A Temporary Relief... But CPI Looms

The headlines say that markets are up because of a cooler than expected PPI report.

Action to Take: With Trump's inauguration less than a week away, we’re back in ‘All news is bad news’ territory. A cooler inflation print tomorrow would help, but that's unlikely - especially with services inflation proving sticky. We're stuck between a rock and a hard place: either inflation stays high in which case rates must stay higher for longer, or something breaks and we get the recession nobody wants.

There is no need to force trades today. Options markets are pricing in the biggest CPI reaction since the banking crisis, suggesting tomorrow could be particularly volatile.

Just trust our capital flow signals–they’ve guided us through similar challenging periods before. There will be opportunities this year; we need patience to act when conditions align and discipline to step aside when they don't.

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Momentum: Negative (Trend Since December 10).

Markets staged a late recovery Monday after an early tech-driven selloff threatened …