Still a Wide Array of Non-Confirmations

The growing list of non-confirmations in the stock market calls for caution

Highlights

• The true bull market is in sentiment and momentum

• Growing list of non-confirmations in the stock market calls for caution

• How have equities climbed the wall of worry over the past 4 years?

• There is a strong case for the BoC to cut rates

While We Were Sleeping

Quote of the day:

“US exceptionalism is going from strength to strength. Despite widespread market optimism, we view this as rational rather than excessive.”

• Manish Kabra, head of U.S. equity strategy at Societe Generale

Hmmm. Maybe it is more a case of speculation rather than going from strength to strength. After all, the CNN Fear-Greed index has moved into “Extreme Greed” territory at 76 (was 41 this time last year). Be that as it may, there indeed is a bull market in sentiment.

A few housecleaning issues, before we get into the overseas action overnight. First, it’s getting slightly tiring hearing about the “hot” inflation numbers in January and February. They were “hot” at the headline level perhaps, but not really in the details. Which is why Jay Powell was non-plussed about the issue on Wednesday. January’s CPI was all about early-year adjustments to health insurance premiums, and auto insurance premiums which the Fed can’t really do anything about — and the two rental components which are out of touch with reality.

Strip these effects out of the equation, and the core index was up only +0.1% MoM in January.