{"id":3356,"date":"2023-10-19T19:07:10","date_gmt":"2023-10-19T19:07:10","guid":{"rendered":"https:\/\/infundpros.com\/markets\/stanley-druckenmiller-said-central-banks-not-earnings-move-markets-today-is-the-day-to-pay-attention\/"},"modified":"2023-10-19T19:07:11","modified_gmt":"2023-10-19T19:07:11","slug":"stanley-druckenmiller-said-central-banks-not-earnings-move-markets-today-is-the-day-to-pay-attention","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=3356","title":{"rendered":"Stanley Druckenmiller said central banks, not earnings, move markets. Today is the day to pay attention."},"content":{"rendered":"

Anniversary jitters anyone? Thursday marks 36 years since Black Monday KO\u2019d global markets, with some sharing it-could-happen-again charts, as rising bond yields keep pulling the stock market off balance.<\/p>\n

A cautious day is setting up, amid some further crumbling of the Magnificent Seven fortress, with shares of Tesla down on Cybertruck expectations. That\u2019s as shares of another of the Seven \u2014 AI stalwart Nvidia
\n NVDA,
\n +0.16%<\/bg-quote>
\n \u2014 has seen a bit of a rough patch lately. A rally from Netflix may save the day for tech. <\/p>\n

\n

Tesla could be a big determiner for how stocks perform from here, says Simon Ree, founder of Tao of Trading, on X.<\/a> \u201cIf we see aggressive dip-buying in TSLA Thursday, that would be a bullish tell. Conversely, if the market fades the pop in NFLX, that would signal overriding bearish sentiment.\u201d<\/p>\n

And get that third eye cranking as Chairman Jerome Powell gathers the Economic Club of New York for a fireside chat on Thursday.<\/p>\n

Watch MarketWatch\u2019s live coverage of Powell\u2019s speech<\/p>\n

On that note and in the thick of earnings season, it\u2019s worth reflecting on what widely followed investor and hedge-fund manager Stanley Druckenmiller has said about why central banks factor importantly in your investments. (h\/t to quant researcher Wifey on X <\/a>for the reminder).<\/p>\n

\u201cEarnings don\u2019t move the overall market; it\u2019s the Fed, focus on the central banks, and focus on the movement of liquidity, most people in the market are looking for earnings and conventional measures. It\u2019s liquidity that moves markets,\u201d Druckenmiller said at the Lost Tree Club in 2015. Note, he\u2019s expressed wariness on stocks this year, as well as predicting a hard economic landing.<\/p>\n

Our call of the day<\/strong> from Macro Tourist newsletter editor, Kevin Muir would tend to agree, as he says Powell\u2019s comments have important bearing on markets for the next two months.<\/p>\n

Muir believes some investors way too caught up in recent data that shows a strong economy. \u201cI will not disagree with the analysis that the U.S. economy appears to be running at full steam with no signs of slowing,\u201d Muir writes in his latest blog.<\/p>\n

\u201cHowever, I think they are mistakenly looking solely at the economic data and not considering financial conditions,\u201d and given post-FOMC meeting moves in asset prices, it\u2019s easy to see that the Fed sees the market doing its tightening work for it, he says.<\/p>\n

What investors tend to forget, crucially, is that the Fed is a \u201csupertanker that takes a long time to start and stop,\u201d says Muir. And it doesn\u2019t shift direction due to a couple of data points, but rather looks at the whole enchilada and figures out \u201cgradual starts and stops.\u201d<\/p>\n

The big debate right now? As economic data has been a little too hot, the bond market thinks the Fed will leave chances of a December hike on the table. Muir says nope, the Fed has paused and it will take some seriously strong economic data to get that hiking campaign restarted.<\/p>\n

On Thursday, Muir expects Powell will be more dovish than many investors expect, and confirm what other members have been saying over the past week, suggesting he will echo what Fed Vice Chair Philip Jefferson said recently. <\/p>\n

Jefferson: \u201cI will remain cognizant of the tightening in financial conditions through higher bond yields and will keep that in mind as I assess the future path of policy. I will be taking financial market developments into account along with the totality of incoming data in assessing the economic outlook and the risks surrounding the outlook and in judging the appropriate future course of policy.\u201d<\/p>\n

A more dovish Fed may not be a green light to buy stocks, said Muir, though he\u2019s considering buying some inflation protected bonds and gold and selling the dollar, and he\u2019s also not sure how bond yields will react due to so many variables. \u201cHowever, I don\u2019t think betting on a hawkish Powell is the correct play.\u201d<\/p>\n

The markets<\/h2>\n

Stocks
\n DJIA<\/p>\n

SPX<\/p>\n

COMP
\n are off to a slightly firmer start, shaking off a creep up in bond yields
\n BX:TMUBMUSD10Y<\/p>\n

BX:TMUBMUSD02Y.<\/span>
\n Gold
\n GC00,
\n +0.90%<\/bg-quote>
\n and the dollar
\n DXY
\n are slipping and oil
\n CL.1,
\n +2.02%<\/bg-quote><\/p>\n

BRN00,
\n +0.57%<\/bg-quote>
\n is also falling after the U.S. relaxed Venezuela sanctions. The Israeli shekel
\n ILSUSD,
\n -0.40%<\/bg-quote>
\n hit fresh lows on fears of a protracted war.<\/p>\n

For more market updates plus actionable trade ideas for stocks, options and crypto,\u00a0subscribe to\u00a0MarketDiem by Investor\u2019s Business Daily.<\/strong><\/p>\n

The buzz<\/h2>\n

Weekly jobless claims fell to a nine-month low of 198,000, while a Philly Fed manufacturing survey showed a modest October recovery. Still to come are existing home sales and leading economic indicators. Fed Chair Powell will speak at noon, with Chicago Fed President Austan Goolsbee at 1:20 p.m., Fed Vice Chair for Supervision Michael Barr at 1:30 p.m., Atlanta Fed President Raphael Bostic at 4 p.m. and Dallas Fed President Lorie Logan at 6:40 p.m.<\/p>\n

Tesla shares
\n TSLA,
\n -10.06%<\/bg-quote>
\n are down over 6% as investors shook off earnings disappointment, then got gloomy after CEO Elon Musk said the Cybertruck would take 18 months to turn into a \u201ccash-flow contributor.\u201d Some analysts still see silver linings in those results.<\/p>\n

Opinion:<\/strong>\u00a0Tesla\u2019s Cybertruck has Elon Musk sounding unusually cautious<\/p>\n

Netflix shares
\n NFLX,
\n +16.32%<\/bg-quote>
\n are headed toward the biggest gain in nearly three years after a big jump in subscribers and price hikes. Disney
\n DIS,
\n -1.36%<\/bg-quote>
\n offered a peek at its ESPN financials, and analysts were relieved by what they saw.<\/p>\n

American Airlines
\n AAL,
\n +1.45%<\/bg-quote>
\n stock is slipping as revenue fell short, AT&%
\n T,
\n +7.19%<\/bg-quote>
\n is up lifting its free cashflow outlook. Union Pacific stock is up after stronger-than-forecast profit.<\/p>\n

Nokia shares
\n NOK,
\n -5.16%<\/bg-quote>
\n are down after the telecom equipment maker said up to 14,000 jobs would go as profit dropped 69%.<\/p>\n

Elsewhere, Las Vegas Sands shares
\n LVS,
\n +3.59%<\/bg-quote>
\n are up after the casino group said it would buy back $2 billion in stock. Equifax
\n EFX,
\n +2.29%<\/bg-quote>
\n is sinking after the credit-score agency cut its outlook.<\/p>\n

Best of the web<\/h2>\n

Want to beat your return-to-office mandate? Try \u2018coffee badging\u2019 at your own risk<\/p>\n

How hundreds of U.S. government employees became gun industry sales reps<\/p>\n

A U.S. State Department official resigned over what called \u201cblind support for one side,\u201d in the Israel-Hamas war.<\/p>\n

The chart<\/h2>\n

The best of the stock relief rally may be over and it\u2019s time to buy fear, says trader Tom<\/a>, who writes the Lines On A Chart substack:<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

The tickers<\/h2>\n

These were the top-searched tickers on MarketWatch as of 6 a.m.:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n
\n Ticker<\/p>\n<\/td>\n\n Security name<\/p>\n<\/td>\n<\/tr>\n
\n TSLA,
\n -10.06%<\/bg-quote>\n <\/td>\n		\n Tesla<\/p>\n<\/td>\n<\/tr>\n
\n NFLX,
\n +16.32%<\/bg-quote>\n <\/td>\n		\n Netflix<\/p>\n<\/td>\n<\/tr>\n
\n AMC,
\n +2.57%<\/bg-quote>\n <\/td>\n		\n AMC Entertainment<\/p>\n<\/td>\n<\/tr>\n
\n NVDA,
\n +0.16%<\/bg-quote>\n <\/td>\n		\n Nvidia<\/p>\n<\/td>\n<\/tr>\n
\n AAPL,
\n -0.01%<\/bg-quote>\n <\/td>\n		\n Apple<\/p>\n<\/td>\n<\/tr>\n
\n TSM,
\n +4.23%<\/bg-quote>\n <\/td>\n		\n Taiwan Semiconductor Manufacturing<\/p>\n<\/td>\n<\/tr>\n
\n GME,
\n -6.14%<\/bg-quote>\n <\/td>\n		\n GameStop<\/p>\n<\/td>\n<\/tr>\n
\n AMZN,
\n +0.28%<\/bg-quote>\n <\/td>\n		\n Amazon.com<\/p>\n<\/td>\n<\/tr>\n
\n NIO,
\n -2.97%<\/bg-quote>\n <\/td>\n		\n Nio<\/p>\n<\/td>\n<\/tr>\n
\n MSFT,
\n +0.72%<\/bg-quote>\n <\/td>\n		\n Microsoft<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

Random reads<\/h2>\n

Citadel\u2019s Ken Griffin is building the most expensive home on the planet.<\/p>\n

Costco \u2014 which announced a CEO change \u2014 has a bargain $4,500, 157-piece Le Creuset set.<\/p>\n

Need to Know starts early and is updated until the opening bell, but\u00a0sign up here\u00a0to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.<\/strong><\/p>\n

Listen to the\u00a0Best New Ideas in Money podcast\u00a0with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.<\/strong><\/p>\n<\/p><\/div>\n