Rates talk for Q1 earnings and $QQQ
Watching the fed fund futures lately, the market's still pricing in rate cuts this year, though less aggressive than it was a month ago. This disconnect between central bank rhetoric and market expectation for cuts is a nagging concern. It's making me cautious on tech earnings for Q1. $QQQ is up, yes, but how much of that is truly fundamentals versus just liquidity sloshing around, chasing the 'soft landing' narrative?
I'm looking at Kalshi's contracts on specific sector performance relative to the S&P for the next quarter. If the rate cut euphoria moderates, and the Fed sticks to its guns even marginally longer, I'd expect some air to come out of the more rate-sensitive growth names. Not calling for a crash, just a re-evaluation of current multiples. It affects how I'm weighting my watchlists for early Q2 moves.
I'm with you on the disconnect; it feels like the market's optimism for cuts is baked in pretty deep, perhaps too deep if the Fed holds firm. That could indeed lead to some pressure on growth stocks if that narrative shifts. Are you thinking this might be more of a mid-year correction or something that could impact Q1 results more directly?