This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
Otherwise, enjoy the column!
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July 5 – stock mentions: AAPL, AMZN, FB
Michael Kramer and the clients of Mott Capital own AAPL
Fed Narrative Remains Unchanged
Stocks managed to battle their way back from a steep morning selling-off, following the better than expected jobs report. As I told the RTM subscribers this morning, the focus for BLS reports at this point should not be the headline number, but the wage growth number. That is what matters the most at this point, not how many jobs were created or the unemployment rate. Despite the low unemployment rate, wage growth has pretty subdued, and that is what has the Fed mystified.
I didn’t think today’s sell-off would last, and it didn’t. The narrative for the Fed hasn’t changed and isn’t likely to change by the time they meet again on July 31. (Premium content: The Fed Narrative Remains Unchanged)
The CME Group’s Fed Watch tool is now projecting a 95% chance for a 25 bps cut in July. To me, that seems the most logical. The idea that the Fed would cut rates by 50 bps in July never made sense to me. I think given the decade that has passed between now and the last rate cut, people have forgotten how significant a 50 bps cut is. The present-day economic scenario doesn’t warrant a 50 bps rate cut, 25, sure, 50, no.
On top of the articles, videos, Q&A, spreadsheet trackers, and the week ahead content. I am now adding a mid-day update audio file for those member of the Seeking Alpha Marketplace Reading the Markets Subscription. So far the response has been good. I’m still testing how I want it to sound. I would really like replicate the old Squawk boxes that use to sit on traders desk back in the day. Anyway, here is a sample from today.
S&P 500 (SPY)
Perhaps that is why the S&P 500 gapped, lower and by days end filled the gap. As the market regained its senses.
Amazon continues to grind higher slowly, and I continue to believe AMZN will head back towards $1,965.
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Apple also appears to be on pace to continue to head towards $209.
Facebook is getting squeezed tighter and tighter in that rising wedge. Something big is about to happen to FB. It could be a drop to $186.
Well, that will be it for a Friday night on July 5 at 9:45 PM.
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