SPY Week of 6/13 and FOMC

Machetephil · June 13, 2022, 6:30pm

Place for discussion of potential Fed moves and market reactions.

juangomez053 · June 13, 2022, 6:33pm

Futures are pricing in:

June-50

July-75

September-50

November-50

December-25 (maybe 50)

Bringing Fed funds to 3.25-3.50% (or 3.50-3.75% depending on December) by year end

Machetephil · June 13, 2022, 6:35pm

The Fed has been signaling a 50bps rate hike in June for months now. I expect the Fed to continue with this increase notwithstanding the higher CPI numbers on Friday. The Fed has a credibility problem (which is why they keep having to answer questions about whether they have a credibility problem). In order to build trust from the market that the Fed can navigate a “soft landing”, the Fed is going to have to do what it says it is going to do and not deviate from its signaled script. If the Fed were to raise the rate by 75bps on Wednesday, the market would panic because that is a signal of two things: (1) the Fed is panicking; and (2) the Fed’s statements can no longer be trusted enough to trade on.

I do fully expect the Fed to start warning of increasing rate hikes during FOMC and press conference. Maybe even in statements leading up to FOMC. The likelihood of a 75bps hike in the future is high. But I would be very surprised if we saw one Wednesday.

juangomez053 · June 13, 2022, 6:53pm

PPI is coming out tomorrow in pre-market. The PPI serves as a leading indicator for the CPI, because when producers face input inflation, the increases in their production costs are passed on to retailers and consumers. Here are a couple of examples of producers passing on costs to the consumer. FYI: just remember, not all companies have the pricing power to pass on rising costs to the consumer.

https://twitter.com/DeItaone/status/1531985509379096577?s=20&t=qXfFBRphKkLGTg95AILfRQ

https://twitter.com/DeItaone/status/1524394339362873344?s=20&t=d-eIWTO32GZQNaPCh5D0UA

https://twitter.com/deitaone/status/1424730043738202120?s=21&t=-xoXhIlU1nDTCKZ_eLepfA

https://twitter.com/deitaone/status/1450800692499783686?s=21&t=-OADuY3Yzj81W9OVFLkKwA

Retail sales come out on Wednesday pre-market. Will there be demand destruction? Find out next time on Dragon Ball Z

hansolo · June 13, 2022, 10:00pm

Some broker predictions

rexxxar · June 13, 2022, 10:03pm

We have so many SPY threads.
Please close the others as necessary.

I posted my thoughts here…

SPY - Broad Market Analysis Archives

SPY Jan24 to Jan28, FOMC Meeting week… [image] That Monday, we opened much lower than the previous Friday’s close as well. With the fearmongering of 75bps interest rate hike, I’d be careful with going all in on puts. There is a chance we can trade sideways this week, before the next leg down, or short breather upward. Please note that we closed today over -5% from Friday’s open of 394.88… [image] That’s a big move. And this is the 2nd Daily Candle gap down since Thursday, last week. I know a lot of us here woke up deep in the green, that should warn of some caution. Review your trading plans, check your charts, read the news early tomorrow morning after the PPI numbers come out–before you decide on your single leg plays. VIX is sitting at 34–which is great for us traders, we make money in these grey clouds. But don’t be too confident. Take the night off and away from your trading apps to rest your green minds. Cum again fresh tomorrow by 9am.