Another firm CPI number is out, to little surprise given the expected rebound in inflationary sentiment along with commodities and other inflation trades (precious metals, led by silver, on this cycle too).
As has been typical, the USD is rallying on the hawkish implications on Fed policy and in the alternate reality of the market in Wonderland, that currency compromising state is bullish for the currency. Markets are subservient to the Fed, comically enough, as an inflation fighter.
The moving averages not surprisingly held and now Uncle Buck eyeballs 105 area resistance again.
My conclusion?
The only way to moderate inflation fears may be for the US dollar to rally, gold to rise in silver terms and broad asset markets to tank and put a scare into market players. The broad SPX, for example, has been robo trending up since Q4, 2023 after all. One of our theories is that a hard and healthy correction could help reset the markets for a bullish phase into Q4.
That is what I think can happen if markets remain in full ‘Fed submission’ mode and correct. It would likely also correct commodities and precious metals. The whole shootin’ match that has been rising on ‘Fed dove’ hopes. The above is just one simplified view of a very complex picture. But I am trying to quickly lay out a general theme. We’ll flesh things out going forward.
