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 →

Update on USDJPY: Mar 14, 2022

USDJPY reached our 118 target overnight. We charted this target over a year ago [see: USDJPY’s Turn] following USDJPY’s breakout from the falling purple channel [see: The Usual Suspects], reasoning that the Bank of Japan would ramp up the yen carry trade in order to support the Nikkei’s breakout. The BoJ rarely disappoints, and they … continue reading →

Bullard Speaks

In a CNBC interview this morning, Fed President Jim Bullard said “Our credibility is on the line here…”  Anyone paying any attention to the Fed knows that that ship sailed a long time ago. Futures have been all over the map, down as many as 55 points before VIX was hammered following a false news … continue reading →

Charts I’m Watching: Feb 11, 2022

This is all it took to get FOMC members to walk back Bullard’s hawkish comments. Note the tiny channel breakdown. Terrifying enough to keep QE going and to respond to the worst inflation in 40 years with a mere 25 bps rate hike a month from now? Apparently.How else can you explain this insanity? If … continue reading →

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 →