Last Week Was the First Down Week in the Past Six – What Could it Mean?: Market Commentary from Cabana’s CEO – February 21, 2023 

2 months ago

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The past week we have seen two separate inflation measures (CPI and PPI) come in above expectations. This has increased upward pressure on interest rates while reducing chances the Federal Reserve (the “Fed”) will cut rates anytime soon. The message from our Central Bank has been clear that rate cutting will not begin until it is “confident” that inflation is headed back to the 2% target. This January data doesn’t help things, although it does appear we continue to be headed in the right direction.  

All this interest rate volatility has caused bonds, dividend payers, real estate and other “sensitive” assets to pull back from the recent highs seen at the end of 2023. So far this year, technology has kept on keeping on, and has helped the market cap weighted indices stay near their highs. We did, however, just finish a down week across the board (even in Big Tech) for the first time in six weeks. That trend is continuing through today. We will get more technology information when Nvidia reports earnings after hours today. It is also worth pointing out that the VIX (volatility index) has been steadily moving higher since the new year began. It is not flashing signs of imminent trouble, but we should keep an eye on it. The VIX crossed 15 this week and 20 has been an important tipping point over the past two years (Source: CNBC as of 2/19/2024).  

It is believed that this time of year is historically a seasonally favorable environment for stocks, and it seems to me that the next move for interest rates is down. These two factors suggest that any selling pressure will be met by buyers stepping up. This will likely keep a floor in place if something unforeseen doesn’t show up. What could that be? A major international conflict that impacts supply chains and commodities like oil and gas? Hmm. That actually doesn’t seem so unforeseen right now. To me, that possibility is starting to creep into the equation and may be part of the move up in interest rates as well as volatility. I don’t hear anybody shouting about these things on CNBC yet, but don’t be surprised if they start. 

For now, I’ll be happy to tread some water here and wait on some potentially favorable inflation news in March. 

At Cabana, we remain in our Transitional Bullish scene and are allocated across portfolios accordingly. 

Key terms:  

  • The Consumer Price Index (CPI) measures the overall change in consumer prices based on a representative basket of goods and services over time. The CPI is the most widely used measure of inflation, closely followed by policymakers, financial markets, businesses, and consumers. (Source:  
  • The Producer Price Index (PPI) measures the average change over time in the prices domestic producers receive for their output. It is a measure of inflation at the wholesale level that is compiled from thousands of indexes measuring producer prices by industry and product category. (Source:  

January 17, 2024

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