), collective traders appear to say that the stock should keep going lower. Will earnings change that? In my opinion, unless earnings are much better than expected - not only better than low expectations, but if companies can demonstrate that they can grow profits despite spiking inflation and interest rates - Q2 earnings will not mark a bottom for these stocks. There will be short-term volatility before another leg down.
Earnings were not outstanding. Investors were thrilled companies didn't fall off a cliff. I failed to appreciate how easily bulls are lured back in. Still, I did say that I expect markets to be volatile. I also reiterated that there is no bottom yet. How do I know that? We only know there was a bottomthe fact. Therefore, last week's substantial advance is nothing more than a bear rally. The stronger the rally, the harder the fall.
Now, let's pay attention to a critical theme: interest rates. Powell warned the market that the bank would resume the sharpest hikes in a generation and added that the pace of rate increases would slow at some point, and that policy is not predetermined but data dependent. So, what would you take from that? As of now, jumps in rates continue, and somewhere down the line, they will slow down.
Moreover, when investors are willing to buy Treasuries even as yields are falling, falling yields - when rates are aggressively rising - underscore the level of uncertainty. Finally, the inverted yield is steepening so much that10-Year Vs. 2-Year U.S. Treasury