- Moving the markets
Wall Street shrugged off another inflation report and pushed the major indexes higher, after a sluggish start.
Traders are waiting for the Fed’s decision on monetary policy, which could affect the pace of the economic recovery. The consumer price index, which measures the cost of living, rose 3.1% from a year ago and 0.1% from October. Both figures matched economists’ expectations.
However, the core CPI, which excludes food and energy, edged up 0.2% month over month, as predicted, and stayed at 4% year over year. The Fed will announce its policy stance on Wednesday at 2 p.m. ET.
Most investors expect the Fed to keep interest rates near zero. However, the Fed faces a dilemma. On one hand, financial conditions have eased significantly, suggesting that the Fed’s stimulus is working. On the other hand, the economy has been slowing down, according to the Citi Economic Surprise index, which tracks how data compares to forecasts. Moreover, the Super Core CPI (excluding shelter) rebounded above 4%, indicating persistent inflation pressures.
One bright spot was today’s 30-year bond auction, which sparked a huge buying spree in stocks in the afternoon, ensuring a positive finish. However, short sellers have not given up, but the market has been stuck in a range for most of the month.
Bond yields were mixed, the dollar and gold reacted briefly to the inflation data, and crude oil was the biggest loser, dropping below $69 a barrel.
The Fed is in the spotlight now.
Will Powell stick to his “transitory” inflation story or bow to Wall Street’s pressure?
2. Current “Buy” Cycles (effective 11/21/2023)
Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.
If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.
3. Trend Tracking Indexes (TTIs)
Market sentiment was optimistic for the second day in a row, as traders expected the Fed to signal a possible reduction in interest rates soon.
Our TTIs also rose and ended the day above their trend lines, confirming their positive outlook.
This is how we closed 12/12/2023:
Domestic TTI: +5.30% above its M/A (prior close +5.11%)—Buy signal effective 11/21/2023.
International TTI: +4.84% above its M/A (prior close +4.70%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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