Summertime Blues for the Lag

We have High Yield Corporate and Junk Bonds (HYG, JNK ETFs, respectively) gapping down hard from a cluster of recent sideways candlesticks denoting a possible bearish reversal down. Meanwhile, both rates and the U.S. Dollar are on the move higher, with rates on the 10-Year Note suddenly coming close to that key 4.1% level we have been noting with Members (which would exceed the July highs). 

All of this is happening as many stocks and indices are barely down, especially the Nasdaq trading in the stratosphere. 

While the lag effect from higher rates (The Fed first hiked in March 2022, which means this September we come up on eighteen months) is fairly well-known and accepted as part of how markets and the economy work, this particular moment in the market seems particularly egregious insofar as bulls disrespecting risks which, again, has me looking for a violent unwind in due time. 

With JBLU the big loser today, airlines look to be giving back a chunk of gains from the spring and early-summer. UBER reversed down hard from initially being flat or even green after earnings. So, the market may finally be pricing in some degree of a consumer slowdown, especially with oil and gas squeezing them. 

That said, let us not mince words: Apple earnings this Thursday night (and AMZN, plus Friday's jobs report) will be the main event given its sheer size, weightings, prominence, and general microcosm for the idea that an equity can be seen as a totally can't-miss cash-equivalent winner.