first of the month, and since HYG’s dividend is larger than SHY’s, that may be the reason for SHY’s outperformance today.
The M2 situation is definitely something to be aware of, and I imagine that it will eventually impact markets. Before then, however, I think the Fed Pause will continue to dominate sentiment, and historically markets do rally after a pause. Perhaps after the summer rally markets do get more wobbly again heading into 2024 when the credit cycle becomes more affected by shrinking liquidity and potential recession becomes a reality.