As I was saying…
On today’s show I stressed the point that “Today, was the day.” that marked the impending disruption that is going to befall these “markets.” The reason for it was, of course, the CPI (consumer price index) is now a known-known and will need to be dealt with directly via the Fed as to pursue its now “re-calibrate” inferred instructions (aka get-your-mind-right) from the President.
As I have been warning, when it comes to inflation, all else will take a back seat (i.e., Wall Street) for importance when the politics of the day are now in play. i.e., not just an election year, but maybe one for the ages.
Inflation (as to show control or at least look like it) is now priority No. 1. Period, full stop.
Another item I pointed out was that my current stance on the “markets” from a technical perspective or viewpoint has not changed, and was still looking for the same things I pointed out prior and at the same levels. When the show went live on the website said “markets” were then still bouncing higher or at least maintaining their original heights from the open.
That has since changed – and it’s an ominous change if one is paying attention, here’s why…
As I also iterated on the show, the reason for such a positive reaction (markets going up) to such calamitous news (CPI printing highest in four decades) was the premise that the Fed was now caught in a policy error of their own making and would not be able to deal with it as to raise interest rates, but rather, would now need to cut. That’s not a misprint, it was truly being leaked across Wall Street trading desks.
So here’s why all the above is important for context…
As the “markets” remained embolden by such a thought or premise, none other than Fed. president James Bullard went on Bloomberg™ to tout that not only was a rate increase on the table: But possibly a full 100 basis point – and – the possibility it could happen in-between FOMC (Federal Open Market Committee) meetings. Meaning: We may not wait for a meeting to announce, we just might announce at any time between today and March. Hint: implication meaning – Like now, got that?!
To me what that signaled was the Fed is putting the “markets” on notice that there is no “error” to be calculated. Or, said differently: Dear Wall Street – You’ve been warned.
And with that the “markets” reversed with immediacy and have wiped out all of today’s prior gains and is heading lower.
Will they continue? No one knows, but at least you have a roadmap that I laid out prior that maybe more important today than when I posted it prior. To wit:
Yes, the chart is the same from Monday’s show note, but for all intents and purposes – you are basically right back to “You are here.” And everything in that original note is as valid today as it was on Monday, actually, more so.
We’ll discuss this and more on tomorrow’s show, see you then.
© 2022 Mark St.Cyr
Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.