The calendar has lots of things on it, but we suspect two will be the important ones

Outlook

The calendar has lots of things on it, not to mention whatever mischief Trump will get up to, but we suspect two will be the important ones. First is the late release of the CPI on Friday, which is occurring only to deliver a number to Social Security. While it comes last in the week, we can expect a lot of chatter ahead of time.

The consensus forecast is 3.1% from 2.9% and core CPI the same 3.1%. Everyone is puzzled why it’s taking so long for the inflationary effects of tariffs to be visible. Even the World Bank/IMF noted the delay, while confident growth everywhere will be hit. We also get the S&P PMI on Friday.

Before then on Tuesday, Japan’s parliament votes to elect a prime minister, and top LDP leader Takaichi has made a deal with a coalition party to get close to a majority. Takaishi will be the first female PM in Japan. This will presumably up the ante on pressuring the Bank of Japan. Reuters calls it the “Takaichi trade,” meaning a halt or delay in the BoJ raising rates favors equities, which we saw overnight (Nikkei up 3.37%).

The third factor is Trump already offering an olive branch to China in his usual TACO manner, failing to grasp the nuances in China’s positioning. There is no doubt China views him as an ugly American lout who cannot see beyond the next move. This is kind of fun in a way but also very dangerous because he is a childish, vindictive lout.

Forecast

We find that the hanging man candlestick in FX is very reliable, and we have it in on the daily chart of the Swiss franc. Unfortunately, the Swiss franc is a unique currency as a safe haven, so we can’t extrapolate to the euro or others. We have a hanging man in the yen, too, but with the same warning

We are in a whirlpool of conflicting sentiments. Sell dollars, the Fed is cutting rates and the government is closed with not even any talks. Buy dollars, the economy is rip-roaring and not even Trump can harm it, plus Trump will TACO on tariffs and make a deal with China, maybe this week.

We call this well-nigh untradeable.

Tidbit: Long neglected but now celebrated, India’s vast contribution to ancient history. From zero and the decimal system to hundreds of languages permeated with Sanskrit (including 40,000 in English), India has been overlooked. Run right out and get William Dalrymple, The Golden Road., How Ancient India Transformed the World. Forget the Silk Road (invented in the late 1800’s)—it was the Indian Ocean that took trade, religion and philosophy to the Med and all of SE Asia.

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