FOMC day today – we’ll know when we know (1pm CST). That’s really all there is to say at the moment, other than the Fed must be explicitly dovish otherwise I expect the equity and bond markets to be disappointed. You could look at Draghi and the ECB’s move yesterday (signaling more stimulus/possible rate cuts) as an attempt to front-run Powell and the Fed today. There’s no doubt that the Fed and ECB coordinate their efforts – though it’d be a major faux pas to say out loud, so I’d think Draghi’s move yesterday is likely foreshadowing a dovish Powell today.  Again, we’ll know when we know. 

The rundown:

Oil- Bounce yesterday ahead of the API report which showed a draw of -812K bbls. We don’t think oil has too much near-term upside as momentum is explicitly bearish – we’d be sellers of oil following a bounce after the 9:30am EIA report. 

Gold- we want to send you the signal, but we’re waiting – the low end of our range continues to inch higher (based on price and volatility) – we’re now carrying a 1324-1360 trading range. 

Dollar- likely going to get direction this afternoon out of the Fed. Remember, when in a G/I slowing environment, the dollar tends to hold a bullish formation as capital flight occurs from outside country’s – we do want to be dollar bears at some point, but we think late summer/early fall will be the best time to short the USD. Again, we’re always data dependent and now at the mercy of the FOMC in terms of Dollar direction. 

VIX- signaling immediate term oversold, coupled with an immediate term overbought signal in U.S. Stocks. This has been a solid indicator of a near-term change in direction in both markets (coupled together). 

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