WTHIH? March 2024. Fed Agenda & Valuation
This is not a new bull market. Big Tech, Mag 7 and problems ahead.
J-POW and the Fed see 3 rate cuts for 2024, even as Core CPI for February 2024 stood at 3.2% — so much for that “we will get inflation to 2%”.
But I’m not here to echo Fedspeak, I’m here to write about something much more important. Since FOMC yesterday (i.e. “Fed day”), equity indices are gapping up with the Nasdaq up ~2.3% even while AAPL gaps down.
You see, stock market participants take dovishness as a cue to go long stocks.
Some argue that economic growth with some inflation sprinkled on top will lead to a runaway bull market — well Philo says it doesn’t always work that way.
I know I am fighting the trend here but I am controversial by nature!
Here’s what I had to say in May of 2022.
Now is the time.
For the long-term investor looking for bargains, now is the time.
“The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.”
-Warren Buffet
Excerpt from the piece below.
Now is NOT the time.
Since I wrote that piece, the Nasdaq 100 is up 37%. It’s up 73% from the October ‘22 lows, but I don’t see a new bull market starting here to bail everyone out.
The Fed has failed abysmally the past few years, and you’re still trying to guess how Fedspeak is going to affect markets. If you suffer from this malady, whip yourself 10 times and then read this.
Big Tech & the Magnificent Seven
We all know that the major indices (SPX/NAZ) have been carried by the technological revolution and global tech dominance by the US.
The whole theme has been extensively covered in this top seller.
But not only are the big boys selling for much higher earning multiples than before — they are now tired and stepping on each other’s toes as well as the target of authorities and regulators all over the place. The noose is tightening.