Weekly: The Weak Before The Fed

BOA, Blackrock, JPM, TD

Dec 11, 2022

∙ Paid

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Housekeeping: Good morning. The latest Zoltan write up ( one of two this week) is a work in progress. We want to make the Gold/Oil case crystal clear  first given some amateurs taking potshots last week.  Pozsar is not easy to translate even when he is correct. He is correct on Gold even if it is outrageous. One can only debate the probability of it happening to the degree he describes. But it is happening.

SECTIONS

Market Summary— Slow pain before Fed decision
Research—
Week’s Analysis/Podcasts—
Charts— Metals, Energy, Forex
Calendar— CPI, Fed Rate Announcement
Technicals— Gc, S&P, Oil, NG, BTC
Zen Moment— Mission…
Full Analysis— Gold, Oil, Zoltan

1. Market Summary

A relatively quiet (but weak) data week (Jobs soft inflation hot, surveys slump) and the pre-Fed blackout meant the combination of pre-holiday low liquidity and headline risk chopped market around intraday with stocks hurting (Small Caps and Big-Tech worst), bond yields higher (in the belly of the curve), and a bloodbath in black gold (as WTI fell to one-year lows).

All the majors got smoked lower on the hotter than expected PPI Friday. But the S&P 500 held above its 100DMA as we await a very big week where CPI comes out Tuesday. Then, Wednesday we get the rate announcement ( 50 or 75 bps?).

Assuming the rate hike will be 50bps, we wonder what happens if the CPI comes in hot. How hot does CPI have to come in for Powell to a) only raise 50bps, but talk extremely tough or b) raise 75 bps? We shall soon see.

Sectors

Tech stocks did poorly
Oil did as badly
Miners keep going up
Healthcare continues to chug along

Commodities:

The dollar ended the week higher
Oil prices are down 6 straight days, with WTI ending the week down over 12% with a $70 handle
Gold ended the week unchanged, above $1800, while Silver outperformed again.

Bonds:

US Treasuries were sold hard Friday, erasing all of the week's gains for the long-bond
The yield curve (2s30s) more inverted on the week

Crypto:

Cryptos were broadly unchanged on the week, despite some intraday volatility

H/t Zerohedge for data and some graphics.

2. Research Excerpts:

BOA’s Hartnett Flow Show
JPM’s FOMC Preview
Blackrock’s Global Weekly
TD’s CFTC and CTA report
BOA’s - new stock market leadership

CONTINUES AT BOTTOM…

3. Week’s Analysis/Podcasts:

Metals and DX

Metals/PGMs

Energy

Forex

5. Calendar

MONDAY, DEC. 12

11 am NY Fed 1-year inflation expectations Nov. -- 5.9%

11 am NY Fed 5-year inflation expectations Nov. -- 2.4%

2 pm Federal budget (compared with Nov. 2021) Nov. -- -$191 billion

TUESDAY, DEC. 13

6 am NFIB small-business index Nov. -- 91.3

8:30 am Consumer price index Nov. -- 0.4%

8:30 am Core CPI Nov. -- 0.3% 8:30 am CPI (year-on-year) Nov. -- 7.8%

8:30 am Core CPI (year-on-year) Nov. -- 6.3%

8:30 am CPI excluding shelter (3-month rolling annualized rate) Nov. -- 1.4%

WEDNESDAY, DEC. 14

8:30 am Import price index Nov. -- -0.2%

2 pm Federal funds rate announcement -- 3.75%-4.00%

2 pm SEP median federal funds rate for end of 2023 -- 4.50%-4.75%

2:30 pm Fed Chair Jerome Powell news conference

THURSDAY, DEC. 15

8:30 am Initial jobless claims Dec. 10 -- N/A

8:30 am Continuing jobless claims Dec. 3 -- N/A

8:30 am Retail sales Nov. -- 1.3%

8:30 am Retail sales excluding motor vehicles Nov. -- 1.3%

8:30 am Empire state manufacturing index Dec. -- 4.5

8:30 am Philadelphia Fed manufacturing index Dec. -- -19.4

9:15 am Industrial production index Nov. -- -0.1%

9:15 am Capacity utilization rate Nov. -- 79.9%

10 am Business inventories Nov. -- 0.4%

FRIDAY, DEC. 16 9:45 am S&P U.S. manufacturing PMI (flash) Dec. -- 47.7

9:45 am S&P U.S. services PMI (flash) Dec. -- xx

Main Source: MarketWatch

GoldFix