When uber-dove Jim Bullard says it, you start to pay attention. Joining the chorus of Fed presidents calling for a tapering and subsequent rate hike, Bullard said “We will be able to get to a good consensus on the committee and get to a good wind-down process. It does seem that we are coalescing around a plan” to taper the $120 billion monthly purchases.

Bullard went on to rising inflation which exceeded the Fed’s expectations (but no one else’s) and even commented on potential asset bubbles in the housing market, referencing the Fed’s policy mistakes in 2005-2006 which made the GFC possible.

The market reacted by shedding 8 points, half of which it promptly regained.

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Yesterday’s meltup, like most Mondays, had a very clear objective: reach new highs and protect them at all costs. It’s also a pattern typical of most weeks during which a Fed meeting (e.g. Jackson Hole) is scheduled.

The mechanics of achieving this objective haven’t changed in the past 10 years: crush volatility, ramp oil futures, devalue the yen, etc. The ease and frequency with which they’re employed, however, is nothing short of astonishing.

This time, they didn’t even wait until ES had reached its 50-DMA. It makes you wonder: what are they so afraid of? Is the market otherwise so fragile that it needs constant manipulation in order not to crash?

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Futures are off moderately this morning, failing to hold the SMA10 overnight after testing the SMA20 on its way to a lower low during yesterday’s session.

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Futures are off this morning on concerns regarding a potential taper, the delta variant, and the disastrous pullout from Afghanistan.

Our targets remain the same across the board.

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The VIX meltdown / ES meltup continues.

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