Dow futures are nearly flat, up seven points, as the index headed for its seventh straight positive week. Markets are euphoric over the Fed keep rates high. They are betting that the Fed dot plot will imply interest rate cuts starting in early 2024.
Investors who bought regional banks may consider taking profits. KeyCorp (KEY) is up 25.38% in only a month, rising from $13.00 to $14.86. KEY stock is -16.13% YTD. KB Financial (KB) lost 1.12% in the last month but is up 3.89% YTD.
Fed’s John Williams tried to cool the chatter of the implied rate cuts. The New York Fed President said that rate cuts are not a topic of discussion. Markets are ignoring the contradiction.
Watch the treasury yields. The 10-year yield is 3.95%, up 61 bps this morning.
Yesterday, S&P Global Mobility projected that auto firms will sell over 88 million vehicles globally in 2024. This forecast contradicts the growing supply at dealership lots and used car firms. Ford (F) gained 7.47% on Dec. 14. GM rose by 6.65%. This morning, GM said it would cut 1,314 employees at two of its factories in Michigan. The location is ending the production of vehicles.
Investors need to separate forecasts from reality. Be wary of companies that cut jobs. That indicates demand weakness and high operating costs.
