Stock Market and "Dove" Powell amid Excellent Reporting

16 de jul. de 2021

The start of the reporting season for the second quarter cannot be called anything other than excellent. Yes, each sector has its own reasons for growth: banks are growing due to write-offs from reserves, airlines due to the return of passengers, commodity companies due to higher prices for raw materials. But most importantly, financial performance is improving across the board at a pace that exceeds market expectations.

If this kind of start is multiplied by the extremely "dovish" rhetoric Powell voiced during the testimony in Congress this week, we get ideal conditions for the explosive growth of the US stock market.

And there is still a record pace of economic recovery in the United States. Jobless Claims, for example, came out yesterday at 360K, which is the lowest since the start of the pandemic.

What do we have in fact? Black weekly candlesticks in SP500 and Nasdak. Naturally, the question arises, if the market cannot grow on such a frank positive, what will it do when the positive becomes less or even negative appears?

In our opinion, all these are signs of an impending collapse of prices in the stock market. So, our recommendation “sell” is becoming more and more relevant every day.

Among other news of the day yesterday, it is worth noting statistics from China, which, although it came out generally higher than analysts' expectations, is nevertheless much worse than the data for the past period, which suggests that a quick recovery is being replaced by a simple recovery and, in general, there is a feeling that China's economy is losing momentum. As a result, non-residents sold 10 billion yuan ($ 1.7 billion) worth of shares in Chinese companies on Wednesday, a record high since September. That is, the first rats are already starting to flee from the ship.