Republic Risk Letter: Record Liquidity Vs. Tightening Economic Conditions

Markets continue crowding into Mega-Cap stocks, but shipping stocks still look strong.

Equity Storm Warning Is GREEN on the S&P 500 and RED on the Russell 2000.

We’re flat this morning as the market continues to react to a surging dollar (11-week high) and questions about how long rates will be elevated. On Sunday, Fed Chair Jerome Powell reiterated that they need to continue knocking out inflation. The odds of a rate cut in March have plunged to 14%, down from 65% about a month ago. The Russell 2000 ETF (IWM) is now under its 50-day moving average, which is bearish. We’ll see if it can push back from 192 to 194.

The other trend today is the ongoing rise in layoffs in the technology sector. Last year was a huge period for tech layoffs globally (with 262,735 workers let go in the sector, according to Layoffs.FYI). This year, we’re on pace to come in line with that pace, as we’ve seen more than 36,000 layoffs so far this year. That pace could trickle into jobs reports as we move into the spring months. Remember that these layoffs won’t reflect in job reports right away, as …