Morning Update

Good Afternoon Friends. Just a gentle reminder today we kicked off QT, and this morning we saw a lot of weakness in the market, but following the positive ISM data that came out we saw how quickly the market turned.  

The reality is to drop inflation Powell needs liquidity to come out of the market; he does NOT control that, commercial banks do….Powell needs credit spreads to widen so corporations can not borrow easy money and burn the fat off the pig. That squeeze in liquidity will drive markets lower.

However, the strength we see on even very minor positive economic news means the Fed will need to be more hawkish, not less.  

Though inflation likely peaked at the 8.5%, we need to slow the acceleration aggressively; I believe we have a bullish set up into the June OpEx.  Then we will likely see the next leg down.

Morning Update – June 1, 2022

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