Times Up!

March 4 2023

Weekly Column with The Contrarian

Hello Everyone,

It's hard to believe that we are entering the third month of 2023. It's also hard to believe for all the volatility the stock market has had it's flat on the year. However, if you look deeper into sectors of the market you will see a whole different performance. Defense, Transports, Industrials, all have had a nice rally. Even last year's dog Meta has doubled since November. Interest rates continue to rise at an aggressive rate and the markets have held up surprisingly well. The S&P's have been trading in a sideways range between 4200.00 and 3800.00. Yields have backed up above 4% on 2-year treasury this week on Thursday. Friday, stocks rallied because yields backed off from Thursday's highs as well as equities were oversold.

Next week we will get several government reports CPI, Unemployment, and The Beige Report. The Federal Reserve will take this data into account when they meet on March 15th to determine their next move on interest rates. FOMC is expected to raise the Fed Funds Rate by .25%. If Non-Farm Payroll rises again, expect a .50% hike as a possibility. The goal posts seem to be moving the stronger the economic data shows. The markets figured Fed Funds Rate would top out at 5.25%. Today, the estatements are moving up to 6% - 6.25%. I have said since last year that inflation will be higher for longer. There is a direct correlation to the Fed Funds Rate, higher for longer.

I titled this blog " Times Up ", What I am referring to is the correction in the metals and the rally in the Dollar. The Dollar has rallied back to the 104.00 level and Gold and Silver went down to the Golden Angle of support. The uptrend is still in place. The main trend also held in Crude oil. The other time factor has to do with the S&P's. Consolidation has been forming since the beginning of 2023. This consolidation will end soon. I expect it to be explosive when it happens.

This spring is just around the corner. We still have increasing tensions between China and the U.S. China has another major Communist Party meeting on Sunday. The continued pressure of the U.S. on chip manufacturers not to sell technology to China has China looking for revenge. The risk of China attacking Taiwan is becoming more real. If China can't advance its technology (for Military use) and Taiwan manufactures over 80% of the chips in the world. I would expect China to take over the world production of chips. The U.S. sees this as a real threat and that's why the Biden administration approved a $56 billion program to help subsidize major chip companies to build manufacturing plants in the U.S.

One other event that is on the clock is the Congress Debt ceiling Limit extension. Janet Yellen told Kevin McCarthy (Speaker of the House) that this summer (June) is the deadline to pass the ceiling bill. There is hope that both parties will avoid default and come together. Both parties did agree this week to ban Tic Tock from all government employees' computers and cell phones. So, there is always hope.

Stay Tuned...