Markets are rallying in early trade session on the odds of a second government shutdown being averted – Congratulations to the monkeys in D.C. (I suppose). Government deals, and Dovish Fed remains the Markets #1 catalyst to test higher ground – chew on that for a second. Remember, the longer we can extend the U.S./China trade deal/negotiations, the longer the market can rally on the “hope” of a deal. Cycle risks are still prevalent as nothing has changed. There’s even more cycle risks that are mounting in terms of Q2 projected earnings and the effects of the strong dollar on corporate profits. Implied volatility signal in the S&P 500 collapse last Friday from -50% to -19% yesterday – our range suggests immediate term upside to the recent highs – where we’ll likely look to get more aggressive in shorting US equities. Also, remember we didn’t get a Q4 GDP reading in Jan when we were supposed too – we’ll get that number out at the end of the month which we think will carry a 1 handle (1.75 q/q SAAR).
Oil- Inflation to bottom in Q1 2019 is our call right now. This would be a catalyst for higher Oil prices coupled with OPEC headlines and their efforts to stabilize prices in an around $50.00 bbl. Oil catching an aggressive bid this morning +3%.
10yr Yields- we’ll look for 2.75% again to send you another buy signal on the 10yr Notes (as the growth cycle continues to slow)
Gold- still one of our favorite macro positions as we’ve got a dovish US FED and ECB. For those that don’t want to buy USD w/ a dovish Fed nor Euros with Italy and potentially France driving into a recession, Gold remains a logical fan favorite.
WED: CPI Reported, Mester and Bostic Speak
THURS: PPI Reported, Retail Sales, Jobless Claims
FRI: MFG Survey, Industrial Production, Consumer Confidence
Gotta run, good luck out there today
Actionable Market Ranges:
Market |
Trend |
Range Low |
Range High |
Notes |
|
|
|
|
|
SP500 |
Bearish |
2618 |
2752 |
approx 1% upside potential? w/ 10-15% downside |
Nasdaq Comp |
Bearish |
6929 |
7232 |
|
10yr Yield |
Bearish |
2.61% |
2.75% |
|
VIX |
Bullish |
14.94 |
20.67 |
|
Oil |
Bearish |
51.33 |
54.45 |
Inflation bottoming? We think so in Q1 into Q2 |
Gold |
Bullish |
1301 |
1338 |
|
USD (Cash) |
Neutral |
94.92 |
97.26 |
|
EUR/USD |
Bearish |
1.13 |
1.15 |
Impending recession, dovish ECB = be long of Gold |
USD/JPY |
Bearish |
1.08 |
1.106 |
Immediate-term OVERBOUGHT/OVERSOLD in Futs |
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