SPY - The CPI Is Expected To Be Lower What If It Isn't?
2024-05-13 09:00:00 ET
Summary
- The CPI and PPI are expected to be lower than in previous months, but complacency could exacerbate a potential sell-off.
- Interest rates and the VIX have declined, indicating complacency in the market.
- I have prepared for the possibility of a sell-off by holding cash and hedging positions, but remain bullish in the long term.
The CPI is expected to be lower, what if it isn't?
If everyone expects this, no one is preparing for the other possibility. We see it in the VIX. The last time the VIX was this low was mid-December ‘23 it slowly rose into the first week of January where we saw a very steep sell-off. The technical explanation was that this was profit-taking in 2024 on 2023 gains. Stocks in 2023 performed so well that rather than year-end tax-loss selling in 2023 traders and investors held off so as not to pay the tax man in 2024. I won’t argue that point, I will say that complacency in the form of a lack of hedging exacerbated the selling. Another point is that with this level of complacency, something can easily come along and upset the “Apple Cart”. Complacency is not just apparent in the VIX, As we’ll see later on....
The CPI Is Expected To Be Lower, What If It Isn't?