“Either way, you gotta be super smart to run a country and sell vol. buddy, okay? It’s not easy.”
“It’s not crazy”…
Finally, in case you haven’t had enough of “connecting the dots” today, here’s another exercise for you…
Dollar bears on the back foot all of the sudden…
The Fed still sees another hike in 2017, perhaps proving that they are in fact leaning in the direction of looking through subdued inflation in the interest of safeguarding financial stability.
“The de-dollarization of the financial system will not be an overnight event.”
Well for those who had their doom bunkers all prepped and ready, there’s “good” news on Tuesday – the apocalypse is back on.
“With the Fed’s balance sheet poised to contract and financial conditions set to tighten either steadily or abruptly, we fear gold, fixed income, and equity asset prices may suffer a sudden drop.”
As one reader put it earlier today, “is just being open for trading” a good enough reason for stocks to rally?
…it’s fair to ask if maybe the CTA crowd had a bad week. Because long Treasurys and short USD wasn’t exactly how one would have wanted to be positioned ahead of the “no apocalypse” risk rally that saw 10Y yields rip 18bps higher off the previous Friday’s lows while the dollar put in one of its best five-day stretches of 2017.
This time last week, everyone thought we’d all seen our last Friday.
There’s tension in the air.
CPI rose 0.4% vs est. 0.3%
Forecast range from up 0.2% to up 0.4% from 76 estimates
Ex. food, energy up 0.2% vs est. 0.2%
CPI y/y rose 1.9% vs est. 1.8%
There have been all sorts of labored attempts to explain how this isn’t all Trump’s fault and because nothing is ever entirely attributable to a single factor, those efforts are not totally in vain. That said….
Generally speaking, this week’s theme (reflation back on in the U.S. as stocks, the dollar, and yields all rise in tandem) held, as there was no news “bigly” enough to change the narrative.