Sky High Nihilism

The major indices and leading stocks continue to operate in a kind of nihilistic world where any and all news items, macro reports, slight dips, bearish technical setups, etc., all point to higher equities, regardless. While it seems like a new paradigm has taken hold, one which has permanently changed markets forever, we know history implores us to stay on our toes for the eventual regime change. 

However, without question this particular melt-up has enjoyed more lives than a cat.

Specifically, going back to 2021 we saw all the classic signs of a euphoric bull market top. True, we had the 2022 mild bear market to shake that out. But the melt up since late-2022 has now clearly exceeded even the 2021 mania. 

We have more big macro data this week, such as the PPI and retail sales on Thursday and Friday, respectively. Jackson Hole is over a week and a half away, and NVDA earnings are not until the week before Labor Day. 

A rate cut at the September FOMC now seems like a done deal, despite core CPI rising year over year and well above target. Still, one cannot help but wonder why the 10-Year Note is seeing rates push higher here. In fact, rates on the 30-Year are pushing even higher on a percentage basis. 

Hence. the scenario from last September 2024, when The Fed began cutting rates, could be in play, where the long end of the curve revolts against rate cuts amid rising and/or sticky high inflation.

At this point the bond market may be the only entity standing between sky high nihilism and some semblance of logic.