I hope everyone is having a terrific weekend. As I write this, it seems we have another TACO moment, where Trump backs down on a planned attack due to being “close to a deal”. Iran has already denied all the terms of the deal, but the tactic has worked for Trump. Oil gaps down, stocks go bid and everything is all wonderful. Iran has the advantage because by now everyone knows that Trump doesn’t want to escalate for two key reasons: he is very sensitive to markets, and U.S. stockpiles are severely depleted.
The bigger story was the FOMC meeting and the markets reaction to it. I previewed the meeting in my deep dive FCI note here: FOMC Preview: Mind your FCI. It was probably the worst FOMC press conference I have ever seen, with no consistency nor framework for conducting policy nor an explanation for how they will manage to get inflation down despite the Chair’s strong “commitment” to it. Credibility is in question. This takes us to a new regime, and a new Playbook is in order.
We will discuss both in the note. In addition, we have a heavy data week ahead. Tomorrow we get ISM Manufacturing and construction spending as well as QRA borrowing estimates. Tuesday we have trade balance, JOLTS, and factory orders. Wednesday we get the QRA composition, ADP monthly, and ISM Services. Thursday has Challenger job cuts, Productivity and ULC. Friday has NFP as the headliner.
Positioning summary is below. Let’s get into it.
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