Daily Market Comment – Fed flushes dollar down the drain, ECB and BoE next
- Fed chief strikes neutral tone, markets take it as ‘green light’ to party
- ECB and BoE decisions coming up, both set for 50bps rate increases
- Earnings season goes into full force with Apple, Amazon, and Google
Meta Platforms got the ball rolling in the right direction yesterday after it axed its planned capital expenditures and announced a massive $40bn share buyback program, propelling its stock higher by 20% in after-hours trading.Overall, there’s a lot of optimism in the markets, which is not necessarily grounded in reality. Behind the latest rally in the S&P 500 lies a massive multiple expansion that has seen the index trade above 18 times forward earnings, even as leading indicators point to a slowing economy and earnings growth has turned negative. The ‘tell’ that this rally is built on shaky foundations is the leadership - the best performing stocks this year are the lowest quality names, most of which were smashed into oblivion last year because they are cash-burning machines.
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