"Storm Clouds Are Building" For Stocks: Kenny Polcari
Kenny Polcari says in his most recent letter that inflation is still "out of control" and that he doesn't share many in the market's confidence that the Fed has things under control.
Friend of Fringe Finance and well known financial news contributor - as well as 38 year veteran of markets - Kenny Polcari has been kind enough to share his most recent thoughts on the market with our readers.
I’ve been lucky enough to be friendly with Kenny for about a decade now, and he was the first guy to ever take me on what I can only describe as an unauthorized tour of the NYSE trading floor, where I got to personally tell several confused specialists and market makers that the Chinese names they were trading were frauds that didn’t even exist.
The tour didn’t last as long as I would have liked, to say the least. But I’ve always appreciated Kenny’s willingness to welcome people into his busy world for nothing in exchange, and his decades of experience, which gives you a pulse on markets that only time can help you recognize.
For those who aren’t familiar with Kenny or don’t recognize him from TV, he is Managing Partner of Kace Capital Advisors, Chief Market Strategist at SlateStone Wealth, and a Managing Director at Campfire Capital a boutique investment bank. He started his career on the floor of the New York Stock Exchange (NYSE) as an institutional broker back in the early eighties when the march of electronic trading was already taking its first steps, and the great bull was first learning to run.
I’m happy to offer up Kenny’s latest thoughts on yesterday’s trading and going forward in macro, from this morning.
The post has been lightly edited for punctuation and grammar.
Kenny’s Thoughts Mid-Week
The storm clouds are building, stocks come under assault, Jamie Dimon’s prophecy seemingly is coming true.
Recall what he said: ‘Prepare for an economic hurricane’. Remember that? Remember how his global economist, Marko Kolanovic, challenged him on the very same day saying that ‘we’ don’t think a global recession will happen and inflation will ‘resolve itself on its own’? How’s that working out for you? (Oh, to be a fly on the wall…)
Stocks have not been able to stabilize since mid-August, just ahead of Powell’s speech at Jackson Hole, as algos try to decipher what it all means, which I find comical, because all it reveals is that algos weren’t paying attention before the speech. Algos can’t interpret body language, intonation or meaning. So, that rally off the June lows has now failed, and a test of the June lows is now in plain sight.
[QTR’s Note: I wrote about why I believe capitulation is coming yesterday.]
Monday, I indicated that the short term trendline support at 3996 was a KEY level that needed to be watched. Would it hold when we tested it or not? And while we did not test it on Monday – we did test it yesterday – after not 1 but 3 different additional Fed-heads continued with the theme of a more hawkish Fed. NY’s Johnny Williams, Richmond’s Tommy Barkin and Atlanta’s Raffi Bostic all spoke, and when it failed, the bottom fell out. Here’s why…