Discussion
Still offline so these are crude thoughts accumulated from monitoring markets via phone.
SPOOZ inability to sell off despite a decisively hawkish CPI print makes me want to capitulate on my tactical pullback thesis and get fully invested behind the AI + Fiscal structural/cyclical bull market.
But FICC is the key tell today with rates up across the UST curve in response to CPI and the Nick Timiraos piece revealing the Fed is considering removing a cut in the March SEP.
This is now the second hot report in a row, and now 3/6M annualized measures of Core CPI have inflected higher. My thesis that the Fed will start hiking again at the December FOMC is actually ahead of schedule based on the current upward inflection underway in realized inflation readings.
I’m wondering if Powell’s well-caveated dovishness (well-caveated because cuts are predicated on the path of the economy following the FOMC’s SEP projection) last week was intentionally designed to foam the runway for more hawkish policy. It was Powell himself who said the FOMC was seeing a pick-up in the economy at the January FOMC post-meeting presser.
With SPOOZ well supported here from OPEX flows and the NVDA event next week on March 18 a potential tactical blow off event, I believe a tactical pullback to the former ATH of 4818.62 on SPOOZ remains base case into April.