TLDR: CPI in August is doom or boom.
The CPI numbers for June were higher than expected and the market dipped. Suddenly a 1% rate hike was on the table, but Fed officials affirmed maintaining 0.75% for their next meeting (July 27/28) and the market rallied.
By not going for a 1% hike, the Fed is calling peak inflation.
The next two weeks there will be a moderate rally, followed by fear selling before the next CPI release.
8/10/22 is the next CPI release. If inflation dips the market is going ape shit and you'll see articles about a possible soft landing. If not, things get really tricky.
The next Fed meeting is 9/20 to 9/21. The Fed doesn't want to drop the hammer because midterm elections are in November, but if they don't the next meeting isn't until November 1st and 2nd – way too late to stop inflation and political suicide at the same time.
So where's that leave us? 8/10/22 CPI is probably the most critical financial day this year. Either JPow beats inflation and becomes Saint Jerome, or JPow drops the hammer on inflation by raising rates, bends over, and shows the stock market his taint, revealing his jail tat' that says “Fuck Yo' Calls” in old English font.
Positions: Lucky gay bear that closed all his SPY puts last Thursday. Buying a shit ton of chip stocks Monday. Deciding whether to go full gay bear or ape in the next 3 weeks.
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