Core CPI came in at 0.3%, above expectations, in line with Waller's comment today that “if core is ≥0.3%, a 50 bp hike should be considered.” Now we wait for the plunge.
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清水研市
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Closed all my long positions and reversed into shorts on QQQ, SOXL, RAM.LITE, MU, and NVDA. I also opened short positions on BTC and ETH this morning; both were already very weak then. Let me lay out the reasoning:
1. At 5 p.m. this afternoon, Fed Governor Waller spoke in London. He said that even if tonight’s inflation data improves, he still favors a 25-basis-point hike in December.
If core CPI is still up 0.3% or more month over month, as it has been for the past two months, the Fed “should consider” a 50-basis-point hike; raising rates by only 25 basis points would damage the Fed’s credibility. The market started to weaken a bit after those remarks. Although today’s CPI is very unlikely to come in hotter than expected and will probably meet expectations, the issue is that the odds of a 50-basis-point hike in December were almost zero before, but jumped to 5% after his comments. That probability is still very low, but it introduces uncertainty for the market. Even if today’s CPI meets expectations, PPI on Friday is also important, and investors may be reluctant to make aggressive moves before those figures are released.
2. Today’s price action across after-hours, overnight, and pre-market trading was actually weaker than I expected. Every genuine market rebound has involved a sustained rally, not a rally that runs all night and then stalls. This kind of action is only seen in rebounds during a continuing downtrend. It’s possible this rally will follow the 2022 playbook.
3. There’s also a CRWV horror story coming after the market close tomorrow morning. Keep in mind that Musk has already hinted that companies like CRWV may not fare well in the future.
4. The short positions on BTC/ETH/SOL are fairly straightforward. Even when QQQ rebounded today, they were weak—let alone if QQQ falls again. This time, BTC might even test 70,000; that becomes more likely if CPI comes in hotter than expected.
Stop-loss plan: If QQQ holds above 683.65 after tonight, I’ll cut the positions decisively. It’s only a few points anyway.
1. At 5 p.m. this afternoon, Fed Governor Waller spoke in London. He said that even if tonight’s inflation data improves, he still favors a 25-basis-point hike in December.
If core CPI is still up 0.3% or more month over month, as it has been for the past two months, the Fed “should consider” a 50-basis-point hike; raising rates by only 25 basis points would damage the Fed’s credibility. The market started to weaken a bit after those remarks. Although today’s CPI is very unlikely to come in hotter than expected and will probably meet expectations, the issue is that the odds of a 50-basis-point hike in December were almost zero before, but jumped to 5% after his comments. That probability is still very low, but it introduces uncertainty for the market. Even if today’s CPI meets expectations, PPI on Friday is also important, and investors may be reluctant to make aggressive moves before those figures are released.
2. Today’s price action across after-hours, overnight, and pre-market trading was actually weaker than I expected. Every genuine market rebound has involved a sustained rally, not a rally that runs all night and then stalls. This kind of action is only seen in rebounds during a continuing downtrend. It’s possible this rally will follow the 2022 playbook.
3. There’s also a CRWV horror story coming after the market close tomorrow morning. Keep in mind that Musk has already hinted that companies like CRWV may not fare well in the future.
4. The short positions on BTC/ETH/SOL are fairly straightforward. Even when QQQ rebounded today, they were weak—let alone if QQQ falls again. This time, BTC might even test 70,000; that becomes more likely if CPI comes in hotter than expected.
Stop-loss plan: If QQQ holds above 683.65 after tonight, I’ll cut the positions decisively. It’s only a few points anyway.