Futures are off sharply as we begin the new month amid renewed tariff uncertainty.

continued for members…

While ES already backtested its December highs, SPX never did.  If the SMA50s don’t hold, that’s the next important level of support.

It’s important to note the VX and VIX also disagree. VIX has backtested its SMA200, while VX has a ways to go.

Currencies are reversing last week’s moves, with DXY bouncing back above the TL it had broken below.

CL and RB are both up nicely…

…helping the 10Y to gap higher.

Keep an eye out for ISM manufacturing which comes out at 10am.

The drama around Lisa Cook’s membership on the Fed continues. Andrew Ross Sorkin summarized it well in a note:

…the fight between President Trump and Lisa Cook, the Fed governor. What many fail to recognize is that this isn’t just a skirmish over one person, but a broader effort to fundamentally reshape the central bank.

Trump said that he was seeking a “majority” on the Fed’s board. This suggests an explicit desire for more control over the central bank’s policy decisions than ever before. There may be an even bigger issue at play: The regional Fed presidents need to be reappointed in February, but if the president gains control of the Fed’s board, he could influence the selection of these regional leaders (who become rotating voting members every several years). That could install an entire generation of ideologically aligned policymakers.

Even many Trump fans think it would be dangerous to have the president in charge, ostensibly, of Fed policy. I agree wholeheartedly. Trump would obviously pressure interest rates lower, which would obviously increase inflation. While real estate magnates might benefit and the stock market would see short term gains, the overall economy would ultimately suffer. Period.