Wednesday's Market Minute: Rough Start

If today was any indication, 2023 is going to be rough. Conveniently, though, it seems like we are in the midst of a macro regime change that just so happens to be transitioning at the same time as the calendar year.

The main difference between this regime and the one from the past year is that bond sell-offs are no longer the reason for stock sell-offs. It's been more than two months since the high in the 10-year yield, and while bonds have had some juicy sell-offs here and there, it's not clear which way treasury yields are trending after a big drop in the fourth quarter.

This is happening even as the dollar seems to be downtrending and everything on my Risk Radar – which functions as a sort of macro market traffic stoplight – is solid red. Tesla (TSLA) is leading Apple (AAPL) and other tech giants to new lows, and bitcoin is holding on for dear life down in the dumps. The fact risk assets are trending lower while yields are range-bound suggests the inflation and Fed shock of 2022 is being supplanted by growth fears as the primary concern for investors.

Seemingly confirming this is the potential breakout in gold, a sure sign if there is one that investors are truly running out of ideas. It'll be important to see how stocks respond to economic data, but so far it's not looking promising. PMIs and ISMs are drifting lower and showing contraction. 2023 is going to be about how deep they go, and the race between any decline in inflation and the erosion of consumer spending power. 

So far, it's looking like the damage may already be done.

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