300 stocks on the New York Stock Exchange hit new highs, the most since March of 2024, suggesting the market’s breadth is expanding. According to Bank of America, the US Benchmark Feds Fund rate suggests Wall Street is set on a soft landing scenario with expectations for interest rate cuts to come.
Yahoo Finance senior markets reporter Jared Blikre joins Asking For A Trend to break down the top market trends for the July 12 trading day, also comparing the Japanese yen’s performance against the US dollar in foreign exchange markets.
For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.
This post was written by Nicholas Jacobino
Video Transcript
Stocks bouncing back from Thursday’s tech driven, sell off the dow closing at its highest level since May and just above that 40,000 level here with more on the train and day takeaways.
We have Yahoo finds his very own Jared blicker, Jared.
That’s right.
We are looking at a breadth explosion right now and that is my first take away.
We really see saw things come alive yesterday and that was in reaction to that weaker than expected.
CP I print carried over into this morning and I was looking at the new highs of all New York stock Exchange listed stocks and there are about 3000 in that group, but the new highs were about 300 today.
306.
That was the most since March of this year.
And it just shows you the general strength that just kind of erupted in this market over the last couple of days.
We hadn’t seen that.
We’ve been talking about concentration.
Well, here we got the opposite of that.
It’s, you know, having the kind of skeptical take on the market has been, you know, this market has bad breath, but now we see this explosion, Jared.
Is it just, I mean, listen, we’ve been small caps very closely but where else are we seeing that?
What are the vertical sectors?
Yeah, you’re right.
It’s not just small caps.
We saw the dow come alive.
It hit an Intraday record, didn’t make the close, but it hit an intraday record.
So it is at the highest level that it’s ever been.
You see the small caps coming alive but it’s not just limited to some of these French sectors or the cap sectors.
You can look at XL B that’s health care just had its first record high since February.
I mentioned the Dow financials also first recorded high since May 17th.
And then you look inside financials to regional banks.
Kr has exploded here.
Arguably that’s a mid cap.
But so you see all the strength coming from different parts of the market.
So I find that encouraging with a couple of cys, all right, hit me with the second bullet point, Jared.
We have Wall Street all in on a soft landing looking for those rate cuts.
And in fact, more rate cuts have been priced in over the last day and that’s in response to that CP I figure.
And the PP I figure in fact, we’re seeing about 10 to 15 basis points of more rate cuts than we were two days ago.
So here’s the federal funds rate.
This is the fed’s benchmark rate.
This is when we talk about the fed adjusting rates.
This is the rate and this goes all the way back to the beginning of the century.
And you can see here, this was a global financial crisis.
There was, rates came up to 5% and then they got lowered pretty drastically all the way down into the 2009.
And then again, they got ratcheted up here into the pan and we actually started lowering rates before the pandemic.
And then we got that steep drop when it was obvious what was happening.
But you notice here, look, this is uh this is where we are.
This is supposed to be July actually, this is December of this year.
This is December of next year.
This is a much more gradual slope here.
So you’re saying a soft landing is done, it’s a done deal.
Is this your point?
Yeah, I I’m afraid that we got to look at history here.
I know this is only two other uh prior events.
But if you look at the slope and let me just erase these lines, you look at how steep this is and how steep this is.
What happens when everybody is expecting a soft landing.
And that’s usually the base case.
Nobody sees the hard landing, nobody sees the recession data until it’s right in your face.
Usually all of a sudden the labor market falls out from under you and there’s a rug pole, so to speak.
And so that’s what we saw the pandemic.
Ok?
You want to say that’s an outlier?
Well, we saw that in global financial crisis, we saw that in the year 2000 in the.com bubble bust when things get bad, they tend to go down very quickly overnight.
And so the onus now, now that we, now that we know where we are in the business cycle, the data has to come in either pretty good or not too bad.
If it comes in really, really bad, you’re going to see, you’re gonna see expectations for a lot more rate cuts and it’s not going to be pretty.
All right.
Bullet Jared.
Let us go for a intervention.
This is kind of under the radar here.
It looks like yesterday when we did get that market moving CP I report the Japanese government was in the market and I’m gonna go to our US dollar versus the yen here.
You can see over the last two days.
Uh, this was a big drop.
This is the dollar getting weaker on that CP I announcement.
And uh it looks like the Bank of Japan was also feeding into that.
So they were actually buying yen, they were selling dollars during that same period.
And then later on that night, when they reopened for business, I think it’s about 8 p.m. Our time, this is UTC down there, by the way, they sold again, they sold the dollar and then this morning, I’m not sure we don’t have yet if there was a intervention this morning, but it’s possible we see the move in Syria.
And so the Bank of Japan, the lesson is uh they don’t want a weaker yen and they’re gonna get in the market to achieve their ends.
And if you’re on the opposite side of that trade, if you’re in the Kerry trade, you’re gonna get stomped on, let’s say, are you an investor right now?
You listen to Jared Blackery, do the charts.
You’re going into the weekend and you’re wondering why does this matter to me?
What do you say to that, Jared?
Look at this chart.
Well, how could this not?
I mean, it’s a beautiful chart.
Um I, I think it matters because at the end of the day we got to remember that when the stuff, the proverbial stuff hits the fan and it might be hitting the fan in Japan pretty soon the governments, they will change the rules and they will do what’s necessary to protect their markets.
In this case, it’s going to be the Japanese currency and their government bond market.
I live through the flash crash.
It’s uh indelibly imprinted in my brain when one part of the market breaks in a big way, it spreads everywhere.
Very instantaneously.
There it is killed it.
Thank you.
