A Textbook Bear Rally

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jim rogers Bear Market Rallies

In his Daily Market Notes report to investors, while commenting on a bear rally, Louis Navellier wrote:

Textbook Bear Rally

The first half goes out with a whimper.

Hopes for a relief rally on peak inflation and optimism that earnings will not disappoint have not been realized this week.  We’ve done a round trip to last Thursday’s levels.  The S&P is still 3% off the bottom from 2 weeks ago, but the strong bounce off the bottom is looking like a textbook bear rally this morning. 

Q1 2022 hedge fund letters, conferences and more

 

Perhaps what’s most disappointing is that an important inflation data point, the Chicago Purchasing Managers Index, the core personal consumption expenditures price index, the Fed’s preferred inflation measure, was reported for May this morning as down more than expected.

Head Scratcher

Investors hoping for a relief rally on such strong evidence that peak inflation appears to have already passed are left scratching their heads. Instead, the S&P is headed towards its 15th 2% drop and the VIX is back above 30.

Q2 Earnings to the Rescue?

Recession fears are now leading the way with interest rates lower across the yield curve, energy and industrial metals lower, and travel-related names off more than the indexes. We are now left with 2nd quarter earnings to ride to the rescue.

Confidence here has been hurt this morning as RH (NYSE:RH) (Restoration Hardware) which is down 10% on the heels of management guiding down its fiscal year outlook followed by a quick slashing of target prices by Wall Street analysts.

Buckle up, volatility remains sky-high, as is fear and uncertainty, circumstances which historically have been a very good time to commit capital.  

Coffee Beans

The war in Ukraine is setting back the global economy. All major international organizations such as the IMF, the World Bank, the OECD, and the UN, have revised their forecasts of global economy growth in 2022 downward by around one percentage point in comparison to their pre-war projections. Source: Statista. See the full story here.

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