Updates for Monday 8/30/21

We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. 

Updates 3:30 PM EST -  Sunday (for Monday 8/30/21)
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Events this week
Here are some important reports coming out this week.   Click here for full economic calendar.

Tuesday:   Case-Shiller Home Price Index
Wednesday:   ISM Manufacturing Index
Thursday:  Jobless Claims, Factory Orders, Productivity & Costs
Friday:   Employment Situation,  ISM Services Index

On Monday 9/6, both stock and bond markets are closed for Labor Day.    

Wall of worry:  tapering and rate hikes
In his much anticipated speech on Friday, Powell confirmed that tapering would begin later this year.   Market responded by buying a lot more stocks and bonds.   $SPX $NDX IWM rose.   The entire bond spectrum rose:  30-yr (TLT), 10-yr (IEF), corporate (LQD), junk (JNK).   

Most likely, market participants are cheering the fact that there was not any mention of imminent rate hikes.  Powell said "there is much ground to cover", implying that the Fed is a long way from raising rates directly.   But he is keeping the options open for the Fed.   WSJ discussed the following timing scenario:  "if Delta begins to weaken, investors should be ready for the Fed to make that commitment when it next meets in early November, and for it to start paring back its purchases shortly thereafter."

Wall of worry:  inflation
​Market participants are clearly nervous about inflation, evident by the huge demand for TIP ETF on Friday.   (TIP:  Treasury Inflation Protected Bonds)

• Consumer spending rose 0.3% in July.
• Consumer prices rose 4.2% from a year earlier, which is way higher than the Fed's goal of 2% inflation.
• Consumer sentiment was down sharply in August.

Inflation in itself does not lead to market crashes, but its trend will greatly affect the Fed's monetary policy.  

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