Tuesday, February 7, 2023

SPX, NYA, and Powell

Powell spoke yesterday, and I found some of his statements interesting, one of which was: “There has been an expectation that [inflation] will go away quickly and painlessly; I don’t think it’s guaranteed that’s the base case.  It will take some time.”

Implicit in this statement is that, so far, things have been "painless."  (I agree with that assessment and have said so a number of times.)  Explicit in his statement is that Powell does not "think it's guaranteed" that things will remain painless.

Seemingly in an effort to drive home that point, he added (emphasis mine): “If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more.”

Powell seems to be asking: "What exactly do I need to do to create more layoffs?"  So the implications of that are interesting to ponder.

SPX has traded sideways since last update, so there's nothing to add in that regard.  Yesterday closed at the blue trendline, with no clear whipsaw or breakout yet:

NYA has also traded sideways:

Beyond that, not much to add to the prior update.  Trade safe.

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