The De Facto Shutdown

Companies and individuals alike are cutting back their activities as the omicron outbreak continues to accelerate. Many companies, short of employees, supplies, or customers are raising pay, trimming back hours or cutting product offerings in order to stay afloat. Individuals are cutting back their activities in order to stay healthy. Though not official, the shutdown … continue reading →

Inflation Coming Home to Roost

We’ve been writing about the current inflation problem for years.  In December 2019 for instance [see: Inflation Games], we noted that CPI was about to top 2% again and that this realization had prompted the Fed’s shift from a 2% target to a range in excess of 2% to make up for past shortfalls. Without … continue reading →

No More Free Lunch

The Fed’s experiment of pouring trillions of dollars into the markets is coming to an inglorious end. Even though an accelerated taper will still results in hundreds of billions in additional liquidity over the next several months, the writing is on the wall. Allianz Chief Economic Advisor Mohamed El-Erian said it well yesterday on CBS’ … continue reading →

Inflation Highest in Nearly 40 Years

At 6.81%, headline inflation is now the highest it has been since March 1982 (6.78%.)  Originally driven by sharply rising oil and gas prices… …it is now broad-based and anything but transitory, with medical commodities the only category below the Fed’s original 2% target. Algos responded with the usual VIX smackdown which, not surprisingly, began … continue reading →

The House That Jay Built

You know things are getting real when ES closes below its 50-day moving average.  It has bounced at that support 9 times in the past year. When the 50-DMA fails, the 100-DMA has provided support 6 times since Jun 2020. With ES closing below its 50-DMA yesterday and likely to reach its 100-DMA today, is … continue reading →

Charts I’m Watching: Dec 1, 2021

The algos have been busy overnight again, driving futures up 50+ points as we head into the open. Omicron shutdowns, botched responses and Powell’s admission that the Fed might accelerate the taper seem to have been forgotten. ES came close to our next downside target, but whiffed. Is the correction over? continued for members… … continue reading →

The Japanification of the US Markets

If you blinked, you might have missed the S&P 500’s 1.1% plunge last Wednesday… …following the highest CPI print since 1990.The print was followed two days later by the lowest consumer sentiment reading in 10 years, a result driven primarily by…wait for it…inflation fears.  Stocks actually rose on the day.Until a few months ago, the … continue reading →

CPI: Out of Control

CPI soared to 6.24% YoY in October, well above the 5.9% expected and the highest since Nov 1990. The MoM print of 0.9% and the Core CPI print of 4.2% also came in hotter than expected and set multiyear records. Put simply, the Fed has lost control.As we’ve discussed, inflation continues to become more broad-based … continue reading →