To The Moon

Its time to call on Captain $Marvell Technology(MRVL)$!

Wednesday brought the much awaited PPI (producer price index) and the numbers showed that inflation is very much still entrenched in the economy. The markets $DJIA(.DJI)$, $NASDAQ(.IXIC)$and $S&P 500(.SPX)$were trending quite nicely up until the numbers were released and when numbers were above the forecasts, they started selling off....again. The bears just keep chasing the bulls away. Come on bulls! 😊

On the macro front, the news were not exactlyuplifting with the same old same old. Inflation blah blah, recession blah blah, energy crisis blah blah, CEOs and analysts predicting recession and more market downside. Where were these people less than one year back? Oh yeah they were predicting rosier days ahead and more upside to an already elevated market amidst irrational overexuberance then. And not to forget the ever present FOMC with their now classic and 'legendary' statement that inflation is transitionary. 

Fast forward about one year later and the opposite is apparent. Everyone is spouting doom and gloom and the FOMC behaves as if inflation is their personal archenemy in college. Andjust because they could, they are using the big guns to shoot down their favourite keyword now. The way they behave now is typical of somebody who is trying hard to make amends and putting aside all rationalism! They are not even pausing to see if their big missiles are hitting their targets. They just keep shooting hoping to hit them. In a military setting, they are using big heavy weapons of destruction to takeout military commanders instead of specific armament drones to limit collateral damage. Eventually, the target will be met but the better choice could have been taken. Oh well but that is just my opinion! 😊

So now, the economy is at stake but more importantly, the global economy especially the developing nations are under pressure no thanks to the elevated dollar putting pressure on the financial markets etc etc. 

So no surprises the yields are inverted and themarkets keep swooning. The FOMC are risking a financial armageddon with heavy weaponsand the way they behaved in the past don't give me confidence. if this is how you take out 'temporary inflation', I wonder if they really know what they are doing. What is the use of controlling inflation when there is no more a functional economy to begin with? 

Having said all that, I believe the FOMC are not stupid. They are just laying down the guns and going all gungho to show they mean business. But the same way they pivoted from 'transitionary inflation and no rate hikes in 2022' to 'severe uncontrolled inflation and massive rate hikes', I believe there will come a catalyst thatwill force their hands the same way rampant inflation did. I believe they are just slow to move and hence when they do they will overdo it. So when they pivot and they will eventually, they will stop rate hikes and suddenly drop ratesas fast as they do the increases. And when that happens, growth names especially tech will propel forward and money will flow back to those sectors. 

I believe the consumer price index (CPI) numbers will be a market mover. The market is so pessimistic and oversold now, anything even remotely good will induce a rally. There is even a rare Demark 13 on the 3 year VanEck Semiconductor ETF! Positive divergences are noticeable with bellweather Caterpillar making a higher low as the under siege tech make lower lows. DJ transports are also seemingly doing soas do the small caps Russell 2000. The markets are able to sniff out market turns better than lagging data and news and I believe a local bottom is due soon as well as a potential bounce and rally. 

As such, I am putting cash raised earlier to work while still having a healthy cash buffer of atleast 15%. I have started layering into names such as $NVIDIA Corp(NVDA)$, $AMD(AMD)$ and Marvell which I believe will be leaders in the AI/ML trend.

Stay safe 😊