I have not sold my stock investments. Yet 
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I suspect big boys will buy when they can front run retail investors. 
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Long macro piece
We believe the markets are much more fragile than they may appear and believe distress could appear anywhere anytime. Credit stress and distress will be the real test for Central Banks’ resolve to hike, as troubles in credit markets are closely followed by lay-offs, bankruptcies and all sorts of domino effects that can snowball out of control.
Druckenmiller calling for hard landing 2023.
https://twitter.com/stealthqe4/status/1591543181631430656?s=46&t=hVW-aq7cAga7qfD-HHNZHQ
Something like “we had all these factors driving a bull market for years and now they’re not just stopping, they’re all reversing”.
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George Goodman on bull markets, 50 years ago. Nothing changes.
“One day the orchestra will stop playing and the wind will rattle through the broken window panes. We are all at a wonderful party, and by the rules of the game we know that at some point in time the Black Horsemen will burst through the great terrace doors to cut down the revelers; those who leave early may be saved, but the music and wines are so seductive that we do not want to leave, but we do ask, ‘What time is it? what time is it?’ Only none of the clocks have any hands.”
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BTW we’re back in a bull market today!
“Random walk thru wall street”
“today” being the operative word.
maybe … looks like a bottom is forming…maybe
It is amazing to me how the performance of the market depends almost exclusively on what people think the Fed will do. Wall Street has gotten so used to the Fed’s heavy finger on the scale after the last 10 years of quantitative easing and zero interest that they cannot imagine other factors affecting the performance.
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Yep. We’re addicted, forget fundamentals. we all like “Free money”
Stocks are down because interest rates are up (cost of doing business increased) and there’s a potential for a recession (revenues may decrease). Right?
If interest rates stop rising and the recession potential diminishes, stocks should go up. Right???
Friday morning the jobs/employment numbers came in much stronger than expected. The market promptly tanked -2% because high employment means the Fed can hike even more to fight inflation if they see the need to.
This is the kind of behavior you see when policy is driving everything, not fundamentals.
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@xerty noted in his post above that businesses hiring more workers caused the stock market to sell off. We expect that companies hire more workers because they have more business and therefore there is a decreased chance of recession.
But because of the perverse outsized influence of the fed noted in my post, the convoluted logic is that less chance of recession means that the fed will increase interest more. The stock market has been conditioned to think that the Fed set interest rate is all that matters even though interest paid is a relatively small part of a company’s expenses. So stock prices go down when recession potential decreases —The opposite of what you claim.
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Depends on the company, since plenty of them have lots of debt on the books. But don’t interest rates also have an impact on new corporate bond issues? Nobody is (or should be) buying 5-year bonds at 3% if you can get govt bonds at 5% (especially if tax-advantaged).
Is this a short-term trend or a long-term trend? Cause I haven’t noticed. Maybe I haven’t been paying close enough attention.
The Fed has always had a major influence on the stock market. Remember Peter Lynch saying “don’t fight the fed” in the 1980’s. Since the great financial crisis in 2008 and the introduction of quantitative easing by helicopter Ben Bernanke, I think the fed has had an even larger influence.
The high inflation of the last year forced the Fed to abandon quantitative easing and to raise interest rates. That crashed the price of bonds and the stock market. I think the markets are even more excessively concerned with the fed now. It seems that everything is looked at through the filter of how it will affect the rate of the fed’s increase in interest.
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Today’s market returns are more evidence of the outsized influence on the fed on the stock market
Dow sheds nearly 500 points, stocks finish lower on worries of further Fed rate hikes
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I didn’t notice whether there was economic data this morning, but generally you have to beware that the financial press will write these kind of headlines regardless of whether it’s true. “The market went up due to reduced worries of Fed interest rate hikes”, or they’ll say “market went down due to increased fear of Fed interest rate hike.” It’s just observing that it went up or down and making up some timely excuse.
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From the article, here’s the rationale
A hotter-than-expected reading of November ISM Servicesfurther fueled concerns that the Fed will continue hiking after the index topped Dow Jones’ estimates and increased from October.
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A great day – everything is on sale! 
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