Consumers are feeling more upbeat. Michigan consumer sentiment index is up to 63.9, better than previous and expectations. Retail sales are also coming in better than expectations, up 0.3% on month. NAHB housing market index continues to improve, rising to 55.
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If Rising Rates Hurts And Causes A Recession, Why Are Bank Stocks Not Falling In Anticipation Of Rising NPL?
The fear is that with rising interest rates globally, borrowers are hurting with higher interest payment, leading to a surge in defaults. Blackstone’s CMBS comes to mind. However, we note that bank stocks are rallying. Seems like markets are not expecting a surge in NPLs. Economy is fine, especially in Europe.
Approaching Key Technical Levels
Various markets are approaching key technical levels. If the support holds, another sustainable rally is in store. S&P 500: Although it closed lower, it touched the 200D MA and bounced up. Credit (JNK): Finding support at the 200D MA level. US Dollar Index: Some way to go before encountering resistance at the 200D MA.
Signs of a bottom
The following charts show why we are at a meaningful bottom for equities and bonds to rally.
China: More Pain To Come?
China is dealing with several problems. One, the economy is slowing due to increased regulations on the tech and property sector. Two, the government has been trying to wean off the economy from too much leverage. Three, Omicron is a tough challenge for China, given the low vaccination rate, fragile healthcare system and the political …
Down beat outlook, lacklustre earnings but bullish market
US stocks are up strongly despite 1) IMF downgrading economic growth outlook, 2) lacklustre earnings season, and 3) FED officials leaning towards controlling inflation. S&P 500 was up 1.61%, NASDAQ Comp up 2.15%, Small Caps up 1.90%, Tech up 1.88% and Financials up 1.37%. Bonds continue to trade lower, with the 10Y yield rising to …
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