The #MysteryBroker went to a short-term sell on the market this morning.
No details. Last week he said S&P 500 would likely continue higher into this week. But he's been arguing inflation would fall hard (not yet) and has been concerned Fed is poised to overtighten (maybe?).
No details. Last week he said S&P 500 would likely continue higher into this week. But he's been arguing inflation would fall hard (not yet) and has been concerned Fed is poised to overtighten (maybe?).
Will offer details when available, maybe tomorrow. Meantime just read the rules. Especially the part about me just sharing this stuff because people ask for it.
https://twitter.com/michaelsantoli/status/1126487466540617728
Just to flesh out #MysteryBroker's move to go to a short-term sell on the market: In practical terms it meant hedging aggressive accounts via S&P 500 puts with the index a bit above 4000 yesterday morning...
The #MysteryBroker, as noted, has been noting leading indicators of inflation (commodities, used cars, even listed rents) suggest it's declining sharply. But CPI data hasn't caught up. The CPI data are "considerably overstating inflation after understating it over the last year."
Whatever the data interpretation, #MysteryBroker says the Fed will use the official numbers in setting policy, "will tighten too much and likely cause a recession," with the 3-month/10-year Treasury yield curve likely to invert soon...
The #MysteryBroker says after a 20%+ S&P 500 drop, it rarely just goes sideways for long. The rally off June low didn't carry high enough to lock in a new bull-market call. Now he sees either a retest or break to new lows. As for which it'll be "don't have to make that call yet."
Summing up, #MysteryBroker says Fed set to overtighten during one of the worst seasonal stretches (9/19-10/6). Biggest upside risk is leadership change atop Russia (has said this before). He likes 10-yr Treasuries near 3.5% yield with inflation set to ease, Fed slowing economy.
This standard disclosure will almost certainly answer any questions about this whole MB routine and obviate any need you might feel to reply or otherwise snark about it.
https://twitter.com/michaelsantoli/status/1126487466540617728
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