It is common-consensus in the media today that the Fed – which gavels in this morning and announces rates tomorrow at 2 PM Eastern – will not move to change interest rates. But we see a rather intriguing possibility now peeking out of our charts – namely they could.
First, it’s axiomatic (around here, anyway) that the Fed gets a pass on “being political” because there is such a lag-time between when a rate change is announced and when its results become apparent at the consumer/street level.
Supply-chains are long…so it’s not just money that drives future price changes. It’s also the “length of the production pipeline” for simple raw materials, and the length of the follow-on distribution pipeline. That’s why a change in oil prices can take up to 50-65-months to fully propagate around the economy.
A surprise Fed hike would signal an anti-Trump 2020 move to us.
The biggest impacts come first, of course. Diesel goes up, food goes up the next crop-cycle later. But, the costs of frozen food (where diesel might fire the generators that run the freezing gear) might take a couple of years because utilities lock in prices will in-advance. Could a hike now impact by November?
That’s why we’re looking with more suspicion than usual at this Fed meeting.
Our internal trading model reduces to a simple pair of lines. When the Red line is above the Blue line, we are “cleared to short.” With a mile-long string of asterisks which is why this is not trading advice.
Otherwise, when the Blue line is over the Red then it’s OK to jump in on the long side. But again, with a zillion terms and conditions that include (just to name a few) the Elliott wave count, the monthly slow stochastics, and so on. On-balance volume, momentum? Sure, toss ’em in the mix, too. Blend well and bring rosary beads.
Here’s the problem we see in the red-blue battle today
(Modeled-forward based on today’s futures prices and explaining the light-yellow candlestick-thingy was a range I was looking at yesterday when short was center-stage…)
This isn’t one market. It’s a composite of several US indices. These – equally dollar-weighted – do a better job of revealing underlying market sentiment than single markets which may be more easily manipulated both by commercials and circumstances.
Take this past three days: The S&P has remained somewhat rational, the Dow has been all over, and the Techs have fallen based on the FB problems and so forth. Apple and several others will announce earnings today, too…so tech action could move accordingly…
You probably don’t want to get down into this level of detail when trading based on differentials between different-sized oscillator samples. If you were, you’d be a Peoplenomics subscriber where we’ll get into more detailed discussion tomorrow.
The abbreviated version here is that our daily data broke to a new all-time high last Thursday. So, we are naturally inclined to believe that a blow-off into the third week of August is the most likely (Elliott) outcome. Still, we nevertheless get nervous when the Fed is meeting and when democrats (the party of the rich/establishment) are looking to “cap” Trump’s run which has been putting points on the board like crazy, lately.
That’s why we felt compelled to talk about the chance of this “Deep State Surprise” potential. The market is overpriced, sure, no question. BUT that doesn’t mean we can’t move higher-still since the market senses how things will be six-months to a year out. And for now, while that seems pretty good, we expect Housing as already begun a slow roll-over and in the process, will spell the short-term end of the Trump Bump.
See the Futures? Lumber was sucking-wind and that is one reason to think Housing data forward from here might be “iffy” and we noticed (very much worth mentioning!) that Lumber is down another 4.14 percent in the early futures trading again today. Who do these lumber traders think they are? Facebook, Twitter, or something?
We’ll post the Case-Shiller (S&P, CoreLogic and whoever) data around 8:15 to 8:20 AM Central. Maybe earlier, but unlike politicians, we like to under-promise and over-deliver.
Homebuying, meantime, continues to become a shorter, smoother process for those stepping up: “Shift to Accommodate Millennial Home Buying Preferences Reduces Loan Application Defect Risk, According to First American’s Loan Application Defect Study…”
On To Other Data
These aren’t as “hot” as Housing will be (or cold based on futures pricing), but important nevertheless:
Labor Department Employment Cost Index is just out.
“Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending in June 2018, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.5 percent and benefit costs (which make up the remaining 30 percent of compensation) increased 0.9 percent.
Compensation costs for private industry workers increased 2.9 percent over the year, a larger increase than the 2.4 percent increase in June 2017. Wages and salaries increased 2.9 percent for the 12-month period ending in June 2018 and increased 2.4 percent in June 2017. The cost of benefits rose 2.8 percent for the 12-month period ending in June 2018 and increased 2.2 percent in June 2017. “
And for Bureaucrats?
“Compensation costs for state and local government workers increased 2.3 percent for the 12-month
period ending in June 2018.”
Under Trump, we observe, the workers – not the bureaucrats – are coming out on top this month. No, that’s not pro Trump, that’s data. Try to differentiate.
Speaking of Trump… the…
Manafort Circus Opens
The highlight – center ring – will be how Paul Manafort didn’t register as a foreign agent when he worked some Ukraine business long-before “stumping and Trumping.” The “collusionists” will try to muddle this and toss in the word Russia as often as they can to keep selling the big lie. If you hear the word Russia in coverage, don’t trust that media source unless it’s a charge in Manafort trial…
If you are a Trump-hater, see Time‘s coverage about this in “Here’s What You Need to Know.”
So far, we’re not impressed with much of anything Mueller has done and the media’s just hawking prognostications from Impeachers and Haters to bump up ad revenue. If you proud have “Sucker” branded on your forehead, these are “thrilling” times.
Despite the Jeer-leading media, Trump is still very much “on game” as “Threats aside, Trump says he’s willing to meet with Iranians.”
Yet here comes the exposé: Woodward to release Trump book before midterms.
Several of our readers wonder if the Hildebeast would have reduced taxes, grown the economy, made a serious run at working out the NorK-mess, and let’s not forget fixing lopsided billionaire embellishing trade deals and a huge middle class tax cut. Seriously? HER?
The Victimology Files
Melinda Messenger: ‘How do breasts have so much power?’ (Because most men are idiots, m’ dear. D’uh.)
Yes sir, Victimology is the new growth industry! Be a victim today! Sue, defame, blame! It’s how to polish your Platform and micro-monetize it! Yee-haw!
Complimentary democrat party memberships included! Member FDIC. model number 23490874er90467, see details at dealership, void where prohibited, does not include $750 doc fee, and dealer prep and state and local taxes.)
Fuzzy-speak at Foggy-bottom
Say, here’s a fine pissing away of Ure tax money – from the State Department: Press Releases: Remarks on “America’s Indo-Pacific Economic Vision”
“Dear Secretary Pompeo: Pah-leeze! Figure a way to cut State’s workforce in half and their influence by a third. Then get up and talk about America being open for business.
But this kind of fluff? Sheesh! Good God, man.
(Don’t mind me. I live in a delusional world where a good CEO-type walks in, gives a 3-paragraph speech: (Our problem is… Our options are…My decision is… Now get out and freaking implement!)
In Ure’s world, politicians who don’t know what the ‘f’ they’re doing hide their ineptitude in a sea of useless words rather than getting-on with rewriting the future. Socks on a goose, as a friend says.
Direct speaking reflects clear thinking while cutting workforce requirements dramatically and, oh yes, saving tax money.
I counted 3,599 words in this State press release while finding nothing of news value to it. Political facetime exercise for the snooze channels. This should explain on thing: the recent spike in Anderson County Texas vodka sales. People actually read this drivel.)
“Moron the ‘morrow…” (after the housing data)