Two quotes by Janet Yellen, only hours apart. The first clearly emphasizes the very real risk of rapidly rising inflation… “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy.” …while … continue reading →
In a presentation to the CFA Society in July 2019, I showed the following chart which seemed to capture the Fibonacci and channel picture quite well. SPX was nearing the top of a large channel dating back to 1986 as well as the 2.618 Fibonacci extension of its 2007-2009 crash. It was an excellent setup … continue reading →
Ten years ago, I posted my first public observations on the state of the stock market. In Collision Looming, I noted a number of chart patterns which indicated a potential top, writing: Price target if the longer term wedge plays out is 46 – 100% of the rise [from 666], indicating 320-700 points on the … continue reading →
At some point – perhaps after six months of hot inflation data – the Fed will be forced to admit that inflation pressure are not transitory. This morning we saw evidence that March personal incomes spiked by 21.1%, the most since 1946. Personal spending for the month shot up 4.2%, the most since last June. … continue reading →
If gasoline prices remain where they are or continue to rise, Powell will be just plain wrong about inflation being transitory. This is what to expect if gas prices were to flatline at this level through December. Unless most of the other components of inflation were to nosedive, CPI will remain well above 2% for … continue reading →
If you were playing a drinking game this morning keying off the word “transitory” you’d have passed out by now. Seemingly everyone is talking about inflation these days. They all want to know whether inflation will be transitory (as Jerome Powell repeatedly insists) or persistent. When it comes to markets, this is the wrong question. … continue reading →
The Case-Shiller Home Price index rose 12% YoY – the fastest pace since February 2006 – meaning even fewer Americans have a shot at purchasing or renting a house. Ironically, the burden falls mostly on the low-income families that the Fed claims to be most concerned about. Thank goodness we don’t have an inflation problem. … continue reading →
March durable goods orders disappointed this morning, coming in at 0.5% versus the 2.3% rebound expected after February’s -1.2% flop. We couldn’t help wonder whether the data were somehow related to the first (tiny) breakdown in RBOB prices since the Mar 23 lows. Given that oil and gas are poised to deliver a huge increase … continue reading →
Futures are struggling to retain their overnight bounce as we approach the open. Yesterday saw equities drop like a rock on the news of a possible substantial increase in capital gains taxes for investors with large gains. This should come as no surprise to anyone who ever listened to candidate Biden, but markets are touchy … continue reading →
Futures are flat this morning on a very quiet news day. Not even the ECB’s mind-numbing something-for-everyone statement could motivate markets to budge off “unchanged.” This, of course, comes after a classic VIX dump ramp job into the close yesterday which resulted in more important backtests. continued for members… … continue reading →