| Amir Kahanovitz, Chief Economist, Phoenix-Excellence |
After deleting between 5 and 10 percent of equals, futures on the main Wall Street indices are rising this morning.
Despite the rising buds, the index, which reflects the standard deviations in options on the, continues to rise this morning towards 30 points, implying that the storm and tension have not yet passed.
On the other hand the VIX curve has been reversed over a period of three months, indicating expectations for a short storm, similar to its behavior in the four kinds of storms of the past year.
But while above the surface the storm seems measured and under control, beneath it a drama continues to unfold in some small stocks and growth stocks.
In this context, special attention will be paid this week to the publication of the reports of the technology giants on Wall Street, led by Apple (NASDAQ :), who will have to prove that the market’s confidence in their stability is justified.
| Fear that the Fed will not come to the aid of the shares this time
The immediate suspect in the declines is the Federal Reserve, which is making monetary tightening into the declines and is expected to continue to do so this coming Wednesday.
The market continues to estimate that this time the Fed is serious and will not retreat either because of declines in stocks, possibly because of the great political pressure exerted on it, and is also reflected in the robustness of bond yields.
But while the common denominator for declining stocks seems to be their great sensitivity to rising interest rates, it may obscure another common denominator – the tight labor market.
| The growing difficulty in recruiting employees tops the list of difficulties
This is according to reports from small companies in their activity surveys. This difficulty is especially critical in growth companies that have difficulty showing ‘growth’ without recruitment and in small companies, which are less in demand by job seekers.
What constitutes a more worrying and uncontrollable common denominator, a faster end to the economic cycle.
| Landing harder than expected
It is not that they did not expect the economy to slow down in 2022, the Israeli economy, for example, was expected to slow down from about 7 percent growth in 2021 to 5.5 percent in 2022, but the latest indications are that the “landing” is more difficult.
The City (Mac) Surprises Index dropped to negative territory last week, after several months of positive surprises, when two weeks ago a surprising decline in the US stood out.
The sequence of upward growth updates was also broken, as the World Bank moved to reduce its global growth forecast from 4.3% to 4.1%. The slope of the yield curve, which signals the strength of growth, continued to flatten rapidly, with the slope of 2-30 years for example falling this morning to its lowest level since May 2020.
Bottom line, fears of a structural slowdown have begun to circumvent fears of monetary tightening, which if true means that the steering wheel is no longer just in the hands of the Fed.
In the background, they also go down even though it continues to go up. Inflation in the United States has fallen from 2.65% to 2.37% since the beginning of the year, even though the price of oil has risen to $ 85, which may indicate that even there the risks of slowdown are reflected.
The author is the Chief Economist of Phoenix-Excellence. This review is provided as a service to readers only, and should not be construed as an offer, recommendation, substitute for the reader’s professional judgment or investment advice or investment marketing, purchase and / or sale and / or holding of the securities and / or financial assets mentioned or of securities and / Or any other financial assets.