Need to Know: Stanley Druckenmiller said central banks, not earnings, move markets. Today is the day to pay attention.

by | Oct 19, 2023 | Stock Market

Anniversary jitters anyone? Thursday marks 36 years since Black Monday KO’d global markets, with some sharing it-could-happen-again charts, as rising bond yields keep pulling the stock market off balance. A cautious day is setting up, amid some further crumbling of the Magnificent Seven fortress, with shares of Tesla down on Cybertruck expectations. That’s as shares of another of the Seven — AI stalwart Nvidia
— has seen a bit of a rough patch lately. A rally from Netflix could save the tech day.

Tesla could be a big determiner for how stocks perform from here, says Simon Ree, founder of Tao of Trading, on X. “If 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.” And get that third eye cranking as Chairman Jerome Powell gathers the Economic Club of New York for a fireside chat on Thursday. Watch MarketWatch’s live coverage of Powell’s speech On that note and in the thick of earnings season, it’s 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 for the reminder). “Earnings don’t move the overall market; it’s 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’s liquidity that moves markets,” Druckenmiller said at the Lost Tree Club in 2015. Note, he’s expressed wariness on stocks this year, as well as predicting a hard economic landing. Our call of the day from Macro Tourist newsletter editor, Kevin Muir would tend to agree, as he says Powell’s comments have important bearing on markets for the next two months. Muir believes some investors way too caught up in recent data that shows a strong economy. “I will not disagree with the analysis that the U.S. economy appears to be r …

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