Powell spoke, and the algos weren’t too happy with what they heard:
“We are attentive to recent data showing the resilience of economic growth and demand for labor. Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy.”
Stocks tumbled again, closing in on our next downside target from last week.
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Futures have bounced back from overnight lows in advance of Jay Powell’s comments at 12pm ET at the Economic Club of NY.
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Escalating carnage in the Middle East points to a protracted and increasingly complex set of circumstances for markets, with oil prices and currencies confused as to how to respond. Futures are off moderately this morning, supporting our notion that a 200-DMA tag is still in the cards.
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Futures are off moderately, backtesting the recently broken channel after much stronger than expected retail sales.
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Futures are up moderately, running into their own channel top following VIX’s recent retreat from resistance, 
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Futures are up modestly following establishment of a new rising channel.
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September CPI came in higher than expected, at 0.4% MoM and 3.7% YoY versus estimates of 0.3% and 3.6%. Core CPI (less food and energy) remained elevated at 4.1%.
The details reveal continuing challenges with shelter, food and energy.
While the YoY print has trended lower… 
…the last two monthly prints suggest that inflation might be leveling out at elevated levels.
Bottom line, the YoY trend is of little benefit to consumers who are tapped out, with depleted savings and higher expenses including the resumption of student loan payments. We don’t see a significant drop in CPI in the months ahead unless oil/gas prices collapse – a scenario that seems unlikely given recent events in the Middle East.
Futures have lost most of their overnight ramp and are almost back to flat.
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September PPI came in at 0.5% versus 0.3% expectations, briefly driving down futures prices…until VIX was hammered back down. Its 200-day moving average continues to be the critical threshold for algos.
It remains to be seen whether tomorrow’s CPI print can also be ignored.
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Futures are up slightly as the bond market reopens and attempts to take stock of the geopolitical situation in the Middle East.
Meanwhile, ES is making an important backtest.
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Equity markets are tumbling following the Hamas attack on Israel this weekend. This comes on the heels of a strong surge off 200-day averages on Friday amid what had been a selloff in oil and gas.
So far, the surge in oil/gas has been held to less than 4%. But, it’s not difficult to imagine the conflict drawing in additional MENA players and unleashing much higher oil prices.
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