Not going to last, IMHO.
Female workforce participation rate increased quite a bit the past couple months to 57 percent as stay at home moms are forced back into the workplace to afford cost of living, couple that with an increase in credit card debt, which is why we saw a bump in inflation.
Also, people in general are working more hours to keep pace, taking on additional jobs, which is in the data with a large increase of .3 hours last month, also inflationary.
This obviously cannot continue as there are only certain amount of hours, jobs and debt that people can take on.
Powell said it will not be a straight line, he is right. He is also correct that disinflation process has begun. Going from 9 to 6 on CPI is just the beginning.
M2 is shrinking, and house prices are going down over the past few months, so people need to get back to work. They can no longer live off there asset prices that were rising.
Participation rate is back prepandemic levels, which caused the dead cat bounce in inflation. Next will be the belt tightening by households, which will show up later in the year in CPI, probably getting us down to 3 or 4 percent range this summer.
The market would really take off on any low inflationary economic data.
I could see us pushing toward news highs in a goldilocks scenario, that we get inflation down over the course of this year without crushing the economy. IE 3 percent on 10 year yield and earnings around 220.
I could see us making new lows on a major deflationary event. IE Fed goes too far and has to reverse course bc the economy is cratering.
Either way, inflation will go down.
Congress is going to be slightly more fiscally responsible now that we have split government, which helps as well.
As many have correctly pointed out on this board, tbe market is at a crossroads here.
IMHO, I don't see any reason right now for us not to continue to make higher lows and higher highs.
Some bullish factors right now-
Stocks are back on sale (some of them)
Vix no new high on a new market low
Sentiment is bearish
Sox no new low
SPX in a Support area
Internals are not deteriorating as fast as the beginning of the week
SPX hammer
Confluence in trend lines
TLT looks like it's turning up (I believe this is the most important)
Have a nice weekend all!
Edited by MikeyG, 25 February 2023 - 05:41 AM.