Disneyland

market vibes

January 15…)

CPI this morning: Considering recent inflation data has been above expectations and PPI was surprisingly dovish, the dollar, stocks, and bonds… and via these three, everything else…may be poised to move.

The last few weeks have been dull. Trump won. Stocks and Bitcoin shot up. Gold went down, oil went lower, bonds went sharply lower, and the dollar rallied 5%.

Bitcoin, gold, S&Ps, and oil are contained by recent ranges, each with their own nuances. Long-term interest rates and USD are negatively correlated. However, risky assets have been impervious or indifferent to both.

CPI today is the last weighty release of data until the FOMC meets on January 29. There are a few surveys and sales data, but today is the period in the sentence, not a comma.

The Fed is expected to cut rates twice in 2025 now, down from four times a few weeks ago, and no action is expected in January. Whether or not the 2024 cuts were mistakes, time will tell. But it seems, looking back, that we didn’t get the whole story why Powell went 0.50 in the face of ambivalence and dissent in September and then continued cutting. The effect has been a disturbing confusion.

Data has been hawkish and the committee, usually a talkative bunch, has been mute in deference to the new president. I think leverage and carries are bigger. Risk concentration is freakish. LA looks like Hiroshima. Two Hundred thousand have been evacuated. Weather forecasts are not good. Will the Fed consider LA? Of course they will!

Trading is many things: a gladiatorial arena, the never-ending ballot box of humanity, entertainment for risk-addicted people with adequate wealth, and the raw power of gods. If I were to choose a metaphor for risk this morning, I would go to Disneyland: Commodities might be Frontierland, gold and crypto Adventureland, the stock market Fantasyland, the bond market Tomorrowland (as far as 100 years' duration), and Natural Gas Mickey’s Toontown. Money moves from ride to ride, and the dollar is, of course, "The Magic Key."

So… on this rather ordinary Wednesday, as the BLS is about to drop a brick in the bathtub of a rather serene January, let’s do a checkdown and see what may be in store for us at 8:31 AM EST.