Good Friday AM,
Not much data today. Consumer confidence (which is one of my favorite data points, as it is one of the only that is forward looking) came in below expectations. FedEx, which is a proxy for the global economy, released a warning yesterday that their revenue and profit would miss expectations as both domestic and international shipments have fallen off a cliff. They are calling the ball on global recession. With that stocks are taking it on the chin yet again, with Citi now coming out with a forecast that the dollar is the only possible hedge for what’s turning into the biggest destruction of shareholder value since the financial crisis. Global stocks have lost $23 trillion this year, so its inverse relationship with risk assets makes it the only option for the rest of 2022.
Bonds are still weak this morning, although fairly flat.
Next week we have very little news, EXCEPT the Fed rate decision, which is about as big as it gets. This is one time where I can confidently say that the market has priced in any pain that I can imagine the Fed will throw our way. The market is fully prepared for a .75 rate increase. The caveat is what he may say during his speech or Q&A session. I believe the market is prepared for a Jackson Hole level of hawkishness. If he goes beyond that level, then all bets are off. If the Fed does not go overboard and keeps the rate increase to .75, we may see a brief recovery rally. For now, keep playing defense until we can be confident the market has bottomed.
To further the point from FedEx, treasuries also flash warning signs.
A key part of the yield curve risks inverting further to a level last seen in the early 1980s, Allspring Global Investments said. Two-year yields will surge in the next six months, it projects, increasing the inversion with 10-year yields to at least 100 basis points, from about 44 bps today. I can’t imagine the damage this has the potential to do to the financial markets although it should be a win for mortgage rates.
67 percent of millennials and Gen Zers who moved back home during the pandemic still live there. Lending Tree surveyed more than 1,300 U.S. parents and/or Generation Zers/millennials to get their thoughts on pandemic parent-living arrangements and found that 85 percent of parents would let their children move back in as adults or have previously done so, and most (73 percent) wouldn’t charge them rent. I am the majority.
And sharing this as I was just surprised by it…
Brokerages aren’t created equal when it comes to getting investors a good deal on trades. A recent academic study found wide disparities in the prices that investors get when buying and selling stocks through a half dozen popular brokerages. TD Ameritrade delivered the best prices, the study found, followed by Fidelity Investments, E*Trade and Robinhood Markets. In a surprise to some investors, at the bottom of the pack were a pair of trading platforms from Interactive Brokers Group—a brokerage catering to day traders that has long touted its execution quality. “The difference in execution costs between these different brokers is huge, and nobody knows it,” said Christopher Schwarz, a finance professor at the University of California, Irvine, and lead author of the study, which came out last month.
Please remain safe and healthy, enjoy the weekend, first, make today great!