It is a great financial calendar with almost every report of homes released in a single week. This is the result of the termination delay. Now we can clarify this important sector. Pundits will ask:
Are lower mortgage rates helped home sales?
Last week Recap
Last week's installment of the WTWA, I suggested that we see the Fed for hints about a new course. It was an accurate prediction, since it is now a clear signal of a pause in interest rate hikes. More than that, the Fed seems to have recognized a problem with its model of low unemployment which causes infant inflation. Fed expert Tim Duy explains the importance of this change.
"It's hard to emphasize the importance of this shift. Fed's models haven't worked this way before. In previous iterations of forecasts, expected unemployment To stave off the press, the Fed experienced the need to raise interest rates over neutral to reduce the economy enough to cut unemployment upwards. Now the Fed believes it can keep unemployment below its natural rate without triggering inflation and without the Fed becoming restrictive. "
This was the big news of the week, and it was bullish for stocks. I will comment on the negative reaction in my last thought.
The story in a chart
I always start my personal review of the week by looking at a great chart. This week I'm with Jill Mislinski, who packs a lot of information into one chart.
Stocks fell 0.7% a week with a sample of 1.7%. It seemed bigger because the decline all happened on Friday. You can see volatility comparisons in our Quant Corner.
I am still on vacation but wanted to provide an indicator update. I'll try to do the same next weekend.
Every week I break the events good and bad. For our purpose, "good" has two components. The news must be market-friendly and better than expectations. I avoid using my personal preferences to evaluate news – and you should too!
News from the light calendar was not very important. The big story was the yield curve inversion, which led to a big decline on Friday.
The week ahead
We would all like to know the direction of the market in advance. Good luck with that! The next best thing is to plan what to look for and how to respond.
The calendar is larger than normal, especially considering that we finally record data from the closure. Housing reports will be in focus with start, permits, new housing and pending sales reported. I don't think we've seen them all for a week before. We also have personal income and expenses, consumer confidence and PCE rates (favorite Fed measurement of inflation).
And of course drama from Washington continues.
Briefing.com has a good US financial calendar for the week. Here are the most important American releases.
Quant Corner and Risk Analysis
] I have a rule for mine investment clients. Think about your risk first. Only then should you consider possible rewards . I monitor many quantitative reports and highlight the best methods in this weekly update, with the indicator image.
Short-term and long-term technical conditions Continue at the most favorable level. Our basic indicators have remained bullish throughout the December fall and decline. C-Score declined – a situation I look closely at, but not with alarm.
Bob Dieli: Cyclical analysis via "C Score."
Brian Gilmartin: All things, for the parent market, as well as many individual companies.
WithdrawalAlert: Strong quantitative indicators for both economic and market analysis.
Georg Vrba: Economic Indicator and Market Time Tool.
The reaction to the Fed news was strange. Something that logically is bullish for stocks led to sales. Residential dealers jumped on the news to buy two-year and five-year notes. This run gives lower and "inverted" part of the yield curve. We saw the typical immediate stock reaction, beginning with algorithms and spreading – eventually reaching the local news.
Bob Dieli calls the change in the curve a "kink". Although we got a recession signal, there would be a probability calculation, not a certain security, and it would be at least nine months away. Historically, the period before a recession, what Bob calls the "boom" phase, has been good for stocks. This obviously needs more discussions, but I've covered a lot of it in previous posts.
Part of the market reaction was to reduce PMI data from Europe. I have never had this indicator because it is completely unconscious. I am surprised that traders treat all the data equally.
I have no positions in any of the listed shares and no plans to start any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for that.