FOMC today not expected to be much different; data dependence. US last GDP print was 5.1%, unemployment 3.7% and we've been fueled by an AI hype (NVIDIA).
How does the FED react though? They can't afford to be Infront of the curve, i.e. QE before inflation is meaningfully and confidently on downwards trajectory. They man even weaponize FATE to have 2% inflation for the decade since we had inflation as high as 9.1%.
This time COULD be different, but more often it is not!
Rather, the FED will have to be behind the curve as to avoid the mistakes of 1970's double inflation wave. FED Chair even touted the ability to do massive QE to rescue markets in event of economic collapse. What does this all mean? Achieving soft landing as like manning a small boat in a storm and coming out the out side unscathed. As fears of recession have stopped being circulated by the mainstream media, it's more concerning. We were injected with mass fears in 2022, only to not materialize.
What other indicators and signs can be look at for a holistic approach? The LEI, 10Y2Y yields, and ETI are reliable leading indicators. The 10Y2Y yields have kicked the can down the road whilst LEI and ETI remains bearish. It's important to note markets can remain irrational than you can remain solvent so it's worth considering upside risks when shorting. Also, when to admit your thesis is wrong and cut the noose tightening.
What else can we look at for bearish signs? Perhaps the massive commercial real estate loans in the coming months? Or the record breaking US consumer debt over $1T... Maybe credit card defaults on the rise coupled with personal savings below pre-pandemic levels?
Something to start thinking about; US elections and uncertainty. Could be a wild rodeo XD
What are possible invalidations?
Unemployment remains stagnant, disinflation continues, no black swans and nothing breaks causing the FED to cut sharply.
Some Technical Analysis
We could hit $5100 based on rising channel. This aligns close to when FED could start cutting rates based on current market projections (CME tool). It would be funny to put in a HL where the second HL is the top similar to Bitcoin in Nov 21...
How does the FED react though? They can't afford to be Infront of the curve, i.e. QE before inflation is meaningfully and confidently on downwards trajectory. They man even weaponize FATE to have 2% inflation for the decade since we had inflation as high as 9.1%.
This time COULD be different, but more often it is not!
Rather, the FED will have to be behind the curve as to avoid the mistakes of 1970's double inflation wave. FED Chair even touted the ability to do massive QE to rescue markets in event of economic collapse. What does this all mean? Achieving soft landing as like manning a small boat in a storm and coming out the out side unscathed. As fears of recession have stopped being circulated by the mainstream media, it's more concerning. We were injected with mass fears in 2022, only to not materialize.
What other indicators and signs can be look at for a holistic approach? The LEI, 10Y2Y yields, and ETI are reliable leading indicators. The 10Y2Y yields have kicked the can down the road whilst LEI and ETI remains bearish. It's important to note markets can remain irrational than you can remain solvent so it's worth considering upside risks when shorting. Also, when to admit your thesis is wrong and cut the noose tightening.
What else can we look at for bearish signs? Perhaps the massive commercial real estate loans in the coming months? Or the record breaking US consumer debt over $1T... Maybe credit card defaults on the rise coupled with personal savings below pre-pandemic levels?
Something to start thinking about; US elections and uncertainty. Could be a wild rodeo XD
What are possible invalidations?
Unemployment remains stagnant, disinflation continues, no black swans and nothing breaks causing the FED to cut sharply.
Some Technical Analysis
We could hit $5100 based on rising channel. This aligns close to when FED could start cutting rates based on current market projections (CME tool). It would be funny to put in a HL where the second HL is the top similar to Bitcoin in Nov 21...