Oil: Back in the Groove

WTI spent May 2020 through Feb 2022 in a fairly well-defined channel (below, in white) as it recovered from its pandemic lows. It broke out on Mar 1, however, topping 100 and taking only 5 sessions to reach our 130 target which wasn’t schedule to happen until December.Since then, it’s seen a series of fits … continue reading →

The Reflation Trade

Remember how excited the bulls were about the reflation trade? Higher interest rates meant the economy was reopening at a good clip. What could be better than that? Things look a little different from the perspective of 3%+, don’t they? Nothing alarming here… Remember, it’s not the inversions that bite, but the spikes higher which … continue reading →

PPI: Record Highs

Headline PPI reached record highs in February, coming in at 10.0% YoY. Under the hood, prices for unfinished goods registered 14.6%, the highest since January 2001. Prices for processed goods jumped 23.3%. Prices increased across the board, with the largest gains in energy. Futures were flat going into the early morning VIX plunge, but gained … continue reading →

The Big Picture: Oct 27, 2021

Equity markets rarely fail to rally into the end of the year.  But, there have been several noteworthy Q4 exceptions over the years, each of them marked by VIX’s bounce off well-established trend lines. Note that SPX’s yellow channel has been rising at a compouned 12.2% per year since the 2009 bottom – historically a … continue reading →

COVID: Still With Us

Interesting piece in Reuters today on Japan’s vaccination efforts and the overwhelming level of infections in Osaka, Japan’s second largest city, only two months ahead of the Olympics. While many countries are making good progress with vaccinations, Japan – the 11th most populous country in the world – is lagging badly.  It’s not the only … continue reading →

USDJPY’s Turn

Members will recall that one critical component of our oil/gas decline scenario is USDJPY’s breakout from the falling channel from 2017 shown below.  Guess what? The yen carry trade is a tried and true method of goading the algos into buying equities – even overpriced ones. It works especially well as a counterweight to falling … continue reading →

CPI: MIA

Futures remained slightly lower following lower than expected initial claims (709K vs 740K consensus) and CPI – which came in at 1.2% annual and 0.0% for October.  Note that it took a plug number outlier +1.2% pop in electricity to keep CPI from going negative. One would think if the economy were really all that … continue reading →

Inflation Tops Estimates…Again

Let’s talk about inflation. At 0.4%, both headline and core handily beat consensus of 0.3% and 0.2%. Why? This morning’s CPI release is a treasure trove of information regarding price action in the general economy.  On an annual basis, energy tanked and food soared. MoM, food was still strong while energy and used cars soared … continue reading →