Futures are drifting higher as we approach the open, mostly on year-end positioning.
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Posts
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John Williams: “Not so Fast”
If Jay Powell’s comments were intended to spur the market to new highs, NY Fed President John Williams’ were intended to slow the roll. On CNBC this morning:
“We aren’t really talking about rate cuts right now…we’re very focused on the question in front of us, which as chair Powell said… is, have we gotten monetary policy to sufficiently restrictive stance in order to ensure the inflation comes back down to 2%? That’s the question in front of us.”
Futures were not amused, dropping from slightly higher to slightly lower as he spoke even though today is OPEX [see: Does OPEX Matter? (which desperately needs updating)].
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Powell: “Buy Stocks and Bonds”
Okay, he didn’t actually say that. But, he might as well have. His latest press conference was completely devoid of any hawkish sentiment. Not only did SPX shoot up past our year-end target…
…the 10Y plunged to our downside target.
The message was clear. Interest rates are coming down and the Fed’s third mandate (higher stock prices) is officially in play, with all-time highs are right around the corner. But, are they?We don’t wish to sound negative, so we’ll let Goldman Sachs’ 2024 Equity Outlook do it for us. Stocks might be near record highs, but it’s really just the magnificent 7 which are reaching rarified air. The rest…not so much.
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FOMC Decision: Dec 13, 2023
With CPI notching only slightly higher than expected yesterday and PPI coming in plenty low (0.0% MoM, 0.9% YoY) the FOMC will have a difficult time convincing algos that there isn’t a rate cut coming in the spring.
Futures continued their meltup…
…driven largely by VIX’s repeated meltdown.
Ramp it up overnight so you can hammer it just prior to the opening the next morning. Works every time…
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CPI Ticks Higher
CPI came in slightly hotter than expected at 0.1% versus 0.0% expected and prior (annual 3.1% vs 3.1%.) Core was 4.0% (unchanged) but 0.3% monthly versus 0.2% prior and 0.0% expected.) Core goods actually fell 0.3% while much stickier services rose a blistering 0.5%. This is all a bit of a disappointment for the rate cut crowd.
Futures are off slightly.
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Charts I’m Watching: Dec 11, 2023
Futures are essentially flat ahead of tomorrow’s important CPI print.
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VIX: “Don’t Worry About It”
Despite a much hotter than expected NFP print, VIX’s convenient collapse…
…has once again convinced investorsalgos that there’s nothing to worry about. The 20-pt drop in futures following the print was erased within minutes.
It’s all in keeping with our year-end forecast, which remains unchanged.continued for members... (more…)
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Update on Oil and Gas: Dec 7, 2023
Algos popped in the past hour on a larger than expected increase in initial jobless claims with the more important NFP due out tomorrow.
But, the more dramatic move has been in oil, with CL reaching our next downside target and RB well on its way to its own.
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Christmas Comes Early
Futures continue to be supported above their 10-day moving average by a combination of algo factors led by VIX. The Christmas meltup came early this year and, so far, shows no signs of letting up.
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Update on Gold & Silver: Dec 5, 2023
As noted yesterday, gold and silver reached our target ranges from mid-October. GC came up slightly short of its target from Oct 18 [see: Mideast Worries Mount]…
…before being aggressively hammered.
Silver nailed its target very precisely before meeting a similar fate. 
We’re faced with the usual questions after targets are reached: Was that it? Is it over? What’s next?continued for members… (more…)
