A Swing and a Miss

ES spent 11 hours hanging around our next downside target yesterday.  While the session had many characteristics of capitulation, the fact that SPX didn’t quite reach significant support (3956) suggests that the overnight ramp is a head fake.continued for members… … continue reading →

Nobody Saw it Coming

The financial press usually starts to take things seriously about this point in a correction. The permabulls aren’t calling bottoms any more, while the bears are licking their chops. It never fails, someone on TV says something like “no one saw this coming.” It’s silly, of course. What they mean is that they didn’t see … continue reading →

A Failure to Communicate

Remember that scene in Cool Hand Luke where Paul Newman mouths off to the Captain after a failed escape attempt? He doesn’t initially appreciate the gravity of his situation. He is soon reminded. That’s what yesterday’s post-Fed presser felt like. Powell was trying to convey the sense that the Fed means business. It is going … continue reading →

FOMC Day: May 4, 2022

Today’s FOMC meeting is one of the most anticipated and consequential in years. It’s difficult to overstate its importance in terms of economic impact and, perhaps more importantly, Fed credibility. Yes, we care about whether the Fed hikes 50 or 75 basis points – though either is unlikely to put a dent in inflation. The … continue reading →

Update on Currencies: Apr 28, 2022

The dollar index continues its tear, surpassing both its 2017 and 2020 highs this morning. This is consistent with our forecast [see: Apr 11 Update on Currencies] that the Fed would need help from a rising dollar to attack inflation without having to resort to sky-high interest rates that would further accelerate the growth of … continue reading →

USDJPY: Off to the Races

We published USDJPY’s next highest target months ago with the caveat that it would mean completing a large IH&S that targeted much higher levels and was, thus, far from certain. With inflation already rising sharply, would the BoJ willingly inflict even higher prices on Japanese citizens and businesses just to keep the yen carry trade … continue reading →

Fed Minutes on Deck

Futures are off sharply as we approach the open. Algos are responding to VIX’s pop back above its 200-DMA and the prospect of increasing Fed hawkishness. As we pointed out yesterday, the 10Y has again reached the top of a well-formed channel dating back over 30 years. Its ongoing decline has provided much of the … continue reading →


Just because we’re seeing an economic slowdown amidst very high inflation in a Fed tightening cycle against the backdrop of a war that could draw the US into armed conflict…doesn’t mean the market has to react rationally. Stocks were up sharply yesterday because they’re still driven largely by algorithms. And, yesterday, the algos were focused on … continue reading →

Should We Fear a Yield Curve Inversion?

It seems like everyone’s talking about the yield curve. Will it invert? If so, when? Would it imply or even precipitate a recession? How would it affect Fed policy? What would it mean for the stock market? Since our work focuses on forecasting markets, let’s set aside for the moment whether an inversion means a … continue reading →