Sharing five macro insights worth contemplating.

1. Unemployment of at least 6.4% may be needed to meet Fed’s inflation target. (h/t @tr8derz highlighting.)

https://twitter.com/jasonfurman/status/1567976028278063104?s=21&t=a91mJRsxO8j_J4x38ok4aA

2. An average-sized slowdown is unlikely to reduce demand to a level that drives inflation down to the Fed's target.

https://twitter.com/totemmacro/status/1567561041797685250?s=21&t=a91mJRsxO8j_J4x38ok4aA

🚨 Trading thread co-authered with @HalfersPower

We look at Post-Earnings Announcement Drift (PEAD).

We wanted to know whether stocks really drift higher following big earnings surprises.

🧵👇

/1 Our research looked at the performance of more than 1,000 Nasdaq-listed companies during periods between a beat announcement and the following quarterly earnings reporting date.

/2

For $ES and $SPY traders, RSI is may be the most commonly used technical indicator. Does it work? Here's what 27 years of data says about it's usefulness... RSI seems to be most helpful when the indicator reaches true extremes. For example, going long when RSI is super low has been a fantastic strategy.

Here's a plot of RSI(21) vs 20 day returns of SPY. The black dots represent signals when RSI(21) registers between below 32.71.

Saw some low readings in VIX:VXV recently. Over last 10 years the signal has foreshadowed increased downside risk for $SPY over the following 60 trading days. Multi-modal distribution of returns highlighted in purple. Even with the increased downside risk, mean return has been positive -- just nothing exceptional.

Is the labor market turning? Latest data from Google shows a pick up in search interest for the team “unemployment benefits”. We’ll need a couple more months of data before we can begin to feel confident a trend is under way. (1/13) If you’re new reader, this thread takes a look at whether Google search interest data is a useful predictor of US recession timing, and seeks to make an educated guess on when the next recession will arrive based on the data, which comes from trends.google.com. (2/13)