DXY reached our 105 target overnight…and is still dropping.While this reflects the sharp drop in interest rates (thank you equity correction), the US is still a net importer. So a drop in the value of the dollar means higher inflation. Not exactly a good look when folks are justifiably worried about stagflation.

Speaking of which, the ADP jobs report was plenty ugly this morning: +77K versus 145K consensus and 186K prior.There aren’t many companies that enjoy the kind of chaos that characterize the early days of Trump’s second term (the first was chaotic enough.)  It’s no surprise that economic uncertainty is being reflected in the market. Are we winning yet?

continued for members…

ES backtested the SMA200 it already dropped through and gave up its usual overnight ramp job even before the market opened. While SPX came within a few points of its SMA200. VX made a triple top, but still isn’t quite overbought. VIX is still broken out. This is a massive move relative to the euro. It’s currently pushing above the SMA200 and is backtesting the white channel midline and red channel bottom. Oil and gas continue to soften despite the USD weakness.

Remember, our interest rate cycle model suggests rates could be much, much lower by mid-May – perhaps as low as 3.5%. It’s hard to imagine us getting that low without a very serious economic slowdown.

Stay tuned…