Amazing Week and “FacePlant”
At 4500 on the S&P500, the index sits 6% below its all-time highs. Even with the Nasdaq surging 8% in four sessions last week, it sits down about -10% below its all-time highs. A one-day -26% faceplant by Facebook/Meta crashed the tech rally party. Amazon wowed investors with the strength of its software business and a Prime subscriber price hike. Net, the index eked out a small gain for the week.
The markets continue to be whipsawed with high volatility largely due to concerns over the path of the Federal Reserve raising short-term rates. The investment team believes that longer term rates are quickly approaching a short-term top in yield, low in price.
History suggests that post first Fed rate hike, market returns do turn negative in the subsequent 1–3-month period. However, markets then make new highs over the following 6–12-month period. Our team continues to expect whipsawing and rotating markets for more of the first half.
At 1.15% on Friday, the 2-year US Treasury note yield is anticipating three to four 25bps hikes in the federal funds rates in the next 12 months. The 10-year minus 2-year Treasury yield-curve spread continues to narrow, suggesting that the Fed won’t have to raise rates much to slow the economy and subdue inflation. All our charts and data show, inflation velocity is past its peak but it should remain elevated for the upcoming months.
The Fed has succeeded in taking a lot of hot air out of the various speculative areas in the financial market, including growth at any price stocks, meme stocks, SPACs (special-purpose acquisition company stocks), and the MegaCap-8 stocks.
Behind the scenes, bitcoin has staged a 30% rally in less than 2 weeks. This is against the backdrop of tighter monetary conditions. This is an early bullish sentiment “tell.”
Oak Harvest YouTube Channel
https://www.youtube.com/channel/UCkLvOm9F5iC01-hHxRmUXpQ
Stock Talk Podcast (Weekly Market News and Opinion from Oak Harvest):
https://oakharvestfg.com/stock-talk-podcast/
The Investor Mindset Podcast (Introduction to Critical Concepts for Investors):
https://oakharvestfg.com/investor-mindset/
First Half 2022 Outlook – Curb Your Enthusiasm Yield a Bull Market Buy.
https://www.youtube.com/watch?v=Ybk6bjjkILQ
This content contains general information and express the views of Oak Harvest Investment Services. All data, articles, and information cited are believed to be reliable at the time of creation; however, Oak Harvest does not warrant any information contained herein to be correct, complete, accurate or timely.
Oak Harvest provides links to content produced by other websites that OHFG does not control, and Oak Harvest does not necessarily approve or endorse such content and does not guarantee its accuracy. Nothing in this content constitutes personalized investment advice. Any charts, indicators, or graphs included or referenced in this content have limitations, and no such material is able, in and of itself, to provide a buy or sell recommendation for any security. Strategies and ideas discussed may not be right for you, and views and opinions expressed may change without notice. Strategies and ideas discussed will not apply to all client accounts or portfolios.
Nothing in this content constitutes a recommendation, or an offer or solicitation to buy or sell securities. Oak Harvest makes no assurance as to the accuracy of any forecast or projection made. Not all past forecasts or projections have been accurate. No current or future forecasts and projections are guaranteed to be accurate. And future forecasts may not be as accurate as any forecasts discussed. Indexes like the S&P 500 are not available for direct investment and your results will differ. Past performance is not indicative of future results. Investing involves the risk of loss.
