Stagflation Fears Renewed

January PPI came in much hotter than expected while housing starts and permits fell far short of consensus, stoking persistent fears of stagflation.  PPI came in at 0.3% MoM versus 0.1% expected.  Excluding food and energy, core PPI rose 0.5% versus 0.1% expected. Stripping out trade services, the tally rose to 0.6%, its highest print … continue reading →

Retail Sales Warn of Economic Woes

Retail sales plunged 0.8% in January, far below estimates of -0.2% and last month’s +0.4%. The miss can’t be attributed solely to seasonality, as the Jan 2023 print was a massive +3.7% gain. The annual gain from Jan 2024 was a meager 0.6%. It has been a tough week for economic data. Inflation higher than … continue reading →

Hot CPI Dashes Rate Cut Hopes

January CPI came in hotter than expected, taking a March rate cut off the table and casting serious doubts on a May rate cut. Futures are off sharply, shedding over 1% to reach the bottom of the rising green channel from Oct 2023. continued for members… … continue reading →

All Eyes on CPI

CPI, due out tomorrow morning, always plays an important role in driving interest rates and economic forecasts. This one is especially important given the extent to which the market has already rallied in anticipation of lower rates. Our gas price model for CPI shows inflation settling lower after a slight bump up over the last … continue reading →

Oh So Close…

The S&P 500 came within 11 cents of 5,000 yesterday, marking a remarkable 43% run since the October 2022 lows and 22% return since the October 2023 lows. The month of February has a mixed track record over the past 10 years, with gains and losses evenly split. Stocks frequently pause at big, round numbers … continue reading →

NFP Soars

Nonfarm payrolls soared by 353,000, more than twice the 175,000 expected. Average hourly wages also beat at +0.6% (+4.5% YoY) versus +0.3% expected. Unemployment remained at 3.7%. Forget about a March rate cut. Bulls will be lucky to get one in May. The overnight ramp job has completely disappeared, with futures struggling to remain positive.  … continue reading →

No Pivot, No Punch Bowl

Powell said what many of us have been thinking: There’s no reason to rush into a rate cut. The part he didn’t say (but implied) was that there was a clear risk to cutting rates at this time. The market, which has been fueled for months by rate cut expectations, was quite disappointed. SPX shed … continue reading →

FOMC Day: Jan 31, 2024

It has been a long time coming, with expectations of a rate cut ranging from “certainly” to “not a chance in hell.” Futures are taking their cues more from GOOGL and MSFT than the FOMC at the moment. Will we finally get a real backtest? Our potential downside targets are getting very lonely. continued for … continue reading →

Will They or Won’t They?

Futures are off moderately as investors place their bets on tomorrow’s FOMC rate decision. This follows yesterday’s pop in prices which was reported as motivated by a better than expected treasury report, but was in reality driven by [drumroll please] more algo funny business in VIX. In any case, SPX was finally pried off its … continue reading →