pebblewriter

Tag: economics

  • Jawboning an OPEX Rally

    Yesterday’s 1.2% spurt higher was driven not only by the usual push in USDJPY and plunge in VIX, but a healthy dose of hopium regarding the debt ceiling crisis. Congressional and White House reps were nearly unanimous in declaring that a deal is as good as done.

    Whether they’re speaking the truth or simply trying to avoid a market meltdown a la 2011 remains to be seen. Both SPX and ES saw a bullish 10/20 cross, but it could unwind if ES closes back below the former resistance at 4166. Keep on eye on the ever proficuous VIX, which usually triggers algos to buy any significant dips by breaking below support such as the purple channel bottom below.

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  • End of the Line?

    The market has frustrated both bulls and bears lately, vacillating between sharp downturns and even sharper recoveries. But, a close examination of the charts shows two very obvious patterns that suggest the tide is about to turn – not in a good way.

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  • FOMC Day: May 3, 2023

    Futures are essentially flat ahead of today’s pivotal FOMC decision and press conference.  This follows a day that saw stock prices plunge below our initial backtest target……as VIX actually broke out – at least for a few hours. The banking crisis obviously hasn’t gone away. How many more First Republics or Silicon Valley banks are out there – clicks away from a bank run? Even those banks which aren’t already in trouble will most certainly cut back on lending, which will certainly raise the odds of a (worse) recession.

    Will the FOMC take that into account as they contemplate future actions?

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  • Earnings Suddenly Matter

    Futures are off about 30 points on disappointing earnings from stocks such as TSLA, AXP, KEY, etc. and a continuing slump in oil and gas.

    VIX is even popping as we approach the open. If it holds, the rollover in equities will have officially begun.

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  • Algos Take Charge

    ES is up 1.3% in the past week. All it took was a 15% beatdown in VIX.

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  • PPI Echoes CPI

    After closing below its 10-day SMA for the first time in a month, ES is backtesting it……on the back of PPI data that essentially echoed yesterday’s CPI print. Headline PPI crashed to 2.7% YoY and -0.5% MoM. Though stripping out food and energy, core PPI fell only 0.1% MoM and increased 3.4% YoY.

    As we discussed yesterday, 80% of the MoM decline was due to the sharp drop in gasoline prices.

    Also out this morning, credit portfolio managers agree with the Fed’s assessment that the economy is headed for recession. It’s a troubling backdrop as we enter earnings season in the midst of a credit crunch.

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  • Jobless Claims Pile On

    Job cuts rose to 228K (vs 200K expected) last week. It will officially register as a drop, however, as the previous week was revised from 198K to 246K.  When viewed through the prism of new highs in bankruptcies and an earnings implosion… …it’s not too surprising that futures are drifting lower. continued for members… (more…)

  • On the Brink

    While the investing world argues whether the FOMC will or should raise rates a whopping 25 bps, the bond market is sending a strong message that markets are on the brink of a significant move.Futures, drawn higher by the usual pre-meeting meltup, are oblivious.

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  • Powell’s Testimony

    Bottom line, a 50 bps rate hike is back on the table. We got the backtest we expected, and even a little bit more. This morning’s ADP employment report further underscores the need to put the brakes on the economy. It will be interesting to see whether Powell’s tone becomes any less hawkish in light of yesterday’s sell off.

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  • The Big Picture: Feb 27, 2023

    Last week completed the backtests we’d been expecting, with ES, SPX, COMP, DJIA and NKD all holding important technical support.While the fundamental picture might not justify these prices, the algos are satisfied. And, until price discovery reemerges (if it does), the algos are all that matter.

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