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TPW Advisory Friday Musings: Crunch Time

23/04/2023
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Estados Unidos Estratégia Global Geopolitica Macro Internacional

College hoops just ended (March Madness now extends into April) & now its playoff time for both the NHL and NBA – there is not much better than playoff hockey – go Bs!

 

Playoffs = crunch time when reps are made and victors crowned. But crunch time extends beyond just sports to other facets of life as well – being under the gun at work, up to your eyeballs with the kids and yes in the markets too.

 

It’s that last one we will cover today – crunch time in the markets. Its crunch time as the Fed and other CBs come to the end of the most aggressive hiking cycle in over 40 years; its crunch time as the S&P comes to the end (we believe) of its long, 240 + day trading range around 4k & its crunch time at the iron sharpens iron contest we described last week.

 

That contest is between US sell side equity analysts who forecast accelerating earnings into YE and fixed income investors who forecast recession and rate cuts by YE with FFR falling from roughly 5% now to 4.6% or so on 12/31. One side will be wrong; Q1 EPS results suggests no sign of forward looking earnings being guided down while there has been some pricing out of rate cuts as bank fears ebb.

 

It’s also crunch time for the Curtain of FUD (Fear, Uncertainty & Doubt) we highlighted in our recent Monthly and the bearish crowd who have embraced the FUD and drank the cool aid. Here is the latest BofA FMS which it termed the most bearish of 2023: “Investor allocation to equities relative to bonds has dropped to its lowest level since the global financial crisis as worries about a recession take hold”. See here for my description on BTV of the Spring WB/IMF meetings: https://www.bloomberg.com/news/videos/2023-04-19/imf-gloomsters-completely-wrong-tpw-s-pelosky-says-video?sref=ftskAWJe

Jay Pelosky

Jay Pelosky
Estrategista Global - TPW Advisory
Nova York, EUA

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