With the strong rally in the stock market Thursday, the markets had the “look and feel” (to us) of getting into a “Buy the Rumor, Sell the News” mode ahead of today’s Retail Sales numbers and the Fed Industrial Production data shortly.
The Fed has already taken away the punch bowl with the appearances of chair Jay Powell telling markets there’s only a ‘chance‘ of another cut this year – and that’s not until way out in December.
Despite this “close encounter with financial sobriety” the market has been marching up – and just over a double top at the close Thursday in our Aggregate Index, but things were far less sanguine in the techs.
As you will recall, our Aggregate close December 16th was 52,470.42. When we looked at the pre-open prices it settled (ahead of the data) at 52,429.69 which, while over the early slog price of 52,470.42 was under the Thursday Aggregate close at 52,585.78.
Two charts trouble us. the Aggregate is at another decision point (up or down from here):
Normally, things would be fairly clear and this kind of chart could set up sailing higher. But the bugaboos are inflation, techs, politics, retail spending, the war lobby, and law-faring against Trump. We’ll look at these flashes in a second.
First, though, consider the problem of the techs. In our work, the NASDAQ has [so far] failed to make a new high. And with Gold over $2950 and silver over $34 today, it’s difficult to assess how much “real” demand there is, how much is commercials getting out ahead of options next week, and how much is re-pricing inflation into asset prices.
Techs have a problem: they haven’t busted higher, yet.
Until they do, there’s an Elliott outcome on the table that’s ugly. We won’t call it, but the REAL scary thing to us was how the techs in our Ebbinghaus model had appeared to complete a five wave up move from the bottom of a possible major wave 1 down.
There are about 20-more charts in the Peoplenomics ChartPack, but that will have to wait for today’s data releases to wash through so we can get a clearer (week-ending) view of things. Money has to land somewhere for the weekend and that’s really what seems to matter.
Could the Fed Strike Pre-emptively?
Let me give you a firm maybe on this. See, in the past, when the Fed has moved between sessions, it has always been driven by downside surprises. But now, with inflation re-pricing in gear, the Fed may be forced by prices (and bonds) to do something history-making: raise between sessions. Here’s their track record on between meeting hikes:
- October 1987: Following the Black Monday stock market crash, the FOMC reduced the federal funds rate to stabilize financial markets.
- October 1998: In response to the Russian financial crisis and the collapse of Long-Term Capital Management, the FOMC made an emergency rate cut to prevent a market meltdown.
- January 2001: Amid the bursting of the tech bubble, the FOMC announced a surprise interest rate cut to address recession risks.
- September 2001: After the September 11 attacks, the FOMC implemented an emergency rate cut to provide liquidity to markets.
- January 2008: Facing mounting recession risks and a significant market downturn, the FOMC enacted an emergency rate cut.
- October 2008: During the global financial crisis, following the failure of Lehman Brothers, the FOMC made a surprise rate cut to stabilize the financial system.
- March 3, 2020: In response to the emerging COVID-19 pandemic, the FOMC executed an emergency rate cut to mitigate economic impacts.
- March 15, 2020: As the pandemic intensified, the FOMC implemented another emergency rate cut, bringing the federal funds rate to near zero.
The motivation for the Fed to pull a “surprise” move to raise rates may be found when considering the inflationary impacts of tariffs going on and Trump has made no secret of his plans to move ahead. If anything, Trump is sounding more committed to tariffs (and getting out of NATO) than ever today: Trump threatens a 100% tariff on ‘dead’ BRICS group if they ‘play games with the dollar’.
The less shrill business problem is simple: The US cannot continue to enjoy Dollar hegemony when we are no longer the “big swinging dicks” of manufacturing, innovation, finance, and articulation of a “worthwhile future.” Sure, populism may get someone elected, but the matter of follow through is what matters.
You have to look at the headlines and sense what’s coming. Europe is still pissing and moaning (Trump’s call with Putin alarms Europe and shocks Ukraine) because they don’t have much future except in warfare – arguably European economics has been cyclical warfare-based for centuries. On top of this PBS (*which leans seriously left and pro war) jumped on the chance to criticize Pete Hegseth Roasted Over ‘Huge F*ck Up’ on Ukraine Policy. Today, we notice that Vance says ‘military tools’ could be used to force Russia to agree a Ukraine deal. There’s some talk that might involve U.S. troops…but I doubt that would fly. Obviously not in Russia: Kremlin seeks clarification on US stance over potential troop deployment to Ukraine. Leaving us looking for the part in Art of the Deal on nuclear war risks…
The NE liberal media is also starting the “hero-making machine” for anyone who attempts to stop the Trump agenda. For example, Who is Danielle Sassoon, the prosecutor who stood up to Trump’s DOJ over Eric Adams’ case?
The Fed – which has to be eyeing re-pricing and the specter of a blow-off market with fear – might find a window in the next two weeks to blow down markets with an “emergency hike” to wash out the speculators. Even though they have never done it before.
Data – Like Retail – Also Figures In
The problem with Inflation is that it can at times lead to a Buying Bubble. In other words, regular people that see that tariffs will increase prices. Middlemen and producers will use any excuse in the book to mark up taxes (which is what tariffs are) to cut a fatter hog for themselves. Working people (and retired like us) will see prices in the pipeline going up and will pre-order and stock up now knowing that Amazon, Wal-Mart, and other retailers will pass through hikes.
OK… a lot to have in mind as we wheel out the Retail Price Report:
Advance estimates of U.S. retail and food services sales for January 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $723.9 billion, down 0.9 percent (±0.5 percent) from the previous month, and up 4.2 percent (±0.5 percent) from January 2024. Total sales for the November 2024 through January 2025 period were up 4.2 percent (±0.5 percent) from the same period a year ago. The November 2024 to December 2024 percent change was revised from up 0.4 percent (±0.5 percent)* to up 0.7 percent (±0.3 percent).
With Retail out of the way, we can move on to Import and Export prices also just out::
- The price index for U.S. imports advanced 0.3 percent in January, the largest 1-month rise since the index increased 0.9 percent in April 2024. Prices for U.S. imports advanced 1.9 percent from January 2024 to January 2025.
- Fuel Imports: Import fuel prices rose 3.2 percent in January, after increasing 1.7 percent in December. The January advance was the largest monthly rise since April 2024. Higher prices for petroleum and natural gas contributed to the overall increase in import fuel prices in January. Prices for import fuel rose 2.4 percent for the year ended in January.
- All Imports Excluding Fuel: Prices for nonfuel imports ticked up 0.1 percent for the third consecutive month in January. Nonfuel import prices have not declined on a monthly basis since a 0.2-percent drop in May 2024. Higher prices for nonfuel industrial supplies and materials; capital goods; and foods, feeds, and beverages in January more than offset lower prices for automotive vehicles and consumer goods. The price index for nonfuel imports advanced 1.8 percent for the year ended in January.
- Prices for U.S. exports rose 1.3 percent in January, the largest monthly increase since the index advanced 2.7 percent in May 2022. Higher nonagricultural export prices in January more than offset lower agricultural export prices. U.S. export prices have not declined on a 1-month basis since September 2024. The price index for U.S. exports increased 2.7 percent over the past year, the largest 12-month advance since the year ended December 2022.
Last stop is the Fed’s Industrial Production and Cap Utilization numbers. (click here – they aren’t out at press time.)
After the soup started simmering today, futures were down a bit. BTC was down to $96,631 and West Texas Intermediate was up to almost $72 a barrel. Which we translate as “Trump Talk on energy independence will take a year to show up.” On the other hand, headlines are a little too gushy for us. Like Coinbase Revenue Surges to $2.3 Billion as Bitcoin Booms and Retail Returns – Decrypt. We’ll just have a lemonade and wait for new ATH’s, thanks.
Septic Scrolling
Haven’t heard from my friend Howard seems like forever. But he used to occasionally remind me that when a recession is due, the role of government is to act like something of a “flywheel” to get the country across bad times while the private sectors caught up. It’s a great and important point because while Trump is fighting to disarm the Left’s siphoning of tax money into political agendas, the “flywheel” could get broken by too much federal spending and cutting. So we eye OPM tells agencies to fire federal workers on probation with concern. Baby and bath water both getting tossed, kind of thing.
On the other hand, we figure it’s disingenuous for politicians (who let USAID become a political party hostage taking of taxpayers) to now turn around and lecture Americans: on X: “BREAKING ? Sen. Bernie Sanders is in full panic mode. He’s starting to realize Donald Trump won The Democrat Party is collapsing.
Airplane troubles are still going around: Marco Rubio’s Plane Returns To US Due To ‘Mechanical Issue’.
“That thing that’s going around” – Pope Francis in the hospital to treat bronchitis and perform other diagnostic tests, Vatican says. Say, you don’t think the movie Conclave was a message in advance, do you?
Another leftover Biden problem may be solved: NASA, SpaceX Set New Mission Date to Rescue Astronauts Stranded at Space Station Following Request from President Trump.
Bad news for Big Pharma (and a shot in the arm for Choice): RFK Jr. praises commander-in-chief during swearing-in ceremony: ‘God sent me President Trump’
Weekend Planner:
Valentines Day. (It’s so hard to pass on the lay away jokes…). But here’s your weekend weather planner instead.
South wet and cold in the middle, looks like to me.
At the Ranch: Ham Radio Experiment
Been collaborating with AI on a practical HF radio antenna using scalar technology. Hasn’t been too popular (even for messing around), So we will get into that on ShopTalk Sunday this week.
Markets closed Monday for President’s Day. That means a food run today to stock up.
Ham and scalloped potatoes on my cooking plans for the day…
Write when you get rich,
George@Ure.net
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