Vix back over 22. We need Prog's butt holding gif here.

WWR over $4 again premarket.

FJ43 said:

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*US Apr Consumer Prices Increase 4.2% From Year Earlier; Core CPI Up 3% Over Year

— *Walter Bloomberg (@DeItaone) May 12, 2021

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Wednesday Macros

Current Equity Futures Mask the Tantrum Levels Overnight

We watched the markets swoon about midnight last night... The Taiwanese index went down a quick 8.6% before bouncing to close only down 4%... US equity futures were down Dow 290 points, S+P down 36 points, and Nasdaq, after bouncing yesterday, was down 160 points... The volatility did not extend to US treasuries where the overnight range was 1.61 to 1.63...This points to the world of limited liquidity... First is the old story we have been talking about for years, that the regulations and the Volcker rule , along with the Fed interventions for over a decade, have curtailed dealers ability to mitigate moves in the markets, so volatility and ranges remain wider at any given time... Just look how the Nasdaq came back yesterday from its lows without a catalyst... Dealers participation will never be the same that we experienced over our career... Can you imagine Credit Suisse bulking up secondary market trading?... After they thought they had a low risk business in prime brokerage?... Markets have to deal with what they have and hopefully the Fed will exit at some point, but not in the near term.

What is driving the markets... Fear is always a good one... Too much optimism in equities... Some hedge funds are leaning against that... Trying to take advantage of the overzealous sentiment in risk currently... But the real move of the markets is coming from the derivatives groups who are hedging their books via options.. The gamma risk is huge and is the catalyst for the inter-day and multi handle moves seen overnight and throughout the day... yesterday we saw dealer hedging as the accelerant as QQQ registered an extremely negative gamma reading... Expect these moves to continue

So what does that bring for us today?... 4 Fed speakers led by Clarida at 9 am, but we already know what he is going to say, pushing back on inflation and probably use the word transitory a dozen times... If you are bidding on the 10 year note today or the 30 year tomorrow, do you want to hear that the Fed is not concerned about 2.5 to 3% inflation?... Rosengren is more interesting as he will talk on cryto currency, but last week he made strong comments that the Fed should reduce mortgage buying, who needs to support a market that is on fire... But more and more smart people are talking inflation... Gas prices are soaring because of the pipeline issues, but the rest of the commodity space has been setting records all year.

Credit spreads...we saw a 1% move wider yesterday in IG... And now there are reports that smart money is shorting HY, expecting a significant widening... There are so many ways to do it... ETF space with JNK and HYD, where both are only up a little over 1% this year, or LQD, which is already down about 5% this year... Or plenty of opportunity in the derivative space... If spreads start to widen, which they will at some point, that will bode poorly for equities.

But the big move overnight is worth noting... And as we have been writing this over the last 20 minutes, S+P are down 10 points and heading south rapidly... Beware of the fear, and the over their skis optimism... Lots of turmoil.

Rates... Range bound until we are not... 10 year Bunds and 10 year treasuries are holding in for now... But Japanese lifers say they will not be participating in today's auctions...1.68 is near term support with 1.77 after that... Resistance is 1.58 and 1.52....we still do not like duration

FJ43 said:

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Prognightmare said:

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FJ43 said:

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*US Apr Consumer Prices Increase 4.2% From Year Earlier; Core CPI Up 3% Over Year

— *Walter Bloomberg (@DeItaone) May 12, 2021

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Let the games begin.

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I can't believe they admitted a number higher than 2%. It's probably 10% or more but gotta start somewhere

FJ43 said:

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HEADLINE YEAR-OVER-YEAR U.S. CPI INCREASE LARGEST SINCE SEPTEMBER 2008

— *Walter Bloomberg (@DeItaone) May 12, 2021

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My thoughts on how Jpow and the Gooberment is reacting:

Our current government on inflation.....