US Indices ultimately closed mixed with marginal upside with little changes in SPX, NDX and DJIA while the Russell 2000 underperformed. The majority of sectors closed in the green with Consumer Discretionary and Energy outperforming but Communication and Technology lagged, limiting the gains in the broader Indices. The focus of the day was on the US CPI data which ultimately was in line with expectations and sparked a dovish reaction due to the lack of upside surprise with traders boosting bets for a 25bps rate cut in December to a 85% probability vs c. 60% pre-release. The initial reaction was to sell the Dollar and Gold and buy stocks and bonds. The Dollar however swiftly reversed with focus returning to the Trump Trade which took DXY to fresh YTD highs. T-notes had pared in the long-end but the move held in the short-end with the curve notably steeper on the session as traders repriced December rate cut odds. Gold prices continued to sell throughout the session, falling beneath USD 2,600/oz to a low of USD 2,573/oz from a peak of USD 2,618/oz. Elsewhere, oil prices settled marginally higher in choppy trade in response to geopolitics. In FX, the antipodes and Japanese Yen underperformed with notable weakness seen once the dust settled from the initial CPI reaction. Core CPI in October rose by 0.28%, in line with the expected 0.3% and prior, but slightly down on an unrounded basis from 0.31%. The Y/Y was in line at 3.3%, matching the prior month’s pace while the headline figures were also in line with expectations. The headline M/M rose by 0.24%, in line with the 0.2% forecast and prior but slightly up on an unrounded basis from 0.18%. The Y/Y print rose by 2.6%, in line with analyst expectations, up from the prior 2.4%. The data has seen money markets start to price in a December rate cut with greater certainty given the lack of upside releases in the print. There is still another CPI report before the December 18th Fed Meeting, and both reports will be accounted for when the Fed makes their decision. Fed’s Kashkari, before the data, said that if inflation between now and the meeting comes in hot, then the Fed can pause, however given this data was in line it has given more certainty to another 25bps rate cut in December. Nonetheless, attention after December will turn to the rate outlook for 2025 with fears of an inflationary impulse seen in response to President-elect Trump’s policies (tax cuts, tariffs, increased spending). However, the Fed has said they will not front-run fiscal policy, but Powell did suggest in the Press Conference last week that they would implement policy into economic forecast models and the results would be taken into account. Looking into the report in more detail, Pantheon Macroeconomics highlights “Primary rent rose by 0.30%, slightly below its 0.36% six-month average, but owners’ equivalent rent increased by 0.40%. Together, these two components accounted for a hefty 0.15pp of the increase in the core CPI”. It also notes a 2.7% jump in used autos was also a main source of upward pressure in Core CPI. MUSALEM (2025 voter) said the Fed may be on the “last mile” to price stability and inflation is expected to converge to the 2% target over the medium term, thus, in accordance with prior remarks in October, where he expects inflation to hit the target over the next couple quarters. Musalem then went on to say monetary policy is “well positioned” and the Fed can “judiciously and patiently” judge incoming data to decide on further rate cuts. The 2025 voter said recent information “suggests” that the risk of inflation moving higher has risen, after saying in October that upside risks to inflation are still there but risks are not higher. He added risks to the job market remain unchanged or have even fallen. On the rate outlook, Musalem still won’t predict the timing or size of future Fed easing but did say further rate easing is appropriate if inflation continues to fall. In the Q&A thereafter, he said it is hard to derive much signal from most recent jobs reports as the lower number was clouded by the storm and other impacts, albeit, in the text release he noted the labour market remains in the range of full employment. In another set of remarks, Musalem said data since the Fed meeting suggests the economy may be materially stronger than expected and inflation data is also stronger, but he has not yet changed the view that policy is on a path to neutral. Musalem added that stronger data is likely behind the rise in Treasury bonds’ term premia. Noting that there is also some sense of higher inflation risk and some sense the Fed may not cut rates as much. He acknowledged the CPI data yesterday was as expected, but would have preferred to see some continued decline on a three-month basis. SCHMID (2025 voter), in wake of the data, said it remains to be seen how much more the Fed will cut rates, and where they may settle. He noted that rate cuts to date are an “acknowledgement” of growing confidence inflation is on the path to its 2% goal. Hopes that productivity growth can outrun the effects of slowing population growth and rising fiscal deficits. He will also not let enthusiasm over rising productivity get ahead of data or commitment to reaching the Fed’s goals. LOGAN (2026 voter), in a speech written before the inflation data, stated the Fed will “most likely” need more interest rate cuts, but should proceed cautiously. She said it is difficult to know how many rate cuts may be needed and how soon they need to happen. Models show that the FFR could be very close to neutral. The Dallas Fed president said that if Fed cuts too far, past neutral level, inflation could reaccelerate. She acknowledged the Fed has made a great deal of progress bringing down inflation and restoring balance to the economy, noting US economic activity is resilient. She added the Fed is not quite back to price stability yet, while the labour market is cooling gradually but not weakening materially. Sees upside risks to inflation and downside risks to employment, says financial conditions pose biggest potential challenges for monetary policy. On the recent rise in bond yields, she said it in part reflects a rise in term premiums, but if the rise continues, the Fed may need less restrictive policy. KASHKARI (2026 voter), speaking after the US inflation data said that Wednesday’s inflation data, on the headline level, seems to be confirming the path the Fed is on, and right now, “think inflation is heading in the right direction and have confidence on that”. Furthermore, the Minneapolis President is not ready to say that inflation is stuck above 2%, and if inflation is heading in the correct direction fast enough, stated “we will see”. On the labour market, thinks it is currently in a good place, and said it is strong and healthy, and wants to keep it this way. Speaking of December and the Fed neutral rate, said it is still around six-weeks until the next Fed, with more data to come, and there is tremendous uncertainty on the neutral rate. Elsewhere, Oil closed 0.33% higher while a stronger Dollar saw Gold fall a further 0.7%.
To mark my 3100th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it lost 68 points yesterday and is now ahead by 1451 points for November having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.02% higher at a price of 5985.
The Dow Jones Industrial Average closed 47 points higher for a 0.11% gain at a price of 43,958.
The NASDAQ 100 closed 0.16% lower at a price of 21,036.
The Stoxx Europe 600 Index closed 0.13% lower.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 1.66% lower at a price of 38,721.
Currencies
The Bloomberg Dollar Spot Index closed 0.39% higher.
The Euro closed 0.35% lower at $1.0570.
The British Pound closed 0.2% lower at 1.2708.
The Japanese Yen fell 0.6% closing at $155.50.
Bonds
Germany’s 10-year yield closed 2 basis points higher 2.39%.
Britain’s 10-year yield closed 1 basis points higher at 4.51%.
U.S.10 Year Treasury closed 2 basis points higher at 4.46%.
Commodities
West Texas Intermediate crude closed 0.31% higher at $68.33 a barrel.
Gold closed 0.66% lower at $2582 an ounce.
This morning on the Economic Front we have Euro-Zone GDP, Industrial Production and Employment Change at 10.00 am. Next, we have the ECB Minutes from last month’s rate cut at 12.30 pm. This is followed by U.S. PPI and Weekly Jobless Claims at 1.30 pm. Finally, we have speeches from ECB’s Schnabel at 1.30 pm, followed by ECB President Lagarde at 2.00 pm, followed by Bank of England’s Bailey at 2.30pm, followed by Fed Chairman Powell at 3.00 pm and Fed Member Williams at 4.15 pm.
Cash S&P 500
My ‘’Nothing Matters’’ theme shows no sign of ending anytime soon. You really have to close your eyes to buy here for there is simply no history, none, that suggests that buying at broad measures such as this has a happy ending and is a good risk/reward proposition to chase new longs here. I am seeing major negative divergences and hence major red flags everywhere. In 1999 we saw multiple tags of the Monthly 14 EMA before markets topped out in March 2000. This year none so far. The Monthly 14 EMA is now at the 5300 area which ironically where the 200 Day Moving Average resides. The S&P has not touched this key pivot since last November. Imagine the horror if we were to tag this level before year-end. Inflation is not falling and from where I sit, I can only see the Fed doing one more rate cut. The Trump Policies will result in higher inflation leading to a further surge in bond yields over the coming months. I am still flat the S&P. Ahead of PPI this afternoon and Fed Chair Powell’s speech later today, I will now raise my S&P sell level to 6022/6042 with a higher 6061 ‘’Closing Stop’’. My only interest in buying the S&P is still on a large dip lower to 5875/5890 with the same 5859 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 6001. If I am taken long, I will have a T/P level at 5922.
EUR/USD
I am still long the Euro at an average rate of 1.0665. Given how oversold the Euro is trading I emailed my Platinum Members to hold this position with no stop for now. I will leave my 1.0725 T/P level unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar has now risen over 6% in the past 33 trading days which is a huge move. The Daily Sentiment Index is severely overbought, closing at an 83-print last night. This latest rally saw the Dollar hit my second sell level at 106.20 for a now 105.85 average short position. I will now raise my T/P level to 105.30 while leaving my 106.85 ‘’Closing Price’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
I am still flat the DAX, scared to buy and reluctant to chase the market lower. As I am away for a few days I am going to stay flat the DAX until I return next Wednesday. If this view changes I will be back with a new update for my Platinum Members.
Cash FTSE
Unfortunately, the FTSE just missed my second buy level at 7990 before having a small rally into the New York close. Yesterday’s move lower saw its 50 Day Moving Average tagged which should offer at least some short-term support. Although the week is not over until tomorrow the FTSE Index is down a rare four consecutive weeks and I can make the case for a bullish falling wedge here. The FTSE is down a rare three months in a row. The last time this occurred was during COVID. My opinion is this market will hold. I am still long from Tuesday at a price of 8070 with the same 8130 T/P level. I will continue to look to add to this position at 7990 while leaving my 7935 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Even though I lost points on the Dow yesterday I was lucky that my 43760-exit level was triggered in the morning on my 43600 average large short position and I am still flat. The Dow has short-term resistance from 44200/44450 where I will be a small seller with a higher 44605 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 43980. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
My NDX plan worked well as the market finally rallied to my initial 21150 sell level before selling off to my revised 21058 T/P level as emailed to my Platinum Members and I am now flat. Today, I will again be a seller on any further rally to 21280/21440 with a higher 21605 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 21140. I still do not want to be long the NDX at this time.
December BUND
The Bund traded in a narrow range yesterday despite U.S. CPI staying stubbornly elevated. I am still long the Bund at a price of 131.70 with the same 132.25 T/P level. I will add to this position on any further move lower to 131.00 while leaving my 130.35 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold continues to attract selling on any rallies following Monday’s 2% fall. This loss has extended to over 8% in the last 10 trading sessions. This latest move lower saw the whole of my buy range triggered for a now 2575 average long position. I will now lower my T/P level to 2589 while leaving my tight 2559 ”Closing Price” unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change: I am still long Silver at an average rate of 32.30 with the same 29.95 ‘’Closing Stop’’. I will now lower my T/P level to 32.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Please Note: I am taking a few days off to spend time with family. My next Daily Commentary will be on Wednesday (Nov 20). Meanwhile any of my calls that are not hit today and are subsequently triggered while I am away will see me return with updated emails for my Platinum Members.
Recent Comments