Macro:
*10Y TSY yield tumbling to 2.322% / 3 Month-10 Year yield curve has once again inverted, dropping to -3.2bps: The Bond market is telling the Fed to go $#%^# themselves because they are completely clueless!!!
*Retail Sales: 7.2% drop in May so far?
*Rut Index has been signaling and no one is watching…correlates to the down-trending economy!
*Liquidity Risk is Real and right in front of us! Reflation Ain't happening....TBD!
Narrative Conversation:
Trade-War Narrative Pivot: “Expect to see this theme develop in coming months. This is no longer a trade spat – this is morphing into full economic war. The US is willing to take a short-term hit in the form of higher consumer prices, and welcome inflation, from Chinese imports until global supply chains re-adjust and new domestic and international lines open, knowing the long-term damage is limited. Meanwhile, the hit to China is long-term and directly on production, thus right across the economy right at the most difficult phase of economic transition. Chinese economists are talking about a 1-2% hit to GDP. I suspect much more plus increased domestic social and political tension.”
Note:
Something has changed in "Mr. Market," if the SPX closes at/below 2800 today, that is your first signal the markets "Expectations has changed from transitory to persistent" (Fed Speak). The market narrative is morphing into realizing reality and the environment has to get worse before Mr. T and the Fed will react and make any attempted change in correcting the narrative back to "Market-Positive." So you could very easily see a pullback or correction until DC pulls there head out of 5th point of contact and makes an agreed upon plan to go forward in the TW and Fed lowers rates...this all could take place earlier but more than likely near the 4th QTR,,,,if they have the smarts to figure this out before the house burns down....TBD! Risk is increasing, be careful out there....have a great Memorial Day weekend! I am! Cheers!
*10Y TSY yield tumbling to 2.322% / 3 Month-10 Year yield curve has once again inverted, dropping to -3.2bps: The Bond market is telling the Fed to go $#%^# themselves because they are completely clueless!!!
*Retail Sales: 7.2% drop in May so far?
*Rut Index has been signaling and no one is watching…correlates to the down-trending economy!
*Liquidity Risk is Real and right in front of us! Reflation Ain't happening....TBD!
Narrative Conversation:
Trade-War Narrative Pivot: “Expect to see this theme develop in coming months. This is no longer a trade spat – this is morphing into full economic war. The US is willing to take a short-term hit in the form of higher consumer prices, and welcome inflation, from Chinese imports until global supply chains re-adjust and new domestic and international lines open, knowing the long-term damage is limited. Meanwhile, the hit to China is long-term and directly on production, thus right across the economy right at the most difficult phase of economic transition. Chinese economists are talking about a 1-2% hit to GDP. I suspect much more plus increased domestic social and political tension.”
Note:
Something has changed in "Mr. Market," if the SPX closes at/below 2800 today, that is your first signal the markets "Expectations has changed from transitory to persistent" (Fed Speak). The market narrative is morphing into realizing reality and the environment has to get worse before Mr. T and the Fed will react and make any attempted change in correcting the narrative back to "Market-Positive." So you could very easily see a pullback or correction until DC pulls there head out of 5th point of contact and makes an agreed upon plan to go forward in the TW and Fed lowers rates...this all could take place earlier but more than likely near the 4th QTR,,,,if they have the smarts to figure this out before the house burns down....TBD! Risk is increasing, be careful out there....have a great Memorial Day weekend! I am! Cheers!