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Will the Stock Market Fall if the Fed Gets Inflation Wrong? Watch Bonds and Gold, Says Ilya Spivak
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Chapters17 segments · tap to seek
ticker lesson
Breakdown
0:03lesson
Markets digest CPI and Warsh testimony
- CPI report softer than expected
- Warsh testimony overrides CPI rally
- Bonds break below support
- Dollar reverses after bond move
- Gold stabilizes despite rate pressure
3:03lesson
Crude oil dynamics and geopolitical risk
- WTI crude targets 83 after surge
- Hormuz blockade may exclude non-Iranian vessels
- Oil rally sticky but reverses on moderating news
- Shipping services decline linked to oil
- Indigestion pattern post-news
5:55lesson
CPI breakdown: headline vs core
- Headline CPI: 3.5% vs 3.8% expected
- Core CPI: 2.6% vs 2.8% expected
- First month-on-month decline since COVID
- Energy dominates headline drop
- Core services drives core decline
8:38lesson
Core services decline linked to oil
- Transportation services down again
- Oil price drop scarring services
- Warehousing and shipping affected
- Services decline not broad-based
- Oil knock-on effect visible
11:44lesson
Markets dismiss CPI surprise
- CPI undershot Cleveland Fed nowcast
- Data seen as aged and outdated
- Oil rebound may reverse disinflation
- Markets acknowledge but ignore report
- No policy shift yet
14:35lesson
Warsh's hawkish tone overrides data
- Warsh: 'We will deliver price stability'
- Fed won't pass the buck
- Inflation not acceptable
- Commitment to unstick sticky prices
- One hike still expected in 2024
17:18lesson
Rate expectations shift to higher for longer
- 26-27 basis points baked in for 2024
- 2027 tightening odds rise to 50/50
- Hawkish shift in long-end expectations
- No near-term cuts expected
- Path of least resistance: lower bonds
19:53lesson
AI-driven investment fuels inflation
- Q1 GDP: 2.1% growth despite weak consumer
- Business investment up >10% annualized
- AI buildout drives growth
- Consumer contribution minimal
- Investment can't fully offset consumer decline
23:02lesson
Fed may delay response to consumer downturn
- Fed focused on inflation, not growth
- Consumer-led downturn may be tolerated
- Slow to cut rates despite contraction
- Markets may reprice on economic shift
- Gold resists fall amid uncertainty
26:14WTI· ticker
WTI crude — long position added
- Added to oil position
- Call vertical used initially
- Switched to sell puts for better risk reward
- Premium up front > max loss
- Improved risk-reward profile
26:15Nasdaq· ticker
Nasdaq — short call vertical added
- Added to short call vertical
- Better than 1:1 risk reward
- More premium up front than max loss
- Rotated positions, booked profits
- Re-upped for longer maturities
26:16S&P· ticker
S&P — short call vertical added
- Added to short call vertical
- Better than 1:1 risk reward
- More premium up front than max loss
- Rotated positions, booked profits
- Re-upped for longer maturities
26:17AUD· ticker
AUD — long position maintained
- Long Aussie maintained
- Dollar reclaiming lost ground
- Aussie seen as strong relative to others
- No change in stance
- Long bias intact
26:18GBP· ticker
GBP — short position established
- Short pound established
- After dollar strength recovery
- Pound underperformed
- Short bias now active
- Dollar strength confirmed
26:19EUR· ticker
EUR — short position established
- Short euro established
- After dollar strength recovery
- Euro underperformed
- Short bias now active
- Dollar strength confirmed
26:20SLV· ticker
SLV — long position maintained
- Long silver maintained
- No change in position
- Silver seen as defensive
- Holding for potential upside
- No exit signal yet
26:21XAU· ticker
XAU — waiting to reestablish position
- Waiting to reestablish gold position
- Gold refusing to fall
- No entry yet
- Monitoring consumption data
- Re-entry signal pending
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