I think it’s just as important to recognize that even though the market is very slow and very reluctant to abandon a profitable long-tern macro story, it is very comfortable and indeed very adept at recognizing shorter term shifts in shorter-term stories within that dominant long-term macro story.
As promised in last week’s YouTube video, I’m going to take a run–in a number of posts–at how to hedge this market and how to position your portfolio for the developing trends. (I don’t have much hope that this will be the last time I’m visiting this topic, of course.) First, let’s recognize that the bigger the trend reversal, the longer it will be until investors and traders abandon the current story on the financial markets and adopt a new one.
Remember way back at the beginning of last week? That is before the Federal Reserve signaled on Wednesday that more of the members of its Open Market Committee were thinking about raising interest rates sooner than previously expected. Re-opening stocks, value stocks, and cyclical stocks led the market. The small cap Russell 2000 was the best performing of the major indexes. Well, they’re back
Yesterday, growth stocks climbed in the face of signals from the Federal Reserve on Wednesday that interest rates increase were coming sooner–as soon as the end of 2022–than expected. That seemed puzzling. May be, one line of thought (mine) had it, investors and traders decided that growth stocks would outrun any increase in interest rates that might take place in 2022 or 2023. Today, we got the selling that many had expected yesterday
The Standard & Poor’s 500 was basically flat with a loss of just 0.04% as of the close today. If you want ACTION!!! you have to look elsewhere: To the NASDAQ Composite, which was up 0.87% as of the close and to the small cap Russell 2000, which was down 1.18% at the finish.
Initial jobless claims in regular state unemployment programs rose to 412,000 for the week ended June 12. Economists surveyed by Bloomberg were expecting 3.425 million new claims.