Futures are off modestly after a more hawkish Q&A with Powell than many expected. ES came within a few points of the 50-day yesterday. Based on the overnight action, it should reach our next downside target with ease.
It didn’t help that unit labor costs shot up 6.3% for April versus the 3.3% prior and 3.6% consensus. Perhaps the three rate cuts the market has been pricing in by year end don’t constitute such a great forecast.
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Futures are essentially flat ahead of today’s pivotal FOMC decision and press conference. This follows a day that saw stock prices plunge below our initial backtest target…
…as VIX actually broke out – at least for a few hours. 
The banking crisis obviously hasn’t gone away. How many more First Republics or Silicon Valley banks are out there – clicks away from a bank run? Even those banks which aren’t already in trouble will most certainly cut back on lending, which will certainly raise the odds of a (worse) recession.
Will the FOMC take that into account as they contemplate future actions?
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Futures are off modestly in the run-up to tomorrow’s FOMC decision.
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After establishing a well-formed falling channel and positioning for a bearish 10/20 cross, SPX soared last week on – what else? – another collapse in VIX.
In the process, the 10/20 cross was (at least) delayed and the channel busted. It’s normal activity for the lead up to a Fed meeting. Perhaps “price discovery” should be renamed “price setting.”
Perhaps we shouldn’t be surprised to see similar goings on in other “markets” such as silver.
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Yes, it was way overdone. And, yes, it was the VIX action we had highlighted. Specifically, it was VIX’s 16% “breakdown” from Tuesday’s highs that sent the algos into a frenzy.
Unfortunately for the bulls, ES was driven right into overhead resistance.
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GDP increased at an annual rate of 1.1% versus expectations of over 2% and Q4’s 2.6%, fueling both recession fears and expectations that the Fed will soon halt rate hikes after next week’s 25 bps increase.
Futures dipped on the news but have since rebounded as the usual VIX smackdown convinced algos to look on the bright side.
For now, algos are ignoring the hotter Q1 PCE data embedded in the GDP print.
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There’s something in March’s durable orders report for both bulls and bears. The 3.2% topline number was wildly better than the 0.7% expected and -1.2% previous. But, it was driven primarily by large Boeing orders.
Non-defense capital goods excluding aircraft, a proxy for business spending plans, dropped 0.4%. And core shipping logged another 0.4% drop.
Stocks were little phased, as they’re still marching to VIX’s drumbeat. But, the 2Y is back below 4% as First Republic reminds us that the banking crisis has not gone away.
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Futures are off 20 points this morning as signs of a continuing banking crisis combine with debt ceiling jitters and mixed earnings to ramp up investor concerns. 
You wouldn’t know it from VIX futures, however, which remain locked in a narrow range of complacency.
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Futures are flat this morning after climbing back from a 20-pt overnight deficit. With scores of companies due to report earnings this week, we should be in for a wild ride.
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Futures are flat after being off modestly overnight. The action over the past few days, however, point to more losses once we’re past OPEX.
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