Morning Roundup

By Mark Masterson on November 22, 2022

Good morning,

Below are the news items moving markets today

---

Executive Summary:

It’s likely to be a quiet week in capital markets with the Thanksgiving holiday directly ahead.

We’ll keep it simple here as well…..

We continue to get slightly dovish Fed messages about smaller rate hikes…..No doubt they are supporting the market.

• Fed’s Mester in favour of smaller rate hikes as financial conditions enter restrictive territory (CNBC)

The hope of a Fed pivot is supporting the flood of money back into stocks….

Below from the WSJ yesterday

• https://www.wsj.com/articles/u-s-remains-only-game-in-town-for-stock-investors-11668982580

Here is the money quote from the article….

• ‘Investors have poured more than $86 billion into U.S. equity mutual and exchange-traded funds in 2022. That is on track to mark the second-highest sum since 2013, following last year’s inflows of $156 billion.’

Read that again.  Near record flows into equities – during a bear market.  Fed has created a “cult of equities” where investors have no fear of a severe market decline.

Quick peek at sentiment from Sentimenttrader….

The Retail/dumb money index in red is well off the lows of extreme pessimism.  Its squarely in neutral territory.  The blue line is the smart money index, and it too is now in neutral territory, backing off from extreme optimism.

So – sentiment is pretty neutral now.

Sentimenttrader.com 11/22/22

More below….

---

Articles of Interest:

• China:
  • China sees lockdowns surge in week since Covid policy adjusted, with cases climbing and 48 Chinese cities subject to restrictions (Bloomberg)
  • China buying gold at fastest pace since 1960s to cut greenback dependence (Nikkei)
• Markets:
  • Hedge funds continue to de-risk (Bloomberg)
  • $3.2T market for riskier corporate bonds and leveraged loans revving up after a long lull, paving way for banks to unload hung loans (FT)
• Economy:
  • S&P sees US corporate default rate surpassing 10-yr average in shallow recession, potentially reaching 6% in deeper recession (Bloomberg)
  • Banks tightening lending standards, impact will be felt with a lag (Bloomberg)
  • US rail workers could strike amid disagreement over labor contract, threatening to cost economy $2B per day (Politico)

---

Charts of the day:

The below chart shows the market capitalization (total value) of the cryptocurrency market.

It is a classic picture of a bubble.

As you can see, it peaked and is now in the deflating phase.

Keep in mind, most bubbles return to the place they started…..

#Cryptocurrency #MarketCap has fallen by 72% from its November 2021 peak ($2.9 trillion to $800 billion).

Daily Shot  11/22/22

Quick update on the dollar…..

It is bouncing right off the red line – the 200 day moving average.

It certainly could rally back up to the trendline it broke as it remains oversold….

---

Quote of the day

What you get by achieving your goals is not as important as what you become by achieving your goals

Zig Ziglar