PCE Signals Stagflation

Core PCE came in hot this morning, tagging 2% (1.9% core.)  Expenditures rose 0.4% MoM, beating income.Needless to say, this falls short of the reality experienced by most Americans, who have seen a 15-20% YoY increase in gasoline prices with the seasonal summer bump still ahead. Will the 10Y take its cues from problematic inflation … continue reading →

That Nagging Feeling

Sometimes, markets can’t seem to get out of their own way.  They manage to make modest new highs, but on poor breadth or without breaking through resistance.  Like many investors, this sets my spidey senses to tingling. Most of the time, the markets grind higher anyway.  But, once in a while, the warning signs were … continue reading →

BoJ: The Waiting Game

That master of incredulity stretching himself, Haruhiko Kuroda, insists that Japan will reach 2% CPI sometime in the next five years. That was all the yen carry trade algos needed to hear.  USJDPY reached our initial upside target with ease, and is threatening to keep going. The futures, which have really struggled to climb on … continue reading →

Degree of Difficulty

Markets face a difficult task, today: keep the rally alive while interest rates and inflation are making investors very, very nervous. The interest rate breakout continues, with TNX reaching 29.75 moments ago.  It was enough to get DXY back up to its neckline again — the 5th backtest so far.   Anything higher, though, would be … continue reading →

Oil & Gas, Inflation and Interest Rates: A Delicate Balance or Goal Seeking?

Most students of the markets are aware of the important relationships between oil and gasoline prices, inflation and interest rates.  Understanding these relationships can provide useful insight into the economy and broader markets.  Digging deeper into the trends, reversals and divergences, however, yields evidence that the relationships are nowhere near as random as the casual … continue reading →

Two Down…

SPX has now achieved two of the three milestones that could see it return to an unfettered bullish state of affairs.  Thanks to the continuing and precision meltdown of VIX, it was able to not only hold the IH&S neckline, but pop back above its Fib 2.24 extension at 2703.62.  And, lest there was any … continue reading →