The S&P 500 SPX,
But here comes February, with a Fed decision, big earnings and data right off the bat. And concerns that a recent rally is over already seems to be spreading across Wall Street and among investors.
Read: Investors who aren’t nervous right now should be, says Standard Chartered,
Our contrarian call of the day from founder and editor-in-chief of The Kobeissi Letter, Adam Kobeissi is not buying any of that.
“We have been bullish of equities, gold, crude oil, and bonds since the new year. Our view is that peak inflation is behind us, the Fed will begin cutting interest rates by the end of 2023, despite their previous statements that they won’t, and earnings expectations have come down significantly,” said Kobeissi, in emailed comments.
Kobeissi thinks the Fed will indeed deliver on that interest-rate pivot in the second quarter. “This is why we have been bullish of the S&P 500 from 3900 and have a 4150 target, and we expect more strength in earnings over the next couple of weeks to lead higher,” he said.
Despite recession worries and “many reasons to fall,” the uptrend is there for markets such as crude, while stocks are in the same basket, he said. But don’t expect a straight line, rather more volatility ahead and a general uptrend over the next few weeks or so.
“The reality is that markets are looking for a reason to rally. When markets are looking for reasons to rally, they usually find them,” he said, adding that sentiment swung too far in the direction of the bears, which explains that “explosive” year-to-date move for stocks.
He’s had a bullish view on tech stocks recently, but generally just plays the S&P 500. “The reason we saw such a steep drop in the tech sector was on the back of higher rates. If markets can begin looking beyond the current tightening cycle, tech can make a comeback,” said Kobessi.
Last year he said he benefited from a mix of long and short S&P 500 setups, being mostly long crude oil, and a mix of longs and shorts on natural gas.
His main takeaway from 2022 is that the market is extremely technical, so “avoiding a bias is key to being profitable.”
“For 2023, it’s important to begin looking past current headwinds and thinking about where we will be in one year from now. Markets are clearly beginning to look ahead,” said Kobeissi.
Stock futures ES00,
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Read: Why McDonald’s earnings probably haven’t been hit by higher prices
DoorDash shares DASH,
U.S. and global economies are set to slow in 2023, but the forecast is “less gloomy,” said the IMF. The only major economy expected to see a recession is the U.K., which on Tuesday marked three years since its Brexit separation from Europe.
The employment cost index for the fourth quarter is out at 8:30 a.m., followed by a pair of house-price indexes, the consumer confidence and the rental vacancy rate. The two-day Fed meeting kicks off Tuesday.
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