Yesterday's inflation print was described with terms like "warm" and "sticky". Lodging and used car prices were the risers while OER finally showed some signs of softening and the markets initial reaction was to send yields lower and stocks higher. The 10Y Auction went swimmingly with the highest bid to cover in history reportedly, though yields eventually backed up some post auction. We head into today's PPI print with a 2Y at 4.16% and the 10Y at 4.27%. Probability of a 25bp Fed cut next week hover around 90%.
Nasdaq 20k for the first time as quantum computing propels Alphabet and AI propels everything else. Bitcoin crossed 100k again as I guess quantum computing breaking encryption isn’t a concern, although as some have pointed out it’s equally concerning for traditional finance…problems for another day I suppose.
Up in Canada they cut 50bps bringing their benchmark rate down to 3.25% while signaling they may not be cutting much more and of course some concern over the impact of the incoming U.S. adminstration. We'll see what the ECB has to say today as they are expected to cut 25bps.
On the day ahead it's the ECB and PPI.
XTOD: Inflation came in a touch above expected, with core CPI at an annual rate:
1 month: 3.8%
3 months: 3.7%
6 months: 2.9%
12 months: 3.3%
The last mile is proving very, very stubborn. Core CPI up 3.7% (annual rate) over the last 3 months. That is at the 98th percentile of performance from 1992-2019. You can make excuses about noisy factors. But there were a lot of 3 month periods during those decades with noisy factors too--but only 2% got above this.
XTOD: Nomura Securities, for example (Japan's stock brokerage Goliath) issued a report just before the market peaked on Christmas day 1989 explaining how Japan's insane PE ratios were perfectly rationale. Then "pop!": The Nikkei took over 30 years to regain that peak.....So be warned: "commeth the hour, commeth the man". Or in our current financial market asylum: "commeth the bubble, commeth the bullshit". Most Wall Street practitioners are well-paid tarts. If you want to feel better buying Nasdaq up here, they will help you with that. But be warned: having slept with these Wall Street tarts, one morning--in the not too distant future--you will wake up full of remorse, self-loathing and a financial STD.
XTOD: It’s still beyond unfathomable to me that these NFL teams are voluntarily passing on the greatest football coach to ever live because he has a method that works better than theirs and they can’t learn it or choose not to try to. UNC’s gain.
XTOD: Text a coworker at a random time “are you joining this meeting?” as a fun holiday prank
XTOD: Do not confuse things that are hard with things that are valuable. Many things in life are hard. Just because you are giving a great effort does not mean you are working toward a great result. Make sure that mountain is worth climbing.
https://x.com/jasonfurman/status/1866920395984589250
https://x.com/shortl2021/status/1866913639057461291
https://x.com/EvCoRadio/status/1866983858627109242
https://x.com/ModeledBehavior/status/1866931110933897519
https://x.com/JamesClear/status/1866889443962954049
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