Market On Open - Friday 28 July

"Only Joking" - BOJ Governor re. Yield Curve Control

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.

They Spooked Themselves Maybe?

Yesterday saw a sounding rocket sent up by the Bank of Japan, who joked that maybe they would have to do some monetary policy tightening.  This being 2022's story and not the all-good-nothing-to-see-here motif of 2023 (no Presidential election in Japan in 2024 of course), market participants everywhere reacted with a primal scream followed by a projectile vomit of all risk assets that they owned, for a few hours anyway.  A couple doses of Pepto-Bismol later, courtesy of other policy committee members of the BoJ, and investors suddenly decided they do like risk after all.  For now.

The point here is that we've had a big ole run up in risk assets in 2023, and in the case of say the Nasdaq or key components therein - $NVDA is the obvious one but the resurrection of $META has been no less miraculous - they have been in direct-ascent mode.  Not so much as a loop around the Earth for a slingshot to the Moon.  Just full-on, light-the-SRBs-and-main-stage-motors-all-at-once and head straight up.  Now, that's not normal.  The market is due a pullback and usually gets one, and the freakout yesterday at the notion that the BoJ may not be playing ball tells you that this extended situation in risk assets is a little fragile.  A good PCE print today may help, but jitters remain.  

So in our view it remains wise to be on your toes for a selloff.  No change to our longer-term view on indices, being, all time highs are on the way, but short term we continue to look for that selloff.  In staff personal accounts we're hedged in all four indices; weighted long in the Russell and the S&P, and neutral in the Nasdaq and Dow.  Paying members here should look for trade disclosure alerts as always in our Slack channels (and sent to your email inboxes / phone apps if you've set up alerts that way) for when we sell or add to these positions.

OK.  Next.

For our paying members only we walk through the shorter- and longer-term outlooks for the S&P500, the Nasdaq, the Dow and the Russell.  If you've yet to sign up to a paying plan here, you can do so right from the link below.