We hope to get new government data next week to guide decisions for everyone, including the Fed

Outlook

We hope to get fresh government data starting next week to help everyone, including the Fed, make judgments and decisions. Chatter about the Fed being at sixes and sevens has led the CME Fed funds betting pool to cut the probability of the Dec rate cut in 26 days from 94.4% a month ago to 53.2% today.

We don’t want to fight the tape but honestly, there is little good reason to doubt the earlier judgment. Yes, some Feds are expressing misgivings, but the Trump lackey Miran is resolute and the unemployment issue does seem to support another cut, both ADP weekly and Challenger. Remember that the Atlanta Fed will issue a fresh GDPNow later today. Last week it was 4.0%, in sharp contrast to other forecasts like Bloomberg Economics at 1.4%.

A deciding factor today could be the stock market. The WSJ reports that futures suggest an extended tech sell-off. The word bubble doesn’t appear and remember that the rally has been broad and not confined to the Big 7, nor confined to the US. If a sell-off has nay lasting muscle, then why are gold and bitcoin down, too? The “reason” for the equity selloff is named as the new perspective that the Fed will not cut in Dec, after all. Well, that idea is happening at the same time but coinciding ideas are not necessarily causative. And it’s an idea and a betting position, not an Event.

We get about 50 newsletters every blessed morning and there is only passing mention of the equity futures pointing down. Complacency born of recent experience or failure to acknowledge a climate change? There has been so much talk of a bubble that its bursting has almost become a foregone conclusion. So far we have been treated to extreme brevity in pullbacks. It remains to be seen whether folks run out and buy the dip.

Forecast

Again we are confused about what’s risk-on and what’s risk-off. You’d think the dip in US equities would feed risk-off, but then why is gold down, too? Maybe gold is just another speculative Thing like bitcoin. Not to mention the dollar, higher only in the special case of the yen and with the euro knocking on the upside breakout door.  Risk-off should favor the dollar as the safe haven (after the Swiss franc) but that’s not happening, at least not yet. Of course it faces the looming Trump monster taking away its special attractiveness.

The safest bet today is to accept it’s Friday and often peculiar, if only because the big traders square up for the weekend and deliver some unexpected closings. In other words, get out of Dodge.

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