No surprises.............
In response to a couple posts, yesterday's rally was preficed as a "surprise rally", I didn't see it that way nor was I surprised, in fact the reaction was inline with my expectations. Sorry also to "disappoint" one poster in that I didn't post a "novel essay", personally I don't feel the need to gloat over anything. Nice when you are right, learn when you are not right.
If you follow any of my posts, I outlined the three things that had to happen to get us "outta here", they were/are;
1. We need to see money come out of the growth areas of the market that has dominated and see a rotation into more "value" oriented stocks, we got that in spades yesterday.
2. We need to see a meaningful reduction in interest rates. Well we haven't yet quite seen that even though the cutting cycle has started in numerous countries including Canada BUT we did just get a "meaningful" tilt in that direction as I alluded to the other day after hearing Powel speak. As noted that shift clearly moved away from inflation (as I have also been alluding to for a bit now) and firmly in the labor watch camp which has been showing softening (that is not to suggest inflation no longer matters because it does, just emphasis for now more on the dual part of their mandate).
3. We need to overcome the debt wall worry that in my opinion has consumed the market narrative for quite some time. This one is going to take a bit longer and thus my late '25 call for recovery. To be clear this will affect some more so than others but will still act as a headwind for the sector until it becomes clear that it will no longer be an overhang. I would expect during this time the market will reward some while keep others in the penalty box until such time as the penalties are over.
Powel has one more speaking engagent in Washington on Monday and should prove quite interesting. As most have now seen PPI came in a bit hotter than expected, what hasn't really been talked about at much length is the YOY PPI, that one is not too nice, possibly expect a "not as rosy" next CPI print.
In closing, it appears like the market has now received what it has long awaited and unless I miss my guess, will run with it unless we get something fairly eventful. When was the last time you saw over 400 of the S&P stocks going up while the indice actually went lower? Looks like the rotation may have begun but alas, we are well well early.
Enjoying about an 8 percent gain on my newly acquired Granite reit in a short week. Artis seems to have put in a nice consolidation here just above and below the $6.50 level, I am not so sure it doesn't want to break out from here, looks poised. All my other reits including U.S. are now outperforming, life feels good for the time being, lets see if we can build off these gains, no one said it won't be choppy! There..................you got your "novel essay"!
Stay good,
DZ