pebblewriter

Tag: cpi

  • Charts I’m Watching: Oct 9, 2024

    Futures are flat ahead of tomorrow’s CPI print.

    Yesterday’s price action put ES in the most ambiguous position possible: poised for a reversal or a breakout.

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  • Mind the Gap

    Futures are flat this morning following unemployment data that supports the widely held expectation of a rate cut when the FOMC meets Sep 17-18.

    The algos are presently concerned with the yield curve, which continues to warn of further downside, tomorrow’s jobs report, and a pesky gap which refuses to be ignored.

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  • Update on Oil & Gas: Sep 4, 2024

    Oil and gas futures have both tagged our next downside targets from June [see: Update on Oil & Gas, June 6, 2024.].

    We’ll take a look at the road ahead and what it means for the equity and bond markets.

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  • Powell Shows His Stripes

    In a speech that was essentially a mashup of all his other recent speeches, Powell reiterated at Jackson Hole on Friday that the pandemic – not historically dovish monetary policy – caused the recent huge spike in inflation. In fact, the Fed should be congratulated for putting out the inflationary fire that they started.

    He did mention by way of a little joke that the Fed’s assessment of inflation being transitory was wrong, but that the Fed had plenty of company. Essentially, no harm, no foul.

    Now, the Fed is apparently ready to lower interest rates. This view will ideally be underscored by Friday’s core PCE print. The market expects it and, in fact, needs it. But, anything more than 50 bps could be seen as the Fed panicking and could unravel the current rally as it stumbles merrily along.

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  • Update on Gold and Silver: Aug 20, 2024

    In our last dedicated Update on Gold and Silver in April, we noted that gold had reached our Fibonacci target of 2466.50 but could have further to go.

    GC is fairly straightforward. There’s a large IH&S pattern which completed around Mar 7 targeting 2557, a short distance above the white 1.618 at 2466.50.

    GC reached 2557 this morning.

    It’s interesting that it’s reaching overhead resistance at the same time as SPX and at the same time that DXY has reached our next downside target.

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  • Update on RUT: Jul 23, 2024

    A lot has happened for RUT in the past week. It was only 11 days ago that we updated its chart, suggesting RUT would reach 2282 by the end of the year.

    RUT’s reversal at its .618 in April set up either a Gartley or Bat pattern, meaning a move to its .786 at 2282.27 or its .886 at 2364.78.  If we extend the dashed red trend line to the right, we get an intersection with the .786 at the end of the year – a very common scenario. While the .786 in December is a logical next target, an equally compelling case can be made for the .886 in September or October.

    Don’t look now, but RUT pushed past the red TL we discussed, allowing RUT to tag 2282 (well, 2278) late last week.

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  • Charts I’m Watching: Apr 9, 2024

    Futures are moderately higher on the eve of the CPI print that will likely determine the rate cut picture for the next few months.

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  • Charts I’m Watching: Apr 8, 2024

    Futures are up modestly as traders look ahead to this week’s important data dumps: FOMC minutes and CPI on Wednesday, initial claims and PPI on Thursday, and Friday’s U of Michigan consumer sentiment.

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  • Hey Fed: You Break It, You Fix It

    In his January press conference, Fed Chief Jay Powell accepted some responsibility for the sharp rise in housing prices during the pandemic.

    “We’re also well aware that when we cut rates at the beginning of the pandemic, for example, the … housing industry was helped more than any other industry.”

    This statement implies that, were it not for the pandemic, the current inflation picture wouldn’t be burdened by sticky, elevated housing prices. But, that’s just not true. The problem developed long before anyone heard of COVID-19. During both the 2000-2003 recession and (especially) the 2007-2009 recession, the Fed slashed interest rates in order to save the housing market from steep price slumps. The Fed’s belief that it could eliminate the natural cycles which have always existed in our economy ultimately led to even worse fluctuations. The current housing crisis was brought on by fifteen years of historically low interest rates – not just the pandemic rescue.

    Now, the Fed says they don’t have the tools to fix the problem they created. That much is probably true. Runaway prices usually require a recession to bring them back to trend. But, the least the Fed could do is own up to the problem that they themselves created.

    Futures are off moderately, testing the 10-DMA as we approach the open. But, of course, VIX hasn’t been hammered back below its 200-DMA yet.

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  • CPI Hotter Than Expected

    February headline CPI came in at 0.4% versus 0.3% expected (and January.) Core CPI registered a 0.4% rise versus .03% forecast and 0.4% prior. YoY, headline was up 3.15%, up from 3.09% in January and a slight beat of the 3.1% expected, while core rose 3.8%, down from 3.9% in January.

    Shelter and gas price increases were responsible for 60% of the rise in February.

    This is in keeping with our Gas v CPI model which shows a slight uptick in MoM pricing in the midst of a YoY decline.

    The short-volatility algos were busy this morning, with VIX diving more than 5% in minutes to back below the 200-DMA.

    Futures, which might have been expected to tumble on the expectation of further delays to FOMC rate cuts, rallied instead. continued for members… (more…)