Morning Market Report: Jan. 25th, 2024

GDP

Morning futures were bid following the "Goldilocks" GDP report showing faster growth and slowing inflation. A few pundits are starting to talk about the potential for a reacceleration of inflation should the economy start to speed up again due to the loosening of financial conditions. However, for the most part, there is a belief that a strengthening economy will be accompanied by declining inflation:

"The two components together added up to “supersonic Goldilocks, because it’s really a strong number yet inflation hasn’t shown up”

Yet.

ECB

The ECB was hawkish this morning as the operating theme is it's "premature" to be talking about rate cuts. Nevertheless European markets followed U.S. futures higher.

Tesla

At today's open Tesla was sledge hammered below key support. This is a totally broken stock now and it is heading back to the lows of 2023 and probably much lower.

S&P Tech new highs divergence

This chart shows that even as S&P Tech continues to make new highs, the Nasdaq Composite new highs peaked back in mid-December. The same divergence we saw in late 2021.

Semiconductors

Semis are continuing their melt-up this morning. As of yesterdays close they had run almost 33% from the last touch of the 50 dma.

The end run in the Artificial Intelligence rally.

EM Bonds:

On EM bonds and other credit risk assets, investors are about to learn that they have now exchanged default risk for inflation risk all while they were busy front-running central bank recession policy.