Subscribe to The Free Market Chronicle and join the 2,685 subscribers getting it for FREE!
5/15/24
#Stocks:
#Macro: #CPI, #PPI,
Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha
- RTM: IV Crush Helps Lift Stocks Ahead Of OPEX
- RTM: Implied Volatility Is Likely To Rise Into CPI
- RTM: Inflation Swaps Moving Higher
- RTM: We Are Not On A Path Back To 2% Inflation
See Me At The Seeking Alpha Investing Summit
Stocks finished higher on the day, no surprise, given that implied volatility levels fell sharply from yesterday’s closing once the CPI report was released. The CPI report itself seemed pretty much as expected, and the inflation trends we have talked about remained unchanged. If there was a slowing in the overall trend, it wasn’t something I could easily find.
Core CPI has been running at a nice annualized growth rate of 4.0% over the past 19 months, and today’s data did very little to change the trend. If the trend doesn’t change soon, though, the core CPI y/y rate of change will start increasing again in June, and the core could be back to around 4% by August.
I guess the biggest thing going forward for inflation is copper and what is happening there, which has to be up there with one of the craziest moves I have ever seen. If the gains actually hold or take a long time to revert, it will not help bring inflation down at all.
Oil also saw a big intraday reversal due to a bigger-than-expected draw in inventories. This will need to be watched over the coming days.
But the unwinding of the hedging flows dominated the market today as noted by the crush in implied volatility from the VIX1D to the VIX Index, with them all falling. The VIX index’s OPEX comes next Wednesday, which is obviously after this May OPEX on Friday. I’m not all that sure that there is much to be gained from the VIX going lower than 12, though, and I would say, at least based on next week’s OPEX, we could be nearing a floor.
In the meantime, that is it. There may be no write-up tomorrow afternoon. I’m a bit tired from all the excitement.
-Mike
Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.