After another round of hot economic data, the rate cuts on which this market has depended continue to look less and less likely. Housing prices resumed their acceleration and labor costs are rising faster than expected, leaving many to wonder whether we’ll get any rate cuts in 2024.
continued for members… (more…)
Futures are up moderately this morning as the Street contemplates an upbeat AMZN outlook, uncertain AAPL prospects, and Wednesday’s FOMC decision.
continued for members… (more…)
There were two problems with this morning’s PCE print. First, PCE is stuck at 0.3%. Although down from 0.4% in January, it’s still well above November’s 0.0% and December’s 0.1%. Core also repeated Feb’s 0.3% reading (2.8% YoY.)
Second, growth in expenditures continue to outstrip those in income. At some point – and especially now that COVID bonuses are generally depleted – this will increasingly curtail folks’ ability to spend. From the bulls’ standpoint, that’s not a drain we want the economy to circle.
But, VIX sold off sharply for the 5th session in a row, the 10Y fell back from yesterday’s highs, and USDJPY even got into the act. So, futures are up nicely.
As we wrote yesterday: “If the 10Y can hold these levels and if PCE comes in on target tomorrow, then ES has a shot at holding the SMA100.” The 10Y did hold, and PCE is close enough to on target, so ES is enjoying a nice bounce off its SMA100 – at least as long as folks don’t think too much about yesterday’s data.
continued for members… (more…)
Futures are off sharply on a very stagflationary offering of economic data. Q1 GDP rose at only 1.6% versus expectations of 2.4%, while core PCE prices rose 3.7% against expectations of 3.4%. The PCE index itself is due out tomorrow.
Meanwhile, the Labor Department reported that unemployment claims for the week ended April 20 came in at 207,000 versus 215,000 expected and the 212,000-222,000 which have been reported in the past 6 weeks.
Weaker than expected economic data, combined with stronger than expected inflation and employment, places the FOMC in a difficult position and a market which has been counting on lower interest rates downright bearish.
Despite a strong showing in March, the SPX is right back where it was the last time we wrote about stagflation in February [see: Stagflation Fears Renewed.]
About the only silver lining in our charts is the 10Y, which has reached our 4.738 target several weeks earlier than expected. The resistance at this level could make a difference for stocks.
continued for members… (more…)
Having pushed back into the rising white channel and falling red channel in advance of Friday’s PCE print, stocks have a decision to make.
continued for members… (more…)
Futures are up moderately as we approach the open. A House bill that would broaden sanctions against Iran’s oil exports adds to the threat of geopolitical-driven price increases and, thus, higher inflation and interest rates.
With jobs data due out on Thursday and PCE and income/spending due out on Friday, this is the sort of uncertainty that rightfully worries investors.
continued for members… (more…)
Futures have regained about 30 points after last week’s drubbing.
continued for members… (more…)
Futures tanked overnight on news of Israel’s rocket attack on Iran, only to recover all their losses as we go to press. The latest retaliation is being characterized as a tit for tat.
But it’s easy to imagine the Plunge Protection Team working overtime to calm markets by hammering VIX and WTI back down from their overnight highs.
Meanwhile, SPX came within 1.89 of our 5,000 target yesterday, testing support that continues to be quite important.
continued for members…. (more…)
Stocks are approaching an important inflection point at SPX 5000.
Not only is it an important round number, but SPX 5000 is the bottom of the rising white channel and the target of the H&S Pattern we identified last week.
continued for members… (more…)
Gold and silver both came within 1% of our upside targets for them earlier this week. With inflationary pressures once again top of mind, have they exhausted their upside potential? We’ll update our long-term forecasts this morning.
continued for members… (more…)
