Stocks Fall On February 28 As Inflation Expectations Continue to Climb

Subscribe to receive this FREE daily commentary directly in your email

2/28/24

#Stocks – $SNOW

#Macro – $NDX, #PCE, #Inflation, #oil

Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha

Some Recent Titles:

Please remember to subscribe to my YouTube Channel for more great content.

Stocks finished the day lower but managed to hold onto support, and it seems to suggest that tomorrow we are likely to see some kind of move. Which direction is tough to say, especially with the PCE report coming in the morning. Estimates are for PCE to rise by 0.3%, up from 0.2% last month, and rise by 2.4% y/y, down from 2.6% last month. The core PCE is expected to rise by 0.4% m/m, up from 0.2% and by 2.8% y/y, down from 2.9%.

Again, I have no real view here because sell-side analysts have already gone through and parsed all of the data from the CPI and PPI and factored that into their estimates. But it would seem like analysts’ estimates for core PCE and PCE y/y have been pretty much in line with expectations for the past couple of months, or slightly too high.

Regardless of the PCE report, inflation expectations are rising, and the 2-year breakeven today climbed to 2.77%; I would be curious to see if it makes it back to the 3% mark or not. That was an important spot in the past, and it is likely to serve as an important spot should it get there in the future.

Also of note today was that the Dallas Fed President, Lorie Logan, commented that tapering the pace of QT isn’t the same as stopping QT. The article quoted her as saying: “What surprised me from the market reaction was that some, I think, connected slowing to stopping,” she goes on to say, “We just need to disconnect those concepts — that slowing doesn’t mean stopping, but really just means managing the pace.”

So it only took since the beginning of January for this to be discussed again, but I guess it’s better late than never. Was this a sign that the Fed is starting to get uncomfortable with all the easing of financial conditions we have seen since November? Will the Fed have to start walking back the timing and the number of rate cuts below 3, next? I do not know, but my guess is that we may be about to find out. If the current trends persist and the market is right, then inflation will not go anywhere but higher, and oil has not even broken out yet.

Oil tried to break out today but didn’t hold those gains and instead closed back below resistance.

 

Meanwhile, the NASDAQ 100 managed to close right on support today, at 17,850, and I guess we will find out if that support holds tomorrow.  It appears to be a descending triangle; my understanding is that descending triangles typically are bearish and result in lower prices.  I think that the gap at 17,480 is screaming to be filled.

Unlock Deeper Insights with Exclusive Member-Only Video Content on The Market Chronicles YouTube Channel – Just $34.99/Month

Strong JOLTS Report Sends Inflation Expectations Higher

December 3, 2024 1:24 PM

Low Realized Vol Has Trapped The Stock Market

December 2, 2024 2:00 PM

Anyway, another day, another stock is moving by some bizarre amount after hours. Today, it is Snowflake’s turn after it provided weaker-than-expected product revenue for the first quarter. So the stock is down, oh, about 24%. I really can’t remember a time when we have seen moves of this magnitude regularly and of this size. SNOW isn’t precisely a penny stock with a market cap of about $75 billion.

See you tomorrow.

Mike

Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment. 

Add your email to The Market Chronicles' growing list of daily readers. A FREE market commentary on the trading day's most critical and least apparent events!

Add your email to The Market Chronicles' growing list of daily readers. A FREE market commentary on the trading day's most critical and least apparent events!