LIVE MARKETS LPL expects Fed to 'tread lightly' with the rate hikes in 2022

LIVE MARKETS LPL expects Fed to 'tread lightly' with the rate hikes in 2022 ...

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The Federal Reserves path toward higher interest rates in the new year could be hindered by the possibility that rate hikes could invert the yield curve, said the CEO of LPL Financial for fixed income on Wednesday.

The central banks long-term debt-rate is 2.5%. This would get them over long-term Treasury yields. Such a move would push short-term loans above long-term debt, an inversion that has signaled every coming recession since the 1970s.

Certainly the Fed is aware of the possibility of increasing interest rates in the point where the yield curve inverts. So, as it stands now, we think the Fed will likely tread lightly following the first few rounds of interest rate hikes next year, said Gillum.

The Fed will raise the rate in June 2022 and follow a low and deliberate pace afterward.

Our main question is how high and how fast the Fed will rise? The ability of the Fed to hike meaningfully may be limited at this point, but its likely that well stay in a lower rate environment for the foreseeable future, said Gillum.

(David Randall)



Clean energy stocks were market darlings last year. Consequently, the blue tide formed a red wave in 2021.

After posting its biggest annual gain of 203%, the WilderHill Clean Energy Index is still still down 30 percent this year, while the S&P 500 Index is up 26 percent year-to-date (YTD).

Of note, clean-energy stocks have been in the wind since the news of Joe Biden's election on Wednesday, the three-nov.

ECO went to bed on that date, eventually overtaken two weeks after Biden took office. Using the funds to gain strength from the 38.2% Fibonacci overhand, the group failed to overwhelm its decline in June and again in November.

Earlier this week the ECO had fast accomplished a round trip back to where it was on the day Biden was elected. The index went up to a low of 142.39 on Monday, putting it within 1% of its annual high on Nov. 3 and 141.01. ECO had lost half its value from the February peak.

Since then, the index has risen well below the descending 200-day moving average (DMA).

In the meantime, ECO relative strength vs most performable S&P 500 group, the traditional energy sector, has been severely weak. With SPNY up around 46% YTD, the ECO/SPNY ratio, which is also below its 200-DMA, has flirted with its lowest levels since July 2020.

And this is happening right now, just as President Biden's "Build Back Better" bill was a hit of a lot of political and economic resistance. The bill, which consisted of the pay of an international program to undermine climate change, met a fierce opposition.

Now it remains to be seen whether the ECO's bounce from a nearly-intensified Biden-election day level can change into an increasingly-enduring rise.

(Terence Gabriel)



The omicron wave may soon bring a snapback rally in small and mid-cap US stocks, Jefferies said in separate reports Wednesday.

Small-caps have borne the brunt of investor concerns that rising case counts could influence the economy. Yet signs that the omicron wave are leading to less hospitalizations could be well resuscited in the new year, said BofA strategists.

The report pointed out that small-cap performance was higher with new hospitalizations (which have recently fallen off) than with new patients last year.

The report says that a sharp appraisal of the Russell 2000 index compared with large cap equities should also improve the return in the coming quarter. The price to earnings ratio of the Russell 2000 fell to 25, compared to 31 at the end of January, the report noted.

Smallers should have improved by more than six months, Jefferies said.

The average increase in January - for small in January - rises 3.7% but when Q4 is down, the smallest of small gains 8.4% in the next month's versus 7% in all periods - is the report said.

Among Jefferies' buy recommendations are Dave and Buster's Entertainment Inc, Urban Outfitters Inc and National Vision Holdings Inc.

Tom Randall.


Is it GOOD, you haven't missed! (1035 EST/1535 GMT)

The S&P 500 has barely reached a 2% mark of the daily stand on Nov. 22 and is unable to reach its peak point, but by fears over a hawkish Fed, the Omicron variant spread and uncertainty about chances of a build back better plan passing in Washington.

The tone became more aggressive in the last month of the year, with sectors such as consumer staples and utilities being the top performers in December, and tens of thousands of millennials has been gaining value, raising the question about whether this represents a portend for a more open market, or a question-and-do that brings stormy seas to it.

In a recent note, Bespoke Investment Group examined the outperformance of the stock market using ETFs, between staples and discretionary and found out that when staples outperformed discretionary by 10 or more percentage points on a monthly basis, the S&P 500 struggled in the midterm going back to 1990.

As a result of Tuesday's close, staples were outperforming discretionary stocks by about 9.5 percentage points.

The largest spread of these two is now at least 30 years.

Unfortunately, even if not according to Bespoke, the two comparisons weren't good predictors for a market fall. But only one cause "the decline".

(Chuck Mikolajczak)

***** **********.


Wall Street's biggest indexes are roughly flat on Wednesday, as concerns lingered over the Omicron-like coronavirus and what it might mean for the global economic recovery.

The S&P 500 is at the forefront for a second straight close above the daily moving average (DMA) of the 50-day period, which sits at 4.618 lower than the market.

The DJI is just shy of its closely watched introductory-term moving average, which is a resistance of around 35,600. The Nasdaq 50-DMA is up around 15,500.

Where markets are in the early trading season:

The late thief, the thief Gabriel.


S&P 500: BULLS GET A BAY (00,900 EST/1,400 GMT)

After Monday's steady bounce, the S&P 500 index fell just about one to three times more from its 8:70.02 November 10 record.

Meanwhile, the 5-day moving average of the CBOE equity pay/call ratio, which can be seen as a contrarian measure of sentiment, is suddenly working together with bulls : - shaky in the pacific - a moment in the future, - bucked as an alarm - - a shit at a tad like the cowards: - - - - - - - - - and - -

The Measure, which risen to 58% and 58% on December 6 and 17 December, has now deflated to 51.8%. Of note, since its bottoming at 40.2% in mid-June 2020, the P/C has slipped to 56%, lower to 60% readings.

If this trend continues then the measure appears to have signaled that the market sentiment became sufficiently bearish over the last few weeks, that the SPX can resume on a longer run.

The traders will also watch whether the P/C measure can easily change back below 40% while the SPX rallies.

A P/C measure was developed to break away from the low-60% area, but could signal panic. The measure sounded at ten5% on March 17, 2020, in a more-than--30% S&P 500 collapse.

(Mary Gover)



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