pebblewriter

Tag: Dollar

  • New Highs for CPI

    CPI reached a new cycle high in June: 9.1% versus expectations of 8.8%. This is the highest print since November 1981. Core came in at 5.9%. Monthly prints were 1.3% headline and 0.7% core.

    The recent decline in oil and gas prices – although substantial – came too late to help mitigate June inflation. The Jun YoY price increase in gas remained strong at 60.73% – among the highest readings recorded in recent years.Futures are dumping on the news, as it clearly takes smaller Fed rate hikes off the table. VIX is even forgoing its usual pre-market dump and breaking out instead.Our analog remains on track.

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  • That Sinking Feeling

    As anyone on a budget could tell you, the headline of this post is hardly news. Income isn’t keeping up with expenses, and isn’t likely to any time soon.

    The Fed might prefer PCE over CPI because it ignores food and gas prices. But, it’s those very categories which are making it difficult for the average family to make ends meet.

    Futures were already off by 1.25% before the data hit the wires. Our analog, still on track, suggests the decline is going to accelerate in the coming weeks.

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  • Q1 GDP Slumps Further

    Stocks are essentially flat following a slight downward revision in Q1 GDP from -1.5% to -1.6% and export numbers which are truly circling the drain.

    The disappointing data came on the heels of the worst consumer confidence reading since Feb 2021 and three (so far) Fed presidents advocating a 75 bps rate hike in July.

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  • But It Looks Like a Rally…

    Following a series of intraday ramps, futures shot up above the 10-day moving average as soon as the market closed. Bogus? Of course. But, the record will reflect (and the algos have responded to) a seemingly bullish move. Chase it at your own peril.

    Today’s tricks will include trying to get past the 10am New Home Sales and Michigan Consumer Sentiment data.

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  • Update on Bitcoin: Jun 21, 2022

    My apologies for today’s post being so late. Our webhosting company just now fixed the “network connectivity problem in one of [their] clusters.”  I’d be very upset about it except for the fact that this is the very first time in over two years that they’ve ever let me down. This post will be a retrospective instead of a look ahead at today’s session.

    Bitcoin reached our next downside target over the weekend: the dual Fibonacci targets of 17,611/17,692. Like everything else over the holiday weekend, it bounced pretty strongly. And, just like everything else, it won’t last. As we detailed in our last BTC update [see: Bitcoin’s Meltdown] there is substantially more downside ahead.

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  • It’s Currencies’ Turn

    USDJPY finally tagged our 132.22 target overnight… …a target we set over six months ago [see: Update on Currencies Nov 17, 2021]:Ordinarily, this might be a good thing for stocks. Not this time, as it echos the dollar’s strength against the euro.

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  • Analog in Play

    Futures are all over the map this morning, with the overnight losses largely erased at one point.

    The key, though, is that SPX bounced back above a key Fib level after tagging its 20% target last week. Although it’s still early stages, our analog is in play.

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  • A Swing and a Miss

    ES spent 11 hours hanging around our next downside target yesterday.  While the session had many characteristics of capitulation, the fact that SPX didn’t quite reach significant support (3956) suggests that the overnight ramp is a head fake.continued for members… (more…)

  • Nobody Saw it Coming

    The financial press usually starts to take things seriously about this point in a correction. The permabulls aren’t calling bottoms any more, while the bears are licking their chops. It never fails, someone on TV says something like “no one saw this coming.”

    It’s silly, of course. What they mean is that they didn’t see it coming. Plenty of others did. Some, like us, saw it months ago. This was our Jan 3, 2022 ES chart, illustrating the downside case.

    We reiterated the target, called the bounce over, and nailed down the timeline in late March.

    Now, as we finally approach ES 3997, it seems that more and more mainstream bulls and trend followers are getting bearish (better late than never.)The risk, of course, is that excessively bearish sentiment would stoke another bounce and postpone the 3997 tag. VIX has some thoughts about that.

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  • A Failure to Communicate

    Remember that scene in Cool Hand Luke where Paul Newman mouths off to the Captain after a failed escape attempt? He doesn’t initially appreciate the gravity of his situation. He is soon reminded.

    That’s what yesterday’s post-Fed presser felt like. Powell was trying to convey the sense that the Fed means business. It is going to get serious about escaping the inflationary mess it has stepped in.

    The market (well, the algos) didn’t hear that. They heard Powell say exactly what they expected and, spurred on by the huge bets lined up on the bearish side of the ledger, decided to mouth off.

    Clearly, they don’t appreciate the gravity of the situation, as we were reminded by this morning’s labor productivity report – the worst in 75 years.

    We would do well to remember that we’ve had these moments of euphoria before. The carefully curated decline which began in late March…

    …has seen more than a few deviations of late.

    But, facts are still facts. Inflation – especially very sticky labor costs – is still a problem, and the Fed waited so long that they now have no choice but to tighten into a recession. There was a time when they could have engineered a soft landing. But, that opportunity was, dare we say, transitory.

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