High Beta Merge Ideas
Data Dump
Last week, we discussed the market’s positive reaction to the deluge of negative economic data. Despite a continued murky economic outlook, risk assets performed well. This was an encouraging sign that gave us confidence that we have seen the market put in this year’s lows.
We also mentioned that this past week would be another crucial week of data, with an expected negative real GDP report, a consequential FOMC meeting, and a slate of critical tech earnings.
On Wednesday, Chairman Powell took to the podium and announced that the Fed was raising rates by 75 bps. The market reacted positively and perhaps even interpreted the FOMC press release and subsequent press conference as dovish, given the sustained rally the following day.
On Thursday, GDP came in negative for the 2nd consecutive quarter, which was unsurprising. However, like the action around rate hikes, markets took this in stride.
The other critical risk heading into the week was a slate of big tech earnings. While Facebook had its metaverse-driven woes, other large-cap names, including Amazon, Microsoft, and Apple, all had relatively positive earnings compared to market expectations.
We think this is a good sign that implies a more robust consumer than GDP would suggest and removes t...Reports you may have missed
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CORE STRATEGY: FOCUS ON MAJORS, KEEP HEAD ON SWIVEL UNTIL BONDS/DXY RELENT We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend...
CORE STRATEGY Our base case assumes that the macro environment will remain accommodative for crypto through year-end. However, in light of recent market action, we remain alert for signs of a local top (not a cycle top). That said, it is difficult to justify a risk-averse stance at this stage and think it is right to lean into this altcoin rally. Source: TradingView, Fundstrat Source: TradingView, Fundstrat STRONG DOLLAR +...
Today's employment numbers broadly met investor expectations, placating a nervous market. Risk assets rallied, aligning with our view that yesterday's de-risking would not persist through today. Yields continued their downward trajectory, and Fed funds futures also declined, reflecting the market's adherence to the Fed's dovish messaging. Yields Falling: Source: TradingView Fed Funds Futures Showing More Cuts: Source: TradingView Oil prices nearing YTD lows likely assisted in alleviating near-term concerns about...
