December PCE data was in line with expectations at 0.3% MoM and 2.6% YoY (2.85% for core PCE.) While personal income increased by 0.4% MoM, spending increased by 0.7%.

The algos took the data in stride, slipping only slightly on the print.

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Powell’s comments were somewhat hawkish, but the algos swept in and crushed the initial pop in volatility, driving VIX back below its 200-day moving average……in order to preserve a gain, which prevailed overnight.

A 32% plunge in VIX to preserve an 8-pt gain in SPX? Sure, why not. It’s the end of the month and we have poll numbers to prop up.

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Futures are off modestly as investors await the latest FOMC economic assessment and interest rate policy.

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Amidst all the carnage in the tech sector yesterday, one observation bears repeating: the charts were quite accurate when, on December 26 [see: Update on COMP], we noted that COMP had reached important overhead resistance.

Even though COMP hasn’t broken free from a very bearish chart pattern, SPX retreated only to exactly where we expected – a textbook backtest of the channel it broke out of.

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Chinese AI startup DeepSeek launched in December, reportedly developed in two months at a cost of under $6 million. This raises big questions about the return on investment for the billions which US companies have sunk into AI.

The US market, priced to perfection last week, is reconsidering those valuations with NVDA alone off almost 12%. The pullback we were expecting has been exceeded by quite a bit.

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Trump’s speech to the Davos crowd yesterday helped elucidate his plan for getting interest rates back down: demand that the Saudis lower oil prices and then “demand that interest rates drop immediately.”

It’s hard to imagine that Trump hasn’t already had this conversation with the Saudis in private, as oil has indeed dropped over the past 10 days. Interest rates, however, are higher for the third day in a row – which makes next week’s FOMC meeting all the more important.

Futures seem uncertain as to how all this will proceed.

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Futures are off slightly on AAPL weakness and rising interest rates.

It seems that BlackRock’s Larry Fink agrees that interest rates are at risk of going significantly higher. This, in addition to Jamie Dimon’s statement that the stock market it kind of inflated, could weigh on investors as SPX tries for new highs.

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Futures are up moderately after breaking out of a falling white channel that originally suggeted more downside.

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Futures are up modestly, tagging the top of our falling white channel…again.

The executive orders announced yesterday might stimulate additional animal spirits, but it’s difficult to believe that any tangible benefits will offset the economic expense of higher inflation driven by higher tariffs and deportations.

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