Let’s quickly analyze risk.
Are FX crosses wonky?
Are commodity prices out of control?
Sugar is +31% YTD, Cocoa +16%, and Coffee +15%. However, natty is -50% YTD, nickel -21%, and wheat -14%.
The most important commodity oil is about flat.
Are yields spiking, potentially causing more bank failures and potential housing collapse?
The US 10yr is at 3.43% and TLT is now +7.4% for 2023.
As far as I can tell, we have two things that can derail markets and send them into another panic.
1. Ukrainian war
2. Major earnings misses.
The latter should not be ignored and although the major factors that determine risk have abated — these things can move quickly should earnings come in much worse than expected. We will shift from inflation fears to deflation overnight and the Fed will then be expected to cut rates, which may or may not be applauded by Wall St — wholly dependent on the severity of the drawdowns.
For now, and ahead of any major reports, markets will trade on momentum.Comments »