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InTheMoneyAdam
Jan 12, 2023 6:07 PM

Rally into 2023?  Long

Invesco QQQ Trust, Series 1NASDAQ

Description

Likely rally into 2023, spurred by downward trend in inflation. Likely 25bp hike at next meeting, then full stop to evaluate the damage (and give time for lagging economic data to catch up to policy changes). Unemployment will rise, possibly some deflation, and fed will cut rates towards the end of 2023 in response to negative economic data. This will cause a second drawdown. Well, the rates will be correlated with a second drawdown, but the real correlation will be between the negative data and equities.

My initial thoughts as we move into a new year. Should be an interesting one.

Love,

InTheMoney
Comments
DeepSym
Respectfully, I disagree and would I echo someone else's conviction of 50 bps. This means imminent crash to 3200 for SP500.
InTheMoneyAdam
@DeepSym, Liklihood of that is pretty much 0%: cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

I expect 25bps and standard hawkish speech to keep inflationary expectations down.
InTheMoneyAdam
@InTheMoneyAdam, Also, if you hit play on the chart, you can see there's already been a bit of a rally into 2023, so not much to disagree with.
InTheMoneyAdam
@DeepSym, Came in at 25bps.
DeepSym
@InTheMoneyAdam, You were right. Thanks for the response.
The311Trader
So are you thinking ~EOY2023 is the pivot?
InTheMoneyAdam
@TheTraderDad, That's my hunch. Whatever the case, I get the feeling the Fed will have a hard time lowering rates until it's unbelievably obvious they'll have to. So that makes Q4 seem like a fair bet, although it could certainly leak into 2024. Obviously, the Fed is hard to predict as they themselves can't predict their own actions accurately.
The311Trader
@InTheMoneyAdam, I get the "soft landing" they want but sometimes wish they'd just rip the band-aid off. This assumes recession followed by bull market but...can't assume that outcome. Bleh. Interesting times await.
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