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Powell Pop… Don’t Get Too Excited
The market is popping on the hope of a more dovish Fed going forward. Chairman Jay Powell gave the market ‘hope’ by saying the Fed is likely to moderate the pace of hikes. But is that ‘really’ that bullish?
Oil: 2023 Supply Shock Coming?
2022 delivered the market a nasty oil shock. But will it be the last? I don’t think so. The oil price shock in 2023 will be due to massive underinvestment from the US in hydrocarbons (which still power 80% of all our energy needs). And if oil should fall to $65 to $70 – that spells opportunity for the year ahead – where I see oil back above $100.
Watching the VIX for a Market Reversal
With the VIX approaching a level of 20 – the market feels overly complacent. The S&P 500 is now around 15% off its October low – resembling what we saw in June. My guess is should we see the VIX below 20 – expect the market to reverse shortly thereafter.
A Framework when Thinking about the Fed
How fast? How high; And for how long? That’s the framework when thinking about the Fed’s policy moves. From mine, the market are offside in terms of how high and particularly how long. What we do know is the pace will slow.