MIXED SIGNALS

For the first time in a long time, the U.S. dollar is the leading signal. Let me break this down, but first, forgive me for the late response to all this chaos. My mother is visiting, and I had to put her ahead of my work since I wouldn't be here without her prayers. No excuses; I will be more prepared next time.

Back to the content.

If a recession were imminent, the DOLLAR would be ripping higher along with the VIX. It's not, but why? Somewhere in the world, dollars are being created. Someone big is either borrowing dollars or dumping dollars. Either way, it results in more liquidity for markets. The only reason to dump dollars is to add on risk. Likely gold or bonds. In another case, you create dollars to stimulate growth.

US dollar down, World Money Supply Up

The acceleration of the MONEY SUPPLY tells us the Liquidity cycle is picking up steam. Like we always say, recession brings more liquidity, and as long as inflation is falling, this kills the recession narrative.

WEDNESDAY IS THE TURNING POINT

The Market is expecting Inflation to cool. If CPI comes in line, we should see the VIX contract (but not below 20) and the market put in a short term bottom. If it comes in BELOW expectations, the market should rip. WHY? Because it will begin pricing in Fed Cuts sooner rather than later.

Over-Blow Growth SCARE

There's a lot of recession Talk, but the bond market is not fully convinced the economy is collapsing. If it were that clear the Bond Market would be ripping higher. It's inching up because growth is slowing, but not at the pace of a complete collapse in growth. ISM services are one of the leading economic indicators reflecting growth.

This is a buying opportunity for investors as long as CPI continues to cool.

This is the highest vix close since the bear market bottomed in 2022 and the banking crisis in 2023. The bottom is near.

Worst case scenario
If CPI comes in above expectations it would implicate STAGFLATION. In that case I will be raising cash.