pebblewriter

Author: pebblewriter

  • Charts I’m Watching: May 15, 2023

    Futures are up modestly, but fading as the open approaches. In short, it’s just like every other open for the past week.

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  • End of the Line?

    The market has frustrated both bulls and bears lately, vacillating between sharp downturns and even sharper recoveries. But, a close examination of the charts shows two very obvious patterns that suggest the tide is about to turn – not in a good way.

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  • Bank Concerns Are Back

    After a brief respite, bank stocks are again under pressure with deposit flight and CDS both pointing to escalating concerns.

    Neither the April CPI nor PPI prints support the notion that the Fed will lower rates any time soon – keeping the pressure on banks and an economy that depends on easy access to cheap credit.

    Futures backed off the key 4166 threshold again yesterday, only to bounce back and test it again overnight.

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  • CPI on Target

    April CPI came in pretty much on target: 4.9% versus 5.0 in March and 0.4% for both headline and core MoM.  Futures are up sharply thanks to the usual VIX collapse.

    But, will it be enough to break the trend of reversing at 4166?

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  • Can We Trust It?

    Futures are down modestly, backtesting the SMA10 they soared above last week. Interestingly, though, the moving averages remain bearishly aligned.

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  • Charts I’m Watching: May 8, 2023

    Futures are slightly higher in the lead up to Wednesday’s CPI print.

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  • NFP Complicates Fed’s Plans

    The 253K increase in nonfarm payrolls handily topped the 180K consensus. Likewise, unemployment dipped to 3.4% versus expectations of 3.6% and average hourly earnings printed a 0.5% increase versus expectations of 0.3%.

    To be clear, this is not the kind of slowdown that would encourage a Fed pause or pivot. Yet, VIX has been hammered by 8.5% overnight, so futures are up over 30 points.

    At what point will the market begin to believe the Fed’s “higher for longer” forecasts?

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  • Aftermath

    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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  • FOMC Day: May 3, 2023

    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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  • FOMC on Deck

    Futures are off modestly in the run-up to tomorrow’s FOMC decision.

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