We continue to be in a critical period of time where understanding macro flows is THE single most important variable. The inauguration occurred during market closed so only futures traded. This means the first day of regular volume will be tomorrow.
The macro view for equities remains. If the view is falsified, then it will be published here.
As I laid out in the macro podcast, we need to approach these markets with ruthless objectivity:
The Tear Sheets are linked here:
Macro Flows:
The dollar has been moving in lockstep with inflation swaps. If we have higher-than-expected inflation in the PCE print next week, then this could push the dollar higher and equities lower.
This is why FOMC is so consequential for equities. At the last FOMC meeting, we had aggressive selling in equities due to a more hawkish stance by the Fed. We are moving into the next FOMC with a new president, a pause in January and no meeting in February. This is a window of weakness.
You will notice we are almost back at the last FOMC level where selling pressure occurred.
We have ticked up marginally in bonds but are likely to remain below 110 in ZN due to how the forward curve is pricing cuts in 2025:
EURUSD has been fading since the election wick and we are likely to make a leg lower over the next week or so:
The TRUMP has only been fading since the livestreaming on Sunday and the inauguration today. This is textbook sell the news pump and dump.
This dragged down Bitcoin and Solana from their highs. These will be key signals to watch in connection with equities moving into the first day of volume for the week tomorrow.
More on this tomorrow
Cheers!
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The risk now is... what if Trump does not follow through with tariffs? Inflation resumes lower, and FED cuts as soon as March meeting? Waller kinda hinted at that already!
CF, how much weight are you putting on the yen and Japan’s FOMC on Thursday/Friday if they hike