Yesterday was quite an exciting session as we saw volatility pick up for the majority of the day. The market rallied off our 6854 VAL, which marked a sharp spike up to the 6889 HVN target. I warned on X not to be chasing longs at those highs, and sure enough, the market sold all the way back down, even breaching the 6854 level briefly.
However, the late-session news of a “Greenland Framework” deal being written up between President Trump and NATO sent the market soaring. We broke above the 6889 target and continued all the way up to the 6932 Point of Control (POC). While the market is treating this as a massive step toward avoiding the February 1st tariffs, the deal is far from finalized.
The “Risk-Off” Divergence
What is remarkable is that despite the equity rally, Gold and Silver haven’t been “slaughtered” as you would expect on good news. Gold pulled back slightly from record highs near $4,887 but remains elevated around $4,790. This tells me that big money still sees significant uncertainty and “tail risk.” If the deal were a sure thing, we would see a much more aggressive flush in metals. Until this is finalized, the “Risk-Off” sentiment remains underneath the surface.
The Economic Calendar
Today is the most important data day of the month. We are getting a "triple threat" of reports that will validate whether the economy can actually handle the current trade-war stress.
GDP (Q3) - A "Good" number for the economy is anything above 2%. It proves the US is sidestepping a recession. However, if this comes in too hot (near 4%), the market might fear the Fed will pause rate cuts.
Core PCE (Inflation) - This is the Fed's preferred inflation gauge. We want to see this trending toward 2% YoY. Bad data would be a print above 0.20%, as it suggests that recent tariffs are starting to leak into consumer prices, revealing a heating inflation. I expect this data to come in around 0.20% and the indices to take this data well.
Personal Spending - Little weight is being put into this release but in the near future this will be important.
Recent data has been surprisingly resilient, with GDP previously showing 4.3% growth.
If GDP stays above 2.5% and Core PCE cools toward 2.6%, it gives the Fed a “green light” to keep cutting rates. This would likely push the S&P through the 7000 psychological barrier.
If Core PCE comes in hot (above 2.9%), the market will realize that the “Greenland Deal” relief rally was premature. High inflation combined with trade uncertainty is a recipe for a “Stagflation” scare, which would send us right back to the 6820s.
