Why We Rallied So Much, Really

Authored by GoldFix ZH Edit:

Many will be commenting yesterday’s move was unwarranted given the barely favorable CPI data point. They are all correct empirically. Yesterday’s move was a massive exaggeration given the data point announced, even with the loosened financial conditions. But this was a seasonal event, with special emphasis on *event*.

Yesterday’s 23bps easing of US financial conditions was historic…

Via ZeroHedge

CPI and Government Risk Were Cleared From the Runway

Data like CPI released determines the direction of moves (Up, down, sideways) but not magnitude. The flow volumes determine magnitude of those moves. And there are a lot of those right now waiting to be deployed.

Therefore, yesterday’s moves were entirely based on one thing. Fresh Bank recommendations being acted upon. What we euphemistically call Buy Season recommendations. Last year’s announcement post and explanation can be found here.

To clarify a little bit: EOY recommendations were at the ready to be released in the markets but were on hold until yesterday for two reasons

• The First was the CPI report. That was key for relying on the continued rate-hike pause Powell has been on. The released low print signaled little chance of Fed-instigated surprises for the rest of the year.
• The Second, and at least equally important was government shutdown risk being punted down the road until January. This gives RIAs clear sailing for a month. It allows them to implement strategies and ideas with known unknowns having been resolved.

1. Bet on a policy panic in 2024
2. Sell Mag 7- Buy cyclicals ( Breadth)
3. Buy Bonds somewhat
4. Buy Bullion if Bonds recover

GS Research is out with their 2024 US equity outlook this morning. [They] forecast the S&P 500 index will end 2024 at 4700, representing a 12-month price gain of 5% and a total return of 6% including dividends. Given the breadth thrust we’ve now seen in the index moves, the desk view is that the market can pull forward a lot of the December seasonality and ‘pre-trade’ some of this 2024 optimism near-term.

What does it mean? It means all that money waiting for loose ends to be taken care of got what it needed.  Now we see how much money it actually is. Santa Claus may be coming to town