Action This Year Has Been Mega-Bullish, Which Has Me Super Suspicious…

We’re finally getting back to a stock picker’s market as Wall Street begins to look past inflation’s impact on stocks, a narrative that’s dominated the past year. 

We’ve had a mega-bullish, risk-on atmosphere in markets around the world to start 2023… which leaves me feeling a little suspicious. I’ll discuss why in a bit but first, let’s set the scene…

What’s happened so far this year began when buyers abroad stepped into their markets. Asian markets have led the way behind China’s reopening and loosening of its COVID-19 restrictions.

The Hang Seng Index is up almost 10% on the year as of Friday morning. 

Europe then followed in lock step, with the Euro Stoxx 50 index up about 9.5%. Now here’s the “but”…

If you take a look under the hood, a lot of 2022’s beaten-down Euro stocks make up a major component of this rally. Big legacy brands like Bayer and Adidas have been strong this year, up 18.7% and 16.1%, respectively. 

European banks have also been on fire, which is incredible because it’s been one of the worst sectors among the global markets.

How long is this bank rally going to last? I’ll just say I’m bearish and this looks to me to be the first chink in the armor as far as how long this rally can last. 

Inflation’s Impact on Stocks

Thursday brought us the latest Consumer Price Index report, which showed year-over-year inflation of 6.5%, down from the previous month. This number is still super high, BUT it’s starting to fade. 

There are, however, still pockets of hell on consumers. 

Year over year, white bread has increased 17.7%… cookies are up 18.2%… hot dogs are up 18%… chicken is up 10%… dairy is up 21%… eggs — a staple of most everyone’s diet — are up 59%!

On the flip side, for the month of December, used cars and trucks are down 8.8%, and Tesla announced it’s cutting prices on new vehicles.

There’s a moral to this story, so check out my video up top and I’ll explain why the market is finally ready to move on from this inflation narrative and its impact on stocks, which has dominated the past year. 

Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com with your trading questions and I may cover them in a future video. You can also join my free Telegram channel, where I share market insights real time throughout the week, articles, videos and more!

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

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Creating a coming winter crisis like no one has ever seen before.

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