Republic Risk: Higher For Longer
At some point, the markets will listen to Fed Chair Jerome Powell. We're heading into a tricky month with interest rate cut odds for March collapsing.
Equity Storm Warning Is GREEN on the S&P 500 and YELLOW on the Russell 2000.
It’s a choppy morning after the Fed’s announcement that it might not cut interest rates in March. The Dow is lower, but everything else is getting a bit of a relief rally in the morning hours. Be careful. The current trend is a pop in the first 30 minutes, followed by funds letting shares go from 10 a.m. into the noon hour. Now is the time to start thinking about the long term. This could be a tough month for long-term investors because of their short-term thinking. We have seen historically a weak February, so be patient and look for bargains if they come.
“Higher for longer” is negative for small-cap stocks and an index filled with Zombie stocks. Zombie stocks are companies with high debt levels and aren’t profitable. We have the highest percentage of Zombie stocks in the U.S. market since the Dot-Com Bubble. Money is flowing into Mega-Cap tech stocks as hedge funds crowd into these positions for safety.
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