pebblewriter

Year: 2024

  • Powell Shows His Stripes

    In a speech that was essentially a mashup of all his other recent speeches, Powell reiterated at Jackson Hole on Friday that the pandemic – not historically dovish monetary policy – caused the recent huge spike in inflation. In fact, the Fed should be congratulated for putting out the inflationary fire that they started.

    He did mention by way of a little joke that the Fed’s assessment of inflation being transitory was wrong, but that the Fed had plenty of company. Essentially, no harm, no foul.

    Now, the Fed is apparently ready to lower interest rates. This view will ideally be underscored by Friday’s core PCE print. The market expects it and, in fact, needs it. But, anything more than 50 bps could be seen as the Fed panicking and could unravel the current rally as it stumbles merrily along.

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  • What Are They Thinking?

    For anyone expecting Powell & Co. to spill this morning on the extent and pace of future rate cuts, don’t hold your breath. Since assuming the chair four years ago, Powell has become increasingly adept at avoiding any substantive revelations.

    Of course, sometimes investors draw their own conclusions, which can make for interesting trading sessions. Yesterday, for instance, SPX tumbled nearly 1% as algos consolidated recent gains. This morning, those same algos have recovered 2/3 of those losses as they position for any Jackson Hole surprises.

    No one know exactly what Powell will say or what the Fed will do over the next several months. Though, we know what they should do given the inflation surprises ahead. continued for members…

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  • Charts I’m Watching: Aug 22, 2024

    Futures are up moderately, tagging our .886 Fib target well ahead of schedule in anticipation of Jackson Hole Fedspeak which confirms the market’s rate cut expectations.

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  • Charts I’m Watching: Aug 21, 2024

    Futures are up moderately ahead of FOMC minutes and mortgage applications.

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  • Update on Gold and Silver: Aug 20, 2024

    In our last dedicated Update on Gold and Silver in April, we noted that gold had reached our Fibonacci target of 2466.50 but could have further to go.

    GC is fairly straightforward. There’s a large IH&S pattern which completed around Mar 7 targeting 2557, a short distance above the white 1.618 at 2466.50.

    GC reached 2557 this morning.

    It’s interesting that it’s reaching overhead resistance at the same time as SPX and at the same time that DXY has reached our next downside target.

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  • Jackson Hole’s Clues

    The Fed’s annual symposium in Jackson Hole, Wyoming is historically an excellent opportunity to suss out the Fed’s thinking on next steps. While investors agree that a cut is coming in September, there is some divergence on how big a cut and what to expect over the balance of the year.

    Futures are generally flat as we approach a week full of potentially important Fedspeak.

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  • Charts I’m Watching: Aug 16, 2024

    Futures are off moderately after weaker than expected housing data and in anticipation of next week’s Jackson Hole Fedspeak.

    ES reached our next upside target a little ahead of schedule, and is now backtesting the purple TL from recent lows.

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  • Retail Sales Argue for Soft Landing

    In the Goldilocks version of the economy, the Fed is nervous enough about a recession that they cut interest rates in spite of data that isn’t so terribly concerning. That’s what we’re seeing this morning, with retail sales coming in at +1.0% versus +0.4% expected but yet another negative Phiidelphia Fed index. The algos are quite happy, with ES popping up past our 5491.50 target and our next higher target in sight.

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  • CPI on Track

    CPI came in on target, supporting the notion of a September rate cut. Equities are responding as expected.

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  • PPI Continues its Decline

    July YoY PPI fell to 2.2%, below estimates of 2.3%. MoM, the index increased by 0.1% versus estimates of 0.2%. Futures responded positively to the lower than expected inflation print and are up over 0.5% ahead of the open.

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