The SPY is up 0.82% in premarket.
The main reason for it is because :
- Jerome Powell speech yesterday
- RBA, BOC, ECB hiked rate according to analyst expectations
- Consumer credit was a big miss
I made a video about this : Help like it :)
https://youtu.be/aog8Fheuh5Y
Jerome Powell speech yesterday
- Jerome Powell speech is priced in as a good news because the market rallied during the later half of Powell's conversation with Cato Institution's manager. The reason i can think of is that the the market thinks Powell have became more 'dovish' as his tone is alot less 'hawkish' when comparing to his tone during Jackson Hole. But it is worth to note that during Jackson Hole, he was speaking on a stage and addressing the world while this time, he is on a zoom call with Cata Institution and having a conversational tone.
3 central bank rate hikes
- RBA (Australia), BOC(Canada) and ECB(Europe), these 3 central banks increased interest rates by 50bp, 75bp and 75bp respectively on Tuesday, Wednesday & Thursday which have met analyst expectation. The market likes it when analyst expectation is correct so US market rallied, in hopes of the FED hiking by either 50bp or 75bp and maybe in hopes of the FED giving a statement about pivoting.
Consumer credit
- The consumer credit m/m was a big miss at $23.8b. Analyst expects it to be $31.5b and last month's consumer credit was $39b. This miss in consumer credit can mean 2 things, first is that CPI this time might be a miss since consumer is spending lesser, second is that since consumer is spending lesser, this quarter's company earnings might reduce substantially which could lead to an earnings recession, causing stock valuations to fall. But now, the market is only pricing in the good news on the FED. And also remember, Jerome Powell have told us that the FED will not pivot until they see a sustained period of low inflation., and they will keep interest rates at a higher than usual level for a sustained period of time.
Comments
Why