Uncertainty Is Ruling The Day

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In his Daily Market Notes report to investors, while commenting on the market uncertainty, Louis Navellier wrote:

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Uncertainty Continues

Stocks fell hard yesterday after one Fed governor suggested that a quick 100 basis point rise in Fed Funds makes sense to him.

Then this morning, other Fed governors countered that they would not continue to fight inflation if it appeared to be forcing the economy into a recession.

Overnight, stocks continued to trade down but after the more dovish comments, the market opened higher out of the gate - and then doubled back modestly into the red as uncertainty continues. 

This morning, the Consumer Sentiment Index came in much softer than expected, helped along by mortgage rates back over 4%.

Uncertainty is ruling the day with gold and crypto weaker, while crude oil has traded back over $91 a barrel.  The reopening trade still has momentum as Expedia had surprising strong results and a bullish forecast, Las Vegas dropped masking requirements, and this weekend's Super Bowl is expected to set records for sports betting. 

The next important milestone will be when PPI is reported Next Tuesday, which could punctuate or soften inflation expectations and will almost certainly lead to continued volatility in the short run.

Post Earnings Consolidation

Now that we are at the end of any earnings season, markets will consolidate. If you're conservative, I still think mid-March is your best window to get in. That's just before quarterly and window dressing when we traditionally benefit because big institutional investors accumulating stocks.  There's still a lot of ETFs out there that only rebalance every 90 days or so and they'll be adding buying too.

The ten-year treasury cracked 2% yesterday. In this environment, any of us could be a Fed chairman. All you do is let market rates go up and then you raise your rates and get in line with them. That's all you have to do. But the quantitative easing they're doing is more nuanced and controls the intermediate to longer-term rates.

Bridge Over Troubled Waters

Regarding the trucking protests, it’s not just the Ambassador Bridge in Windsor that’s in play.   There's one in Winnipeg and there's one in Alberta too.  This is getting to be very severe. Four auto companies, Ford, GM, Stellantis, which is Chrysler, and Toyota, are all shutting production at multiple plants.

That is a lot of trade and it just can't remain closed.  But the protests have gotten bigger and bigger, so whatever Justin Trudeau is trying to do, he's losing.  At least the semiconductors will start piling up because they're not making into cars.

Coffee Beans

The Idaho Potato Commission announced it is celebrating Valentine's Day and the state's signature crop with a limited-edition product: potato perfume. The $1.89 bottles of the fragrance sold out quickly on the IPC website, but social media users can still enter an Instagram contest to win free bottles. Source: UPI. See the full story here.