To The Moon

The article is right about the job report had cemented the 0.75% hike for Nov. Fed only cares about the job market and inflation. With the job market so strong, Fed now only need to focus on bringing the inflation down. So 0.75% hike is almost a sure thing now. Additionally, many Fed officials had make their speech this week. All spoke of the same thing. Hike is still needed and high rates are here to stay until end of 2023. Market downturn will not forced Fed to pivot. In fact, Powell already warned us a few times that pain is going to be expected. What do all this means to the market? My opinion is, for the next 6 months, it should still be a downtrend. There may be some relief rally in between but nothing can reverse the general downwards trend. The main news that will reverse the downw

The new Sept FOMC is more hawkish than the June FOMC. The terminal rate for 2022, 2023 is increased and from the dot plot, there is no plan to decrease the rates until 2024, which match with what Powell talks about holding the higher rates for a longer time. The GDP growth is also revised downwards while the unemployment rate is revised upwards. Generally, all these are bad news for the market. As usual, short term market movement for the next few days will be unpredictable. Basically it will depends on how the media wanted to interpret the FOMC data and Powell speech. But for the next 3 months, at least we can be sure the rates will go up another 1-1.25%. Not favourable for the market and may cause the market to test the low in June or even break lower... Be cautious if one is buying

Here are my thoughts on this. 1) WSJ seems to be the mouthpiece for Fed these days and they are fairly accurate. The latest WSJ article seems to downplay on 1% hike so we should see only 0.75% hike, 2) Powell most likely to be as hawkish as his speech during Jackson Hole last month so do not expect anything dovish. 3) Based on the few Fed officials speech recently, the dot plot from Sept FOMC will be more hawkish than June FOMC, with higher rate for end 2022 and 2023. So not expecting the market to rally after FOMC. But short term market movement are impossible to predict. The market is actually super hawkish now and predicting a higher terminal rate than Fed. So when the dot plot for Sept FOMC comes out and show lower than what the market expects, there might actually be a rally as media

Really hard to predict the market. 3900 can hold, but also might break through. Recently many Fed officials are out there, talking down the market with the comments of higher rates needed and need to hold high rates for longer. Brainard came out and talked about this today as well. But what many may not noticed is that she also mentioned of risks becoming two-sided during the tightening cycle. This means she also have fear about over tightening. This coincide with the recent FOMC minutes. So while many Fed officials are talking down the market, claiming high rates, longer period, but do they really have the resolve to do it? There is no need to guess. During Sept FOMC which is 2 weeks later, the dot plot will be reveal. We will know how many Fed officials are really hawkish or fearful

Many Fed officials are already talking about it during the last 2 weeks but the market still decide to rally. Only when Powell talks about the same thing, the market finally reacted. Basically it's the same that Fed is always talking about. High rates of around 4% is needed, rates are here to stay for some time, and yes, there will be pain. Unemployment will go up, market will slow down and might even experience hard landing. Pain, soft/hard landing are already in the speeches during few months ago. It's a real bear market so let's not bluff ourselves. There will be some relief rally from time to time, even as much as 20%. Make use of it if you have the technical skill but do not mistake it as the start of a whole new bull. Take care and be cautious.

Tesla is a strange stock. It's stock that is highly owned by retail investors (around 40%). Institutional investors only owns around 42%, which is pretty low considering the size of Tesla. With so much owned by retail investors, it's more affected by market sentiment, which explained the huge rise and fall. Also means it can rise up fast after the split if someone can create a hype on it. The same can happen at the opposite direction if market sentiment suddenly turn bearish. It's a 50-50 bet. Buy if you are bullish but don't bet your house on it. Oh, forget about all the hype on semi, FSD or robots. These are being repeated for a long time and are already priced in since long ago. It's not overvalued for nothing. Good luck. (Disclaimer: I owned some Tesla so I had my bias too)

The drop should be more of "buy the rumours, sell the news". Tesla had a good run and gain more than a fair bit before the 4th Aug. So now is just selling and profit taking. Comments about recession or whatever is just an excuse used to explain the drop in price. Elon had made worse comments about recession and we don't see the same in drop in price. In fact, he had made positive comments but why not mentioned by the author? Because the price falls instead of rising so can't used the excuse of positive comments. Ha ha.

Its the old trick of "bad news is good news". With "bad news", that means Fed must be less hawkish and start it's pivot soon. The FOMO is getting stronger and stronger. Will retail investors start rushing into the market again? I personally think this is just another relief rally. But for those who think the bottom is over, you can buy some good quality companies. Many of them are now at attractive valuation. As usual, avoid the hype or chase prices that had gone up by a lot.

Market seems to be dovish on Powell speech. But will we see a market drop on the next day, similar to what happen during the last few time when Powell speaks? FOMO seems to be getting stronger and stronger, pushing the market up. Actually we are still far from a pivot from Fed and Powell had clearly stated more hikes and QT are planned. The macro environment (high inflation, slow down in economy, Ukraine war, high oil, etc) is still the same. Wondered what is actually pushing the market up. 

Many will be listening for Fed forward guidance for Sept and also rest of 2022. But how accurate will this forward guidance be? The previous June guidance is 50bps but we all know it was hike up to 75bps instead during the last min after May CPI came out much worse just 1 week before June FOMC. As such, Fed did not follow through with their guidance and went ahead with a bigger hike. Maybe Powell should follow the example set by Lagarde of ECB. Last week, Lagarde ditched their guidance and went ahead with a 50bps hike. She then said ECB will not offer forward guidance of any kind and will make monetary policy decisions on a data-dependent basis, month by month. So will Fed follows ECB and decide not to offer guidance too? Fed guidance is not shown to be any accurate anyway.