BoJ Rolls the Dice

The Bank of Japan has kept interest rates at or below zero for years. Their bet was that the suppression of interest rates (by purchasing Japan’s net issuance, the BoJ now owns over 50%) would offer sufficient protection against both inflation and the 263% debt:GDP – exacerbated by the rapid depreciation of the yen. Investors, … continue reading →

FOMC Day: Dec 14, 2022

They’re all important, but this one carries extra significance due to the potential for a slowdown in rate hikes, or at least the commentary regarding one. Futures almost backtested the 200-day moving average overnight, but are now essentially flat. After all the excitement yesterday, our targets remain the same across the board. If anything, the … continue reading →

Crisis Averted

Based on how the market is reacting, inflation is no longer a concern. The Fed will pivot and easy money will be back in no time. Except, as we’ve been discussing, this is one of those weeks which almost always overreacts to the upside: FOMC meeting, OPEX, end of year, etc. As noted yesterday, the … continue reading →

Japan’s Runaway Inflation

Japan’s inflation hit a 40-year high in October, driven by a policy of placing stock market gains above all else. When Japan first adopted negative interest rates, the argument was that it would help end the country’s deflationary spiral and return inflation to a 2% goal. Now that inflation is nearly twice as high as … continue reading →

A Swing and a Miss

Economic data came in as expected except for Philly Fed – a huge miss at -19.4 versus -5.0 consensus and -8.7 prior. But, it was the former dove turned chief hawk Jim Bullard who decided enough is enough, suggesting rates could reach as high as 7% before inflation is tamed. Futures were not amused. It’s … continue reading →

VIX Sliding Away

Seemingly on a rail, VIX’s bump took it only to the top of the falling red channel in place for over a month. A failure to break out means ES can top its 361.8 Fib extension and reach its IH&S targets. continued for members… … continue reading →

FOMC Day: Nov 2, 2022

The market is essentially unchanged from yesterday, with VIX in a position to make or break this rally unless the FOMC delivers a significant surprise. We’ve seen this movie before: a sharp rally into a Fed meeting or CPI report that wipes out the put buyers and positions the market for a drop from a … continue reading →