Subscribe to receive this FREE daily commentary directly in your email
Stocks finished the day lower, one day ahead of tomorrow’s core PCE report. Analysts expect core PCE to rise by 0.3% m/m, and Kalshi is pricing a core PCE of 0.4% m/m. It will be interesting to see if Kalshi can be a reliable source for some of these reports. A 0.4% m/m number would not be a good number.
Speaking of inflation today, we got the KC Fed prices paid data, and that was up sharply, too, in March, following the Empire State and Philly Fed.
1 and 2-year inflation swaps today jumped, breaking out, with both climbing to new cycle highs.
Speaking of breakouts, today, the CDX High Yield Spread Index broke out of that bull flag we mentioned last night. If spreads are breaking out here, it won’t be long before we see the S&P 500 break down.
In the end, these spreads just inverse to the S&P 500, and one can see that if the spread is breaking out, that the movement in the SPX are probably not far behind.
If the S&P 500 going to break lower, tomorrow seems like the best chance, given that today, was a pause day, with that doji candle. The index all closed below its 10-day exponential moving average, suggesting the recent move in the index higher, was a false move. If this bear flag is the real thing, which it looks very real to me, then next leg lower could take us to around 5,000.
-Mike
Terms By ChatGPT
1. Kalshi – A prediction market platform where users can trade on the outcomes of future events, including economic indicators like core PCE.
2.Core PCE (Personal Consumption Expenditures) – An inflation measure that excludes food and energy prices. While common, the term might be unclear without specifying it focuses on consumer spending.
3.KC Fed prices paid – Refers to the “prices paid” component of the Kansas City Federal Reserve’s manufacturing survey, indicating input cost trends.
4.Inflation swaps – Derivatives used to transfer inflation risk, where parties swap fixed interest rate payments for payments linked to an inflation index. 1-year and 2-year refer to the maturity of these swaps.
5.CDX High Yield Spread Index – A credit default swap index tracking the credit risk (spreads) of high-yield (junk) bonds. A breakout in this index indicates increased risk perception.
6.Bull flag / Bear flag – Technical analysis chart patterns. A bull flag is a consolidation during an uptrend, often continuing upward. A bear flag is a pause during a downtrend, often continuing lower.
7.Doji candle – A candlestick pattern that signals market indecision. It forms when the opening and closing prices are very close or equal.
Subscribe to receive this FREE daily commentary directly in your email
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.
Trump Is Going To Break Everyone... LOL
Mott Capital's Market Chronicles 14 hours ago