Daily Alert [text] – Thursday 30th May 2024: Equities slump, trade the reversal

Mark NugentDaily Alert, May 2024

Daily Alert – Thursday 30th May 2024: Equities slump, trade the reversal

Good afternoon.

Another text-based report today. I am traveling and having trouble with my audio recording software. It’s not working properly on my new laptop. Sorry about that.

Since I wrote on Tuesday, sentiment has soured on equities due to the market talking itself into a bit of a tizzy about when, if ever, the Fed will cut rates. This was perhaps catalysed by last Wednesday’s FOMC Meeting Minutes where worries were expressed about persistent inflation and the idea of a rate HIKE was mentioned. Equities fell.

Now, I don’t wish to overstate things. The USD is flat on the week and the US 10-year yield is up but not by much. A lot of the economic commentary on the equities fall seems to centre around today’s terrible GDP number, which was not terrible and in fact in line with expectation. Further, a little-used PCE measure (not the main PCE measure, due tomorrow) was also invoked to presage disaster, which is simply nonsensical. So, I suspect we are witnessing a storm in a teacup.

In this drama, the Dow30 is the greatest faller. I will be looking to trade the reversal, a good strategy to employ when markets over-react in quiet times.

Tomorrow’s Core PCE on a m/m and y/y basis is expected to show no improvement on last month’s numbers. Many eyes will be watching out for this report at 130pm-UK time tomorrow.

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