If it looks like a bottom, acts like a bottom, and trades like a bottom, then it probably is a bottom. Bear market rally calls are suddenly becoming quiet these days. The risks of the Fed sending the economy into a recession are easing as inflation is slowly coming down. The Fed’s soft landing seems achievable and that has allowed this rally to continue. The Fed’s minutes will confirm the Fed’s dependency on the next round of inflation data, which should suggest that another massive 75-basis point rate hike is very much still on the table.
US stocks rose after decent retail earnings as a mixed round of economic data still supports the Fed to go big with tightening in September. Walmart did better than many feared as that profit warning earlier this month set the bar low for them. Home Depot impressed and raised some questions whether the housing market is really cooling as quickly as many were expecting.
Tech is getting hit hard as chipmakers are facing a much weaker consumer that might not be buying expensive goods over the next few quarters. Semiconductor growth is moderating and that is why Wall Street is seeing the unwinding of the overcrowded tech rebound.
Crypto hits a wall
The recent crypto rebound has hit a wall as retail traders continue to lick their wounds and institutions respect key technical levels. Bitcoin can’t yet break above the $25,000 level, but it seems to be maintaining a bullish trajectory here. Pretty much everyone on Wall Street thought that the mid-June lows would get retested for bitcoin, but now it seems this dead-cat-bounce just doesn’t want to stop. It appears the institutional money is mostly behind this recent rebound, which suggests it could have a better chance of lasting.
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