New week, same debates.

The sparse color on offer Monday trod familiar ground as traders and investors eyed a crowded data calendar that includes an update on the Fed’s preferred price gauge. Who’s excited?! Pretend, ok? You have to pretend.

It’s possible, I suppose, that market pricing for the Fed in 2024 could recede such that traders no longer expect three full quarter-point cuts. We’re dealing in hypotheticals here so I won’t dwell on the point, but that’d be a watershed if it were to happen: Market pricing would reflect less in the way of easing than the December dots, with implications for the March SEP refresh.

Of course, engineering a soft landing theoretically entails adopting a policy stance that’s ahead of the curve, where that means dovish versus markets. In holding terminal north of 5% with twos down around 4.70%, the Fed’s doing the opposite. So, maybe a Fed that sticks with three “planned” (Jerome Powell wouldn’t like that word in the context of the dot plot) rate cuts against market pricing for fewer would be a Fed that helps effectuate a soft landing.

I don’t know. It doesn’t matter. This is just pure, unadulterated speculation and the hype around Thursday’s PCE update in the US will dissipate entirely (which is to say disappear into thin air) within minutes of the release, thereby rendering an entire week’s worth of journalistic effort meaningless. Imagine having that job. “It’s gonna to be a rewarding week, John! You’re gonna write four PCE previews which exactly nobody will ever read again after Thursday.” (“Is there gonna be cake? I was told there’d be cake.”)

That’s one of the more amusing aspects of the financial news cycle. Top-tier macro events are billed as pivot points with the potential to change the course of human history right up until the numbers are out. Then, barring a multi-sigma surprise, everybody immediately moves on to the next story, exposing the whole thing for what it is: A click racket, whereby the BEA and BLS release schedule is preemptively monetized by media organizations, mainstream and otherwise, who pretend it’s all very, very exciting, extracting every possible penny ahead of each key release, then abandoning the data once it’s no longer exploitable.

Anyway, equity market concentration’s quite extreme. Have you heard? Do you know about the “Magnificent 7”? “Everyone’s talking about it,” as one former (and quite possibly future) US president might put it. Here’s an entirely generic, but ostensibly meaningful chart:

So, that’s the cap-weighted S&P divided by the equal-weighted S&P, and as you can see, the former’s outperforming the latter to a degree not witnessed since the dot-com bubble (we’ve now exceeded post-pandemic “everything bubble” extremes). The dot-com bubble presaged a market crash when lofty growth expectations didn’t pan out. Therefore, today’s market concentration might presage a crash too considering there are no guarantees with regard to similarly lofty growth expectations.

Voila! I’m a “strategist”! Where’s my $450,000? That’s a joke, but if you make less than that, just remember that right now, today, people are getting paid multiples of your salary to pen wholly generic assessments like that one. What I just wrote about market concentration counts as “strategy,” believe it or not, and there are hundreds (thousands, even) of people all around the world who get paid huge sums to pen it. If you do something that benefits society for a living, grab your pitchfork and a torch. “This will not stand, man.” (I’m not being literal about the pitchfork or the torch.)

Investor positioning is “extremely” concentrated, Goldman’s Cecilia Mariotti said. And yet, there’s “space for bullish sentiment and positioning to be further supported, especially if we start seeing a more meaningful rotation out of cash and into risky assets.”

JPMorgan isn’t so sure. About any of this. Targets are being raised on the notion that earnings are robust, but margins may be peaking, Mislav Matejka mused on Monday. Interest expense could be higher going forward if corporates have to refi, producer prices are softening which bodes ill for margins and labor costs are elevated, he went on, adding that over the past several reporting periods, the Magnificent 7 accounted for all of the S&P’s profit growth.

“Investors may find themselves asking ‘now what?”’ JonesTrading’s Mike O’Rourke wrote, of the post-Nvidia earnings trade. “Although it has been overshadowed by the excitement of earnings season, the market has begun to acknowledge that the inflation war is not won.”

Also writing on Monday, SocGen’s Kit Juckes said he’s “read news stories” which tell him the US PCE data “will be the main market driver” this week. That release isn’t due for days, though. “There will be some thumb-twiddling to get through, first,” Juckes added.

Yes, some highly-paid thumb-twiddling. And thumb-twiddling’s probably a euphemism.