DHUnplugged #670: Angry Markets

Markets are pissed - and they have every right to be as Powell dumps markets. Seasonal patters playing out. Could strikes be the next market breaking catalyst? Listen in to what China is doing with US Bonds - not good PLUS we are now on Spotify and Amazon Music/Podcasts! Click HERE for Show Notes and Links DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar. Love the Show? Then how about a Donation? Follow John C. Dvorak on Twitter Follow Andrew Horowitz on Twitter Warm Up - The Wait for the Fed is over - and the market is pissed - Starting t wonder if there  is another banking scare coming (rate rocketing higher) - We still selling Rosh Hashana  and Buying Yom Kippur? - Weight loss drugs worrying different market segments - Wondering - Next Catalyst for market - Unions Strike Trend? - PSA about COVID Season Market Update - 10Yr Yield approaching 4.5% - Oil taps $92 then comes in to $90 - Bad week for markets - we have some stats - Cisco M&A - Splunk - Oversold reading - switched the short small-caps today Market Commentary The major indices registered sizable declines last week. - Softness in mega caps had a disproportionate influence on index performance, but there was no effort to rotate anywhere else so many stocks came along for the downside ride. -  All 11 S&P 500 sectors finished in the red last week. ----- - - - - - The consumer discretionary (-6.4%), real estate (-5.4%), and materials (-3.7%) were the top laggards while the health care sector (-1.2%) saw the slimmest loss. - The catalyst for the weakness was another big jump in Treasury yields. ----- - - - The 2-yr note yield climbed eight basis points last week to 5.12%. --- - -The 10-yr note yield climbed 12 basis points last week to 4.44%. - - - - -  -Including lastweek's move, the 10-yr note yield is up 35 basis points this month. **** Those moves were largely in response to the Fed's hawkish pause on Wednesday. Fed Update Meeting (Briefing.com) - As expected, the FOMC voted unanimously to leave the target range for the fed funds rate unchanged at 5.25-5.50%. - - - The median fed funds rate estimate for 2023 was unchanged at 5.6% - - - BUT the median estimate for 2024 was 5.1%, versus 4.6% in June. This suggests officials are still leaning in favor of one more rate hike this year it also tells us that there is an expectation that rates will come down by only 50 basis points in 2024, as opposed to 100 basis points when estimates were provided in June. - - - - -The longer-run fed funds rate estimate was maintained at 2.5%, leaving one to infer that the Fed is going to stay committed to its 2.0% inflation target. Other Central Banks - Japan's central bank maintained its ultra-loose policy and left rates unchanged last Friday, mindful of the "extremely high uncertainties" on the growth outlook domestically and globally. - Yen dropped hard on the  news (weakening) - In a policy statement after its September policy meeting, the Bank of Japan said it would maintain short-term interest rates at -0.1%, and cap the 10-year Japanese government bond yield around zero. - Very dovish for Japanese rates (in a world that everything else is inflating) More Other Central Banks - The Bank of England halted its long run of interest rate increases on Thursday as the British economy slowed, but it said it was not taking a recent fall in inflation for granted. - A day after a surprise slowing in Britain's fast pace of price growth, the BoE's Monetary Policy Committee voted by a narrow margin of 5-4 to keep Bank Rate at 5.25%. - Are they really using data that is real-time? Stupid as economy moves slowly - they are nuts! China Dropping Treasury Holdings - China has been reducing its US Treasury holding for about 10 years now - China, presumably, drew some conclusions from the Russia invasion of Ukraine (freezing of assets)  and recognized the same cou...