Confusion Reigns…

We are now into a new market environment. It is no longer about AI, Inflation, Interest rates, or the Fed, it is now about Tech over-valuation.

What this means is that the next shoe to drop is a sharp decline in tech related stocks. Once that play is over our Climate Tech Model is going to step back into EV, Solar, and Biotech stocks which it exited in early March.

Meanwhile here is what general market players are saying today as they still think inflation is a problem. The Fed left rates unchanged, as expected. I’m using a sentence I read this morning in the commentary of US bank First Trust, which reads “without definitively ruling out a hike, Mr. Powell made it clear that the Fed believed current monetary policy was already tight enough to bring inflation down, and anticipated that the next move would be a cut”. Quite reassuring, given the market’s ultimate fear. Nevertheless, the central banker insisted that inflation remains too high and the labor market too tight. A small incongruity in the previous day’s announcements, the Fed announced a slowdown in the pace of its quantitative tightening. The cocktail of this measure, perceived as a form of easing, and Powell’s tone, which was slightly less severe than expected, enabled US indices to rebound during yesterday’s session. However, this confidence did not last, and May 1st ended on a curious note on Wall Street: +0.2% for the Dow Jones, but -0.3% for the S&P500 and -0.7% for the Nasdaq 100.

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