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Gap 'n Crap

This is the closing market report for February 13th, 2024.

This morning just before CPI was released, Barron's published an article claiming that the AI bubble is impervious to the Fed. That for the first time in history Tech stocks would keep leading the market higher whether the Fed was hawkish or dovish. I'm not sure who writes that in the hours ahead of a CPI report, but as we all know, that type of hubris does not go unpunished:

"Gone are the days of tech stocks closely following the ebb and flow of Federal Reserve interest-rate expectations. AI-exposed stocks are dancing to a different tune. That may work in the sector’s favor if economic data push back the timeline for the central bank’s first rate cut."

Just a few hours later, we got the answer.

It doesn't work.

Because even if it were true that "higher for longer" is now good for Tech stocks, then investors would need to consider what higher rates is doing to the rest of the market. One year ago, gamblers got a free pass for ignoring the bank meltdown by rotating to the AI trade, but now we know that is a very, very crowded trade.

Today, small caps had their worst day since the 2022 lows and before that the 2020 lows.

In summary:

The reason why I don't trust these central bank rigged markets is because the minute investors start to believe in them en masse, they implode. Again.

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