The collision of global markets and social mood

Wednesday, February 15, 2017

Wednesday -- Hawkish Yellen, Hot CPI, Apple Vs Deere, Crazy Train

S&P E-mini Futures:
Backing off from a new overnight high, more so after hot CPI numbers.

An odd takeaways from Yellen's hawkish testimony yesterday: a strategist from Geneva, Switzerland said: “It’s risk-on again, thanks to Yellen.”

Could it be that someone actually believed Yellen when she hastily added at one point that a faster pace of rate hikes would mean that the economy was doing better?

Rather, the Fed sounds like it is trying to convince anyone who will listen that rates are going higher because the Fed healed the economy, not because the credit cycle has turned.

CPI was just released and, careful, it's hot. CPI surged the most in four years. And it gives Yellen plenty of hawkish cover. Maybe she'll be a dove today.

Last quarter's 13-Fs came out. Most interesting was that Warren Buffett dumped John Deere (DE) for Apple (AAPL). Sounds like a weird bet against America and all-in on Foxconn.

Twitter CEO Jack Dorsey bought 426K shares of his company. At least he's bullish.

CHF & JPY agree with Risk On, but AUD & CAD see higher rates hurting commodities.

USD ripping on CPI.

Another red day thus far after Yellen's hawkish testimony and especially the hot CPI.

WTI crude still hanging at highs. Maybe gathering steam to fill 56.50 gap.

NG trying to rally, but looks like it could retest the 2.60s.

Gold, silver, platinum and palladium don't seem to believe it's really inflation. Nor does copper.

S&P Outlook:
A weak correction reversed yesterday even though Yellen openly discussed rake hikes and Fed balance sheet reductions. A great example how markets do what they want to do when they want to do it.

SPY put/call ratio was 1.49, so a lot more put buying yesterday, not capitulation. So far they're right, though.

As noted yesterday, calls are cheap. Well, so are puts. Volatility is non existent.

For me, I still want to see something break before I stand in front of the locomotive. Key word: loco.

Crowds of crazy people are capable of anything. And until the market stops acting like it's in a third wave higher, by giving us a fourth wave correction possibly into the 2320 area, I'm still looking for places to use cheap calls to ride the crazy train.

Only a break of 2300.99 at this juncture would sober up the party, although a close below 2320 would be a clear warning shot.

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