Closing Market Report: Jan. 31st, 2024

Today was the biggest down day of 2024. The market closed at the lows of the day.

As was somehow totally unexpected by markets, the Powell FOMC pushed back expectations for imminent rate cuts. Here we see that the high yield spread - a proxy for financial conditions - was pinned to the multi-year baseline going into this meeting.

There was not the slightest amount of concern for the Fed going into this meeting:

Whereas ultra-bull Ed Yardeni was musing earlier this week as to whether or not Powell & Friends would make another happy policy mistake this week leading to a much bigger Tech bubble - the exact opposite just happened. The $trillion dollar question is, did the Fed just burst the Magnificent Tech bubble? That is a question I will be seeking to answer over the balance of this week. Needless to say, if the Fed did just implode the Tech bubble, then bulls will now be waiting another six weeks for further clarity on their next bailout, because the Fed isn't about to u-turn next week just because Tech bulls are getting obliterated by their own complacency.

The Dow was green all day up until the post-FOMC press conference, then it joined the Nasdaq deep in red territory.

Bond yields imploded today - meaning bonds rallied hard.

In summary:

In the old days what we used to call "Sell", today's bulls now call "Beat".

As in, beat the crowd out the door.