Home 2022 Benchmarks Reversed, Fed Pledges to Cool Inflation, Biden “Up in Smoke”

Benchmarks Reversed, Fed Pledges to Cool Inflation, Biden “Up in Smoke”

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#stocks #reversal #banks #Fed #inflation#DeFi #knights #DAO #NFTs #politicians #Biden #DeSantis #virus #cryptocurrency

$DIA $SPY $QQQ $VXX $USO $GLD $USD $DXY $TLRY $GS $BTCUSD $KNIGHTSUSD

“Investors started to buy the dip just after it looked like the 10-yr Treasury yield peaked for the day, finding a good excuse to buy into an oversold condition” — Paul Ebeling

DJIA -162.79 to 36068.87, NAS Comp +6.93 at 14942.83, S&P 500 -6.74 to 4670.29

Monday, the S&P 500 (-0.1%) declined for the 5th session running, but it only lost 0.1% after being down 2.0% intraday. The NAS Comp (+0.1%) gained after being down 2.7% intraday, while the DJIA (-0.5%) and Russell 2000 (-0.4%) closed off session lows. 

Investors started to buy the dip soon after it looked like the 10-yr yield peaked for the day buying into the oversold condition. The NAS Comp for instance, was down 8.2% in less than 5 sessions and had fallen below its 200-Day MA at 14690. 

The S&P 500 did not reclaim its 50-Day MA at 4676, as 8 of its 11 sectors closed lower. The industrials (-1.2%) and materials (-1.0%) sectors declined at least 1.0%, while the healthcare sector advanced 1.0%.

  • DJIA -0.7% YTD
  • S&P 500 -2.0% YTD
  • Russell 2000 -3.3% YTD
  • NAS Comp -4.5% YTD

Key Commodities

WTI Crude Oil futures settled lower by 1.1%, or $0.83 to $78.11/bbl, Gold futures settled $1.40 higher (+0.1%) at $1,798.80/oz, and the US Dollar Index is +0.3% at $95.98.

The Memes

marijuana grower Tilray Inc. (NASDAQ: TLRY) with a double-digit gain following the morning’s quarterly earnings report that included a surprise breakeven, when the estimates had projected a loss per share of seven cents. The company also showed strength in its home market (Canada) and increasing strength in Germany. Now, if only the United States would get off the dime and legalize pot.

Cryptocurrencies

Just In: The chairman of the SEC, Gary Gensler, during an interview refused to be drawn into conversations about if Ethereum is an unregistered security or not, the boss of the financial watchdog stated that the commission does not talk about specific projects nor does it give legal advice over the airwaves. Stay tuned…

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Notably, some decentralized finance (DeFi) tokens that fell out of favor in early Y 2021 still managed to retain some Top spots in terms of total value locked, which represents the number of assets that are staked in a protocol. Perhaps as they are considered more battle-tested and a safer store of capital compared to newer competitors.

For now, even with altcoins in the headlights, volatility has declined in both BTC and ETH recently.

Our view is that this volatility compression is structural and will be a theme for Y 2022. That said, we believe this dip in the front-end of the volatility curve is overextended and we are adding long gamma in here.

Savvy traders are “long gamma profit” when the underlying asset moves more than expected.

The US Economy

Monday’s economic data was limited to Wholesale Inventories, which increased 1.4% m/m in November following a revised 2.5% increase in October.

Fed Chairman Powell pledged “to prevent higher inflation from becoming entrenched” in comments prepared for delivery at a congressional hearing Tuesday, where the high pace of price increases is likely to be the focus.

Mr. Powell did not mention his plans to hike interest rates in brief opening remarks for his nomination hearing before the Senate Banking Committee for a 2nd 4yr term as head of the Fed.

He did note that the economy was facing “persistent supply and demand imbalances” during the pandemic reopening, and that the resulting high inflation “exacts a toll,” particularly on the poor.

Looking Ahead: Investors will receive the NFIB Small Business Optimism Index for December Tuesday. 

Politics

Mr. Biden’s approval rating fell the latest IBD/TIPP Poll finds.

Mr. Biden’s vow to shut down the virus and not the country has resulted in raging COVID-19 cases, a return of shuttered schools, staffing shortages due to infections and mandates, and has been a complete failure.

His central promise of his campaign is totally up in smoke,” Governor DeSantis (R-FL).

He went on to say, “And so I think as a result of that, they try to find scapegoats. And I think trying to fight with Florida or Texas is just one of the things they do to divert attention from their failure.

Have a prosperous week, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.