Transcript
The other commodities we watch as well dollars at the epicenter of many of these products and watcher. Okay, now to focus on the fundamentals behind the technicals, we got those three people joining us chief Market Strategist at Blue Line futures. Phil, am I right? First of all, welcome to my right to argue that the dollar the 10 year yield reflection of the Fed at this point, are they both they seem to be kind of looking for direction pretty clearly in a holding pattern here.
Yeah, it looks like there’s a lot of complacency in the market. At the moment, we are at about a six day high on the dollar index right now, but it doesn’t feel like it’s gonna break out to the upside. 10 year yields the line in the sand for me 4.3%. On the third year, it’s going to be 4.47%. We don’t want to see a break above those levels. Now the economic data clearly impacts yields, yields impact the dollar index, the stronger dollar hurts a lot of these different commodities. So with the dollar index up about a quarter percent here this morning, putting a little bit of pressure on the markets, but we’re seeing things like the gold market kind of trickling right back up here stuck between the 50 and the 200 day moving average. So we’ll see what happens we expect a small upward revision on GDP here about 3.4% that consensus 3.3% And then we are going to have those two fed speakers, the FOMC voters that we’re gonna watch here today, Atlanta Fed President Bostick and then also Fed President Williams, but they’re not giving us anything new. The commentary is like so dry, there’s so playing there all wait, no shock, basically,
is how we put it in the last block.
We’re not getting anything like that December meeting where you know, and then and then Powell reversing course, it’s just not it’s just not happening
right. Now. Talk to me about the dollar again, at this 104 level. Yeah, it’s higher, it’s up about a quarter of a percent but still relatively contained. You mentioned how it hurts commodities, I’d argue, continued strength and a move up through 105 could hurt stock bowls, right? We’ve been arguing for a while that the activity we’ve seen conducive to that run up, we’ve seen to these historic levels in the indices. But in that category of some of the supporting contributing factors, we’ve got the dollar, you’ve got crude and for that matter, gold’s a reflection thereof in terms of some of those geopolitical concerns contained 2050. I mean, all of these markets very supportive of what we’ve seen as far as stocks,
yet historically, when the dollar tops or bottoms that merits turning points in the in the stock indices, but stock indices have really kind of disconnected themselves. I do believe that this rally in stock indices is broadening out. I mean, people argue that left and right, because they’ll say that the rustle is like 20% below itself, eyes. But I mean, you got to kind of look at where we’re at right now, you can’t always go back to you know, where we’ve been so far back, because the dynamics were completely different at certain periods of time. So I do like the underlying narrative, and people are chasing a lot of different stocks here. There are the, you know, four or five that are controlling everything, but it seems like each one has its own little story to tell. Now I do know, I know that when we talk about like the video moving $100 in a day, Palo Alto moving $50 You know, that super micro computer going up a couple 100 Those tend to mark some kind of tops or a capitulation point in the market here. But it seems to be very resilient at the moment.
Yeah, I agree sustainability with those names come into question when you see a big move like that, but also each stock does tell its own story or has its own story in many ways, right? Uh, talk to me. And kind of getting back to the currencies discussion here. Speaking of having its own story, the Bank of Japan, I kind of feel like we haven’t really gotten anything definitive from them one way or the other. And that tipped the scales for the dollar ultimately provide a little bit of clarity there. But even recently, what was it looks like slightly firmer than expected January CPI, the core rate 2%. Targeted ultimately kind of renewed speculation for boj hikes but there’s still some uncertainty there.
The BOJ that’s gonna be Japanese yen that’s going to be the one that go along once they start cutting rates in the US or we start getting dovish, and the reality of the snowball effect, you’re gonna see a big short covering rally in the Japanese yen. So that’s definitely one you want to keep on the radar. Look at those farther out option contracts, things like that, because of the complacency in that market. The downward trend. There’s not a lot of premium in those options, but the Delta could be a quick vortex once it gets underway. So it’s on my shopping list. It should be on every one shopping list to look at the the end to the upside. But it’s going to take a more dovish fed over here and those actual interest rate cuts in order to get that going. Yeah, here’s
a look at the yen. It has been struggling to say the least here. This is just going back to the fall. I’m sorry, summer of last year, we were up around 7374. You can see the failed attempt to as we rally back into the end of last year beginning of this you’re up to 7200. We’ve come right back down to those lows from November of last year. Take a look here a little bit of a longer term chart. It really speaks to the significance associated with these lows. Take those out here and we could see some fun Are there energy look at this on a weekly basis here looks like While Donald was, what does this it looks like nine weeks in a row here something was 10 weeks in a row. As we’ve continued that slide, talk to me a little bit about some of these fed cut rate expectations. We were joking around in the office earlier this morning before the show, I feel like looking back to December of last year, and there was something like a 90% chance 90% Plus chance that we’re gonna get a cut this March here now there’s back basically no chance thereof. I mean, I feel like that fed, fine fed tool that fed funds, the watch tool that we have, ultimately, what is it really a predictor thereof, I mean, if we get so hyped up about 90% chance, and all sudden it falls off into basically a zero expectation thereof.
And the devil is going to be in the details on that one. So as that sentiment shifts we see that start to come out. Maybe the CME will make that a tradable product, there were short love that 97% Or go along with with those expectations. So 69% chance right now that they’ll cut in the May meeting. It’s like a 0% chance in March. And then if you go out to June, it’s a 64.5% chance that they’ll cut. But you got to see this weaker economic data in the economy has been really quite firm, at least in my opinion. And what I see around here, we’ve been traveling all over the place. My team’s in Houston right now. We were in Las Vegas last week, and it was just rocking. I mean, people are just spending money left and right. Maybe they don’t have it, maybe they’re taking on credit card debt and things like that. But it just doesn’t seem like the economy has been derailed whatsoever. And I think that we’re kind of at this new new time. You know, the one thing where this conversation is all about currencies and interest rates and things like that, and I look at Bitcoin, up 6% here today, and in you know, you ask yourself, what kind of currency moves 6% in a day, we don’t live in like Argentina or, you know, some South American country where you see that type of volatility there. So I really don’t think that Bitcoin is really a currency, it’s more of this commodity, if anything,
yeah, it’s kind of one of the more outside size moves we’ve seen since the ETF approval. Ultimately, there had been kind of a reduction. I felt like in the volatility. Today’s move definitely stands out here. But also you can tie it into kind of that risk on that optimism about also the ETF sort of backdrop, adding to it. Appreciate you joining us here Phil, thanks for covering currencies and treasuries with us here this morning on the Future Show Phil Strieber chief Market Strategist at Blue Line futures a quick break and we come back. We’ve got GDP headed our way Chris Rock