Phil joins Schwab Network to discuss how Fed comments are affecting the dollar.
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A little bit. A reversal from the past two days is yielded down on the dollar’s down too. Phillip Streible is back with us. Joining us, the chief market strategist at Blue line Futures A we got a little bit of bond bulls, dollar pairs coming back today.
What do you make of it? Well, I mean, we don’t really have much wait. Cleveland Fed master FOMC voters she’s super hawk is know she is also leaving her post here in June when their term ends. She said that march is probably too early this is January 11th and that they need more evidence. CPI shows that there’s more work to do today.
She said it would be a mistake to cut too soon and it’s going to happen later this year. You look at that corp skew, it’s fallen 2.6% a year ago. Was that 5.4%? So inflation’s moving in the right direction. Really. The Fed has two options slower and sooner or faster and later. So I think that’s why we got a little bit of a pullback here.
Dollar index. Treasury yields a little bit of a risk on appetite across the board. Many of the commodities in stock indices, that’s the fill stream of macro take though, because there could be other outcomes. Maybe they go for later, but it doesn’t have to be fast. Maybe we don’t hit a wall on the economy. Maybe it’s, you know, a pause like we did on the way up.
Don’t think that that’s he’ll end up disappointing. That’s what will happen. I think it’ll come down to the election. I think I’ll get some pressure. I’ll get a call on the bad phone. They’ll be like, look, they’re all got to cut 50 bodies. We got to we got to release the dirt, you know, the debt burden. We’ve got to fix this.
We’ll see what happens with, you know, you talk about keep core bank and put options in this and that last time that a banking crisis happened, March 20, 23, gold went up $175 in eight days. So, you know, that’s when the chatter was that the Fed’s got to make cuts right away. So we’ll see if that has any steam that Bancorp that New York City bancorp’s fallen like 60% in a week.
So, you know, it’s tough to see what happens here. The dollar index, that massive reversal of fortune we saw on Friday, the continuation, the upside. I think there was a lot of stops getting hit here today. I think it is weakness in a dollar, just as a little bit of overbought action, really. Somebody should be long tactically from January 18th, the breakout on the dollar index should be trailing this stop.
I suggest 50 day moving average 102 60. But you know you’re wrong if we close below one or 275. Okay, so you think dollars basically that’s it. We saw a little reversion of the of the trade. Do you think Fed’s going to eventually have to cut if your outcomes are either soon and slow or later and fast? That means the dollar probably doesn’t get very high from here?
I don’t think so. I don’t think the dollar is going to go very high. And I mean, you know, the tail wagging the dog, you look at gold, it’s always the timing, the pace, the depth of the interest rate cuts, economic data that comes out, impacts yields, yields, impact the dollar, stronger dollar hurts gold, weaker dollar helps gold.
You know, since 1990, you look at gold historically has risen 6% within 30 days of the first interest rate cut. So short term, if you’re trading gold, it’s the Fed’s forward rate path. It’s going to drive short term price action. So if you don’t if you’re overleveraged and you’re micro managing your position, things like reports that come out on Thursday, like initial claims and continuous claims, they’re going to drive you nuts because they’re like a little yo yo bouncing back and forth.
You know, you got to take a step back. Look at the big picture. The Fed will eventually cut rates regardless of what happens or too high. Right now, it’s a very restrictive policy stance that we have at the moment when even Nestor, who has been a little bit more hawkish. Yeah, like like you mentioned, says eventually this year, I do feel like that’s a know point for the doves that she’s saying, talking about it like it’s almost defined outcome that’s like sleep talking about two years out and baseball what happens look masters done in June so she’s saying in a later end of year they’re going to cut rates.
She’s not even going to be there. She’s already been traded. She’s off the team. You know, So that’s the that’s the that’s the reality. So you got to if you’re going to trade this thing like like your audience should have a scorecard. Who are the voting members? Are they hawkish? Are they dovish? Which way do they lean? And then they should have little notes.
What did she say it the last time she talked? Major press conference. You know, January 11th marches too early. They need to see more evidence. She mentioned CPI. So you’re going to know if CPI is what she mentions in there. She’s watching it. Now. You get a bunch of Fed officials out there all watching the same report. That’s the report you want to you want to look at you want to look at the rate of change is it going up or down?
Things like that. That’s a simple playbook for for your audience to follow. And then I think it alleviate some of the stress. They’re able to trade a little bit better. You know, your best trading is when you’re relaxed. A good grade for sure. Should the numbers from yesterday’s services prices paid top end. Same story on the last days of manufacturing.
Then of course, we’ve got the nice wages component, too. That was a little bit warm, maybe seasonal, but a little bit warm. Does any of that make you un relaxed about no case? No, not at all. I like to see the economy job. I’m not a guy who wants to see the economy crash and burn and get so I could get lower interest rates.
I want to see. I’m just I hate it. Just just like, can’t we all just have a great time here? You know, people should have jobs. That people should have great jobs. I think wages, you know, they don’t need to be like you don’t need to be negotiating for massive pay raises without qualification and things like that. So wage growth was way too.
I come back to normalization, starting to see happy hour pop up again here and there. So prices are coming back down to a couple of bucks of beer so that inflation’s going away, you know. So I think that things are fading out. The economy’s going to be great. It’s not even going to be a soft landing. These tires are not going to even touch the touch the runway.
I think we buzz we’re going to we’re going to buzz the watchtower. You know, it’s like there’s a top ten reference here. All right. Thanks, Phil. Take care. But I like the macro framework. Those tribal chief market strategist blue line futures are developing—