GDP Beats, But…

After the government “put $5 trillion into a $3 trillion hole,” as Ares Management’s Michael Arougheti so eloquently put it, GDP bounced back sharply last quarter. Unfortunately, it’s still down 2.9% for the year.Keep in mind that this is also the advance read for the third quarter, days before an important presidential election, and that … continue reading →

Rally Faces Another Test

Futures have given up all of Friday’s rebound gains and then some, again testing the IH&S neckline and the bottom of the rising white channel from last March. At the risk of sounding dramatic, a failure of the channel would mark the end of the current rally and usher in the correction suggested by our … continue reading →

Yield Curve Model: “Correction Imminent”

Our yield curve model is again sounding the alarm on overpriced equities. Unless the 10Y – which closed its June 8 gap this morning – declines sharply right away, the 2s10s spread signals a sharp equity correction.The bad news for equities? A sharp drop in the 10Y also portends a correction. continued for members… … continue reading →

Housing Boom: 2007 Redux

Single-family home starts continued to gain from rock bottom interest rates and the exodus from urban, multifamily housing amid the pandemic. September residential starts grew 1.9%, while permits rose 5.2%, the fastest since the 2007 peak. Single-family inventory dipped to 3.3 months, the smallest since 1963, while multifamily starts cratered by 16.3%. It was a … continue reading →

Retail Sales’ Last Hurrah?

September retail sales sharply beat estimates, coming in at +1.9% versus 0.8% expected. With enhanced unemployment and virtually all other stimulus having dried up, however, this could be retail’s last hurrah. But, it’s enough to boost stock prices on this OPEX Friday 2 1/2 weeks before a presidential election. continued for members… … continue reading →

The Pandemic’s Stark Reminder

Futures tagged our initial downside target overnight as markets are once again reminded that the pandemic is far from over. The shutdown headlines out of Europe won’t surprise anyone who has been watching the COVID-19 numbers. The US, which was considerably less successful in suppressing cases following the initial or second surge, is on the … continue reading →

CPI: Putting the Brakes On

CPI rose 0.2% MoM in September, half the August rate. It rose 1.4% YoY, slightly higher than September’s 1.3%. Without the outsized gains in used cars and the minor gains in energy (conflicting with the official EIA data), MoM CPI would likely have been negative. This is hardly supportive of the reflation narrative driving equity … continue reading →

More Gimmicks, Higher Highs

More gimmicks, higher highs. It’s getting to be an old story. But, as long as voters and algos don’t know or care, it will continue. Futures were in danger of giving up Tuesday’s 3421.75 highs when VIX suddenly collapsed by 7% in a matter of seconds.When that didn’t immediately result in a sufficient boost, it … continue reading →