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Weekly Update

Weekly Update 17-April-2024

  • Profit taking continues

  • Technical selling dominating the flows

  • USD strength is worrisome

  • More evidence of tightening positioning (but maybe not tight)

  • Cooler PPI Inflation tempers the hot CPI fears

  • Retail Sales are still strong

  • Housing is slowing again

  • China is slowing again (do not believe the GDP “data”)

  • The Fed is more cautious on rate cuts (again)

  • Oil has a war premium in name only

  • Quick Hits

  • Where did all the crypto money go?

  • Chart Crime of the week

Profit taking continues to direct the market.  Strong economic data is, ironically, still the root cause of the weakness in equities.  Even though there was some relief in inflation and some softer Housing data, Retail Sales are powering ahead.  The Fed is still backing the market away from imminent rate cuts, and the market is obliging.  In effect, the bond market has priced in three rate hikes in the last two months.  Some could argue this is just the reversal of the rate cut expectations.  But the end result is the same:  Tighter financial conditions.  Meanwhile the ECB held rates steady, but the Europeans sound poised to cut sooner than the US.  Typically, this might point to outperformance for European equities, but this has not been the case.  This reinforces our theory that the market does not need rate cuts.

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