It might amuse some of you to revel in some of my latest faux pas. I had stocks going down in October and then I had the Republicans winning during the elections and then I had the CPI coming in “HOT AS FUCK” based off commodity data — which was a little off kilter.
As you can see below, inflation isn’t a problem in American any longer.
CPI 0.4% M/M, Exp. 0.6%
CPI 7.7% Y/Y, Exp. 7.9%CPI Core 0.3% M/M, Exp. 0.5%
CPI Core 6.3% Y/Y, Exp. 6.5%— zerohedge (@zerohedge) November 10, 2022
On this jolly good news, the NASDAQ is +591, Dow +831. The Euro is more than par, +1.6%, and the US 10yr is down a staggering 29bps to 3.85%. Concerned about oil? Don’t be. Oil is flat with gains in copper +2.3% because the Fed pivot might be here.
FED’S HARKER: EXPECT TO SLOW RATE-HIKE PACE IN COMING MONTHS
*HARKER: EXPECT FED TO PUT POLICY ON HOLD AT SOME POINT NEXT YEAR
*FED’S HARKER SEES PCE INFLATION FALLING TO AROUND 3.5% IN 2023
— The_Real_Fly (@The_Real_Fly) November 10, 2022
I had entered today with old man stocks, some NET, and a plethora of shorts — sending me lower by 340bps at the open as my SQQQ and DRV drove rail spikes through my head. I sold out of all of my longs, and then closed out my shorts — because I lost the right to own them, and then took to trading on the long side via leveraged ETFs and made back +150bps in losses at the time of this blog. I am now once again net short with LABD, SQQQ and an FAS hedge — 80% cash. But that could change in an instant — as I am trading larger sized positions than normal for 1-2% rips.
What happens next?
Well, perhaps whatever I am about to tell you just do the opposite. This much is indelibly clear:
The inflation rate is lower than expected. I realize we are still at 7.7%; but these things take time to unwind. The great pressure on rates has been greatly reduced today and we are seeing the FX markets normalize. My fear with any reflation of the stock market was to have it led higher by commodities. This is partly true today, as the Stocklabs 4000 index jimmies higher by 4%, the raw commodity index is higher by 1.15%. This is counter-intuitive for the Fed’s goals — but I don’t think it means a damn now, as we speed towards Thanksgiving in a seasonally strong time of year.
The comeuppance will occur during the holiday season, when firms report WORSE THAN EXPECTED results. Even still, I’ve concocted a list of GENERATIONAL BUYS inside Stocklabs and might begin a campaign of buying them once per month in early 2023, as I did with ETH when it was in the 100s.
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The CPI #’s were fudged.
Harker is an imbecile.
This blast is exactly what gives Jay Powell permission to keep the pedal to the metal.
Smells more like a short-squeeze to me. That said, it could last till end of year.