Weekly Memorandum 1/10/2022
Stocks made a new all-time high last week, with the exception of the Nasdaq, and then reversed to close near the week's lows. Not only is this bearish price action, but the fact that the Nasdaq is leading the market lower warrants further concern given its tendency to lead. When it comes to the imminent completion of QE and the Fed's intention to begin raising rates as soon as March, we are seeing value and inflation-sensitive sectors of the market receive significant bids compared to their growth and tech counterparts. Dare we say we are finally seeing the massive unwind of a decade-long trend? Time will tell.
Bonds closed at a new low last week as well, as inflation expectations show no sign of slowing down. However, if equity volatility spikes, don't be surprised to see a relief rally of the sorts. The U.S. Dollar finished higher last week, but well off its highs. We could see a case of, "Buy the rumor, sell the news," unfolding here, especially with respect to the monetary tightening cycle. Crude Oil had a good week too, and all but confirmed the completion of an important low in early-December.
Grain markets displayed notable strength, and are showing signs of another possible bull run. Gold and Silver had mixed weeks, and are trying to hammer out a higher-low. If successful, 2022 could be a fruitful year for this downtrodden sector. We maintain our Pet Rock > Digital Rock outlook, and speaking of which, cryptocurrencies had another dismal week. Bitcoin and Ethereum continue to make new lows, as the short-term bear trend is reinforced. This is most certainly not a sector to be HODLing blindly, especially when one is holding against the trend.