We’re approaching the halfway mark for earnings season and volatility is ramping down after a wild week. Now that we have a solid understanding of what kind of businesses stood tall to end 2023 and which ones cracked under pressure—next week’s CPI numbers should give us a confident view of how the rest of 2024 will play out.
If inflation comes back cooler than expected, that will help cement our nascent rally and put pressure back on the Fed to lower rates and stop pumping the brakes so hard.
However, inflation could easily come in hot with shelter prices still up in the air and gas prices creeping back up to finish January. In that case—we’ll stay mired in this moment of volatile equilibrium where industry winners take all the gains while mid-tier performers get heavy punishments for anything less than perfection.
We’re seeing that dynamic play out this morning as a strong slate of earnings reports got hammered thanks to less-than-optimistic guidance for 2024. Management teams are keeping predictions close to the chest and the market is handing out heavy punishments for that pessimism. Of course, high bond yields and sustained gains for oil aren’t helping anyone’s appetite for any equity that looks too risky.
Meanwhile, with December inflation numbers getting corrected to show a cooler report than initially expected, wider markets are surging as the narrative turns back toward rate cuts coming sooner.
At the same time—the crypto market has passed a few critical milestones and Bitcoin has risen over 11% this week to pass the peaks the chain hit post-ETF approval. With every major token in the top 10 experiencing decent lift to end the week and BTC knocking on the door of a $1 trillion market cap again, crypto season appears to be confirmed.
Ethereum is starting to break out in particular thanks to new speculation that Cathie Wood and crew will be able to lock in approval for an Ethereum ETF as early as May—so gear up for another round of wild volatility surrounding that rumor mill.
But for now, let’s try to find long-term patterns in all this short-term data. We’ll take a look at the stories making the biggest impact as we ramp into Super Bowl weekend and try to see if there are any signals in all this noise. Let’s get into it.