Jerome Powell’s testimony last week offered no pushback against rate-cut expectations, and if anything, actually stoked the fire. Bets of a 50 basis point cut, as opposed to 25, rose, indicating the market shifted to an even more dovish stance.
Article Category: Junk Bonds
I’ve used this analogy before, but on days like today, one can’t help but feel like investors are nothing more than Pavlov’s dogs, salivating for the inevitable treat they’ve been conditioned to expect. As for Pavlov, he is of course played by Fed Chairman Jerome Powell, also known as the Wizard of Oz.
Earnings season officially kicks off this week, so let’s begin with a quick look at how expectations have evolved, and what it could mean for stock prices moving forward. The first thing to note is that S&P 500 earnings are expected to decline for the first time since Q2 of 2016.
There have been quite a few interesting developments over this past week, so we have a lot to cover. I want to begin by drawing your attention to the divergence between stock prices and bond yields. We discussed this back on March 5th, but since then, things have deteriorated even further.
Wow, what a month it’s been. If you didn’t know any better, you might think the U.S. economy was screeching to a halt. The vicious selling and massive price swings that we’ve seen are characteristic of a bear market, and yet beneath the surface, things are oddly much more placid.
Given the nature of this correction, today’s site is going to be a bit longer than usual. Not only do I believe a lot of items warrant your attention, I think there may be some opportunity to be had from all this recent selling. So let’s jump right in.