pebblewriter

Tag: FOMC

  • Charts I’m Watching: Dec 11, 2023

    Futures are essentially flat ahead of tomorrow’s important CPI print.

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  • VIX: “Don’t Worry About It”

    Despite a much hotter than expected NFP print, VIX’s convenient collapse… …has once again convinced investors algos that there’s nothing to worry about. The 20-pt drop in futures following the print was erased within minutes.

    It’s all in keeping with our year-end forecast, which remains unchanged.

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  • Update on Oil and Gas: Dec 7, 2023

    Algos popped in the past hour on a larger than expected increase in initial jobless claims with the more important NFP due out tomorrow.

    But, the more dramatic move has been in oil, with CL reaching our next downside target and RB well on its way to its own.

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  • Update on Gold & Silver: Dec 5, 2023

    As noted yesterday, gold and silver reached our target ranges from mid-October.  GC came up slightly short of its target from Oct 18 [see: Mideast Worries Mount]…

    …before being aggressively hammered.

    Silver nailed its target very precisely before meeting a similar fate. We’re faced with the usual questions after targets are reached: Was that it? Is it over? What’s next?

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  • PCE Just High Enough

    Official core PCE came in at 3.5% YoY (0.2% MoM) which was high enough to knock fuutres off their overnight highs but not enough to drive VIX above its 10-day moving average.

    We pay a lot of attention to VIX as it’s perhaps the most important daily driver of algo behaviour. After poking up above its SMA10 in October for all of nine sessions, it has now spent an entire month ducking below it – stymieing any equity pullbacks…until now.

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  • Charts I’m Watching: Nov 29, 2023

    Futures are up sharply in advance of the open after a $10 billion GM share repurchase announcement and a GDP revision that did nothing to dissuade algos from the notion that the Fed will soon be cutting rates VIX is plumbing new lows.

    The market is rapidly running out of room for a pullback/backtest of any consequence before the end of the year.

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  • Charts I’m Watching: Nov 16, 2023

    Futures have been pegged at the same breakout level for the past 48 hours now…

    …as WTI has now reached our 74.25 target from August.

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  • October CPI Unchanged

    October CPI came in unchanged following a 0.4% increase in September. For the year, CPI dropped to 3.2% from 3.7% in September. Core came in at 4.0% YoY and 0.2% MoM.

    Futures soared on the print.

    As we have anticipated for the past several months, it was a sharp drop in gas prices which produced the equity-friendly print.  From CPI Continues Falling on July 12:

    As we discussed last month, the benefit from YoY price declines in oil/gas has maxed out unless prices continue to fall. In other words, central bankers might need to drive oil/gas prices even lower.

    From June’s No Surprise:

    It’s important to note that oil/gas mustn’t rally any further. If gas were to level out at current levels, the strong positive correlation between YoY gas prices and CPI indicate that inflation would be on the rise from now through the end of the year.

    And, Powell: Inflation Not Over:

    … there is little chance of inflation not bouncing back up unless oil and gas prices collapse from current levels.

    The breakout in July following OPEC’s production cut was followed by an incredible increase in geopolitical risks related to the Israel-Hamas war. Yet oil and gas prices are lower than they have been in almost two years.

    It might not be a big enough drop to help Americans forget the 6.7% annual increase in shelter expenses. But, it’s certainly enough to break stocks out of their latest swoon.

    Mission accomplished.

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  • All Eyes on CPI

    This is one of the biggest weeks for economic data in quite some time. We get October CPI tomorrow, PPI and retail sales on Wednesday, initial claims on Thursday, and housing starts and permits on Friday.  Of all these data, CPI looms largest for the markets.

    Recall that September core CPI came in at 4.1% YoY, with shelter (+7.2% YoY) accounting for over 70% of the increase. With the recent sharp drop in mortgage rates, shelter could remain stubbornly high, complicating the Fed’s inflation fighting efforts and thus paring the market’s optimism.

    Futures are off moderately in advance of tomorrow’s data after nailing our channel top target.

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  • FOMC Decision: Nov 1, 2023

    Futures have bounced back from moderate overnight losses in advance of this afternoon’s FOMC decision.

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