In today’s briefing:
- Three Catalysts That Could Spark A “Rip Your Face Off” Rally
- The Fed Has Become the Bull in a China Shop
Three Catalysts That Could Spark A “Rip Your Face Off” Rally
- The U.S. stock market appears to be highly resilient in the face of bad news.
- We outline three catalysts that have the potential to change the macro narrative from bearish to bullish and spark a “rip your face off” rally.
- While none of these factors are specifically actionable, investors should be aware of possible asymmetry of risks and behave accordingly.
The Fed Has Become the Bull in a China Shop
- The Fed appears intent on tightening until something breaks. In effect, the Fed is behaving like the proverbial bull in a china shop.
- Even as Fed speakers assert their determination to bring down inflation, the market is signaling growing stress.
- The combination of a falling 10-year Treasury yield and rising HY spreads is a possible lethal combination for financial stability.
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