[Chart courtesy of MarketWatch.com]

1. Moving the market

The rally in stocks and cryptocurrencies came to a halt and reversed as traders grappled with recent record highs, shifting their focus to the October Producer Price Index (PPI).

The PPI headline number matched forecasts with a 0.2% month-over-month increase, while September’s figure was revised upward from 0.0% to 0.1%. On an annual basis, the PPI rose by 2.4%, surpassing the expected 2.3%, with the previous month’s figure also revised higher from 1.8% to 1.9%.

These figures indicate that inflation is not moving towards the Federal Reserve’s 2% target but rather in the opposite direction, prompting traders to question the likelihood of a December rate cut.

This data reinforces my belief that inflation is far from over and may worsen, potentially leading to the much-dreaded condition of stagflation.

JP Morgan CEO Jamie Dimon echoed these concerns, stating:

– *DIMON: THINK THE CHANCE OF SOFT LANDING LESS THAN OTHERS THINK

– *DIMON: “NOT SO OPTIMISTIC” THAT INFLATION WILL GO AWAY QUICKLY

– *DIMON: GROWTH IS BEST POLICY TO FIX DEFICIT PROBLEM

– *DIMON: TRUMP INHERITING INFLATION THAT MAY NOT GO AWAY QUICKLY

Federal Reserve Chair Jerome Powell also acknowledged in his remarks that “the Fed is in no hurry to cut rates… and inflation is on a bumpy path.” Powell’s comments accelerated the market downturn, with small-cap stocks bearing the brunt of the sell-off as heavily shorted stocks were pushed lower, erasing recent gains.

Despite this, traders are holding onto historical seasonality patterns, which suggest a rally into the inauguration during election years, followed by a peak in February.

The dollar rebounded after a midday slump, as did gold, although the precious metal slipped again. Bitcoin, after an early bounce, found support at the $88,000 level.

Will tomorrow’s retail sales report add even more volatility to the markets?

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[Chart courtesy of MarketWatch.com]

1. Moving the market

The markets began the day on a positive note as traders sought to maintain the post-election momentum.

However, by the end of the session, the major indexes had delivered mixed results. The hope that inflation is under control remains far from reality, a point I have emphasized throughout the year.

Today’s Consumer Price Index (CPI) numbers confirmed that the issue persists. For the 53rd consecutive month, core consumer prices rose on a month-over-month basis in October, with the year-over-year pace accelerating to 3.33%, as reported by ZH.

The headline CPI increased by 0.2% month-over-month, aligning with expectations, and pushing the year-over-year rise to the anticipated 2.6%. However, the Super Core figure, which excludes shelter services, remains at elevated levels.

Traders are now turning their attention to the Producer Price Index, set to be released tomorrow, and the eagerly awaited retail sales data on Friday.

Mega-cap tech stocks saw early gains but ended the day only marginally higher. Bond yields continued to rise, though at a slower pace, while Bitcoin surged past $93,000 before some profit-taking occurred.

In contrast to Bitcoin’s ascent, gold prices fell to near two-month lows, partly due to the dollar’s relentless climb to two-year highs.

Former Wall Street money manager Ed Dowd predicts trouble ahead, believing the economy is on the verge of a downturn. He questions why the Federal Reserve is aggressively cutting rates when some major indexes are at or near record highs.

Could it be that they see what he does—blatant manipulation of government statistics that obscure the true state of the economy?

We will find out soon enough.

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[Chart courtesy of MarketWatch.com]

1. Moving the market

The markets began the session moving sideways to lower, as traders appeared to take a breather from the highs reached in the post-election rally.

Bond yields climbed, with the 10-year yield advancing nearly 0.12% to close at 4.43%, marking its highest level in five months. This increase in bond yields was sufficient to push equities downward and the dollar upward.

The anticipated short squeeze was notably absent, leading to a significant decline in Small Caps, followed by gold, which dropped to two-month lows due to the dollar’s continued strength.

Bitcoin once again emerged as the top performer of the day, coming within a few dollars of crossing the $90 level, and even briefly surpassing it after hours. The cryptocurrency received substantial support from massive inflows into Bitcoin ETFs.

With the resurgence in global liquidity appearing robust, Bitcoin seems poised to potentially surpass the much-anticipated $100,000 price point.

Will it happen this month?

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[Chart courtesy of MarketWatch.com]

1. Moving the market

The Dow continued its rally from last week, surpassing the 44,000 mark, while the S&P 500 also made significant strides by crossing the 6,000 level. However, the Nasdaq lagged. With the bond markets closed, trading activity was somewhat limited.

Several major banks saw their stock prices rise significantly, contributing to the Dow’s impressive gain of over 300 points. Traders are hopeful that Trump’s election victory might lead to more lenient regulations for the banking sector.

Bitcoin underwent a massive surge over the weekend, effortlessly breaking through the $80,000 barrier and ending the day around $87,000. This rise was fueled by hopes of deregulation and the historical trend that Bitcoin’s best performances occur approximately six months after each four-year halving cycle.

In contrast, gold prices have been declining since the election. However, when adjusted for inflation, the precious metal has not seen a significant pullback from its all-time high.

Small Caps emerged as the big winners, while the Nasdaq, despite closing slightly in the green, was the biggest loser. This was partly due to the most shorted stocks recording their fifth consecutive day of gains.

The dollar rallied back to recent highs, while crude oil prices fell to two-week lows, dropping below the $70,000 level.

The futures markets are indicating a potential increase in 10-year bond yields, which could put some pressure on the bullish sentiment when the markets open tomorrow.

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