The Casino Is On Fire

This is a special report ahead of the PCE inflation report tomorrow (Thursday).

The animal spirits are running hot right now ahead of the PCE report. I don't know why bulls are so ebullient, since it was only a couple weeks ago when a hot CPI (Feb. 13th) imploded the market. They seem to have forgotten that the entire premise for this rally off the October lows was on the belief there would be rate cuts by March. Now March is almost here and there is no sign of rate cuts. What was going to be six rate cuts in 2024 is now pricing in at three rate cuts later in the year, according to Fed Funds futures.

Nevertheless, social mood is the final arbiter of investor confidence. And right now speculators have made up all new reasons for markets to go higher. As I've pointed out, the timing of this melt-up is the exact same as what happened in early 2021, what I call the "left shoulder". Back then a single stock - Gamestop - almost imploded the entire market. This time around, all of mega cap Tech is massively overbought along with crypto and AI stocks. This should be interesting.

Exhibit A: Social Mood morphing the narrative on the fly is from today's Coinbase exchange crash which was interpreted bullishly:

"The popular cryptocurrency exchange Coinbase experienced a major outage today, causing a brief dip in Bitcoin’s price. Interestingly, this crash has fueled fresh speculation about a potential Bitcoin bull run"

Bitcoin is up six months in a row. But bulls believe the rally is just getting started.

Lastly, I would remind everyone that the Hindenburg Omens already predicted disaster for this casino.