MAD Macro - Who's in Charge?
The Tin Man Pretending to Be in Charge
Jake and Jill Are Actually in Charge
The WSJ has a good article about the White House trying to manage the Mideast War, linked here. It’s titled “Inside the White House’s Frenetic Scramble to Avert a Full-Blown Middle East War”. Lately it seems like the White House is in a frenetic scramble to control all sorts of things: the Ukraine War, the Mideast War, inflation, violent anti-Semitism protests, climate change, the news and the Orange Mad King I’s trials. That’s a lot of problems for the Tin Man, particularly at his age. No worries, Jake and Jill are actually running the country. Don’t worry about the Tin Man, he still thinks he is in charge.
Meanwhile, Jake and Jill have the Orange Mad King I all tied-up in court. Today the trial of the century starts in NYC. Today’s online NYT has a remarkable spread on the trial. The NYT staff is so excited, they are actually breathless. The story jumps out of your iPad screen and practically hits you in the face. If the NYT gets their way, they can keep this story on top for two weeks or more. This trial will get better coverage than the OJ trial. It will not matter what else is going on in the world. The Orange Mad King I’s trial will be the top story.
Markets had a rough week. On the charts risk assets are breaking important trends and support levels. Maybe it’s overdone. We get a lot of important earnings reports this week. The Mag 7, after leading the market up, are now leading the market down. Nvidia is down more than 20% from it’s recent highs. I included a good inflation chart today. Short-term three month inflation has clearly turned higher in the first quarter of 2024. 2yr yields are back to 5%. Larry Summers thinks the Fed might need to raise rates. I don’t think that’s going to happen in an election year. Jake and Jill will make sure of that. Thursday and Friday will be the big days for economic news. Thursday we get our first look at Q1 GDP. It’s expected to be 2.5%, down from 3.4% in Q4 2023. Friday we get the important PCE deflator.
I updated the U.S. Dollar Index, U.S. 2yr yield, U.S. 10yr yield, U.S. 10yr-2yr yield spread monthly, WTI crude oil, copper weekly, spot gold, bitcoin, S&P futures, S&P cash weekly, NASDAQ 100 futures and NASDAQ cash weekly charts below.
The dollar is stronger and interest rates are a little higher. 2yr yields are trading 5% today. I included the long-term chart of the 10yr-2yr yield spread. I still think the Fed will find a way to ease and save democracy. If that happens the dollar should fall.
Crude oil is unchanged and copper is higher. Gold is sharply lower this morning but still in an uptrend. Bitcoin is higher after holding the 59,000 support level last week.
Both the S&P and NASDAQ 100 futures are higher. I included the long term weekly cash charts of both for perspective.
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Unless otherwise stated, Bloomberg is the source of all data and charts.
S&P 500 futures are a type of derivative contract that provides a buyer with an investment priced based on the expectation of the S&P 500 Index’s future value. Nasdaq 100 futures are commodities futures products traded within the equity futures sector. West Texas Intermediate (WTI) oil is a benchmark used by oil markets, representing oil produced in the U.S. Brent Crude Oil is a blend of crude oil recovered from the North Sea in the early 1960s, whose price is used as a benchmark for the commodity's prices. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners. UBS Bloomberg Constant Maturity Commodity Index is a total return rules-based composite benchmark index diversified across commodity components from within specific sectors.
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