Beware of the Premature Celebration

The stock market’s inflation hawks may have celebrated too soon. [Jeff Clark's Market Minute]( Beware of the Premature Celebration By Jeff Clark, editor, Market Minute As the Detroit Lions’ fans learned on Sunday, it’s foolish to celebrate at halftime. The stock market’s inflation hawks may be guilty of the same offense. Let me explain… The FOMC’s favorite inflation indicator is the Personal Consumption Expenditures Index (PCE). This is one of the main data points – perhaps THE main data point – the Fed uses to determine monetary policy and decide whether to raise or lower interest rates. For the past year, the Fed has aggressively raised rates, intending to bring the annual inflation rate down to its 2% target. And, based on the December PCE report released last Friday, the Fed has accomplished its mission. The report showed that the monthly inflation rate for December was 0.2% – in line with expectations. Year over year, the report showed an increase of 2.6%. While that’s still above the Fed’s target rate, it was close enough that inflation hawks felt justified in doing a touchdown dance. Recommended Link [The One Ticker Retirement Plan]( Over the Shoulder Demo Now Available [image]( Market Wizard Larry Benedict crushed the market in 2022. But he didn't do it with a “traditional” method… For a limited time, he’s sharing a free over-the-shoulder “demo” of his strategy in action. It takes less than 10 seconds… [Watch it here.]( -- Former Chicago Fed President Chuck Evans was quick to point out that if we take results over the past three months and annualize them, then the PCE inflation rate is just 1.5%. If we annualize the past six months, we’re looking at 1.9%. Mission accomplished! Of course, if you eat, use electricity, live indoors, or drive a car, it doesn’t feel that way. But why quibble? The government says the inflation rate is falling. So, we might as well believe it. The problem, though, is the PCE for January is likely to rise. And the price trend for the next few months looks higher as well. Look at this chart of the Invesco DB Agriculture Fund (DBA)… [(Click here to expand image)]( DBA reflects price changes in the agricultural sector. The fund declined 4.4% between early November and early January. That’s in line with the declining PCE Index. But look at what’s happened over the past two weeks. DBA has recovered its entire decline. It is trading at an all-time high price level. And it’s on the verge of breaking above a resistance level that it has challenged three previous times. This is a bullish-looking chart. If DBA can break decisively above $21.50, then it could surge higher – fast. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. That’s bad news for anyone trying to keep inflation under control. And it reduces the chances of the Fed lowering interest rates anytime soon. At the moment, the Fed funds futures are showing a 50% chance of a rate cut as soon as March. The chance of a May rate cut is at 80%. But, if DBA continues higher from here, then the odds of a rate cut have to go down. So, too, will the hopes of the inflation hawks, who may have prematurely started their celebration. Best regards and good trading, [Signature] Jeff Clark Editor, Market Minute IN CASE YOU MISSED IT… [Crypto Legend Who Minted 3 Millionaires Says: "Do THIS Now…”]( In early 2023, after crypto dropped -74%: Teeka Tiwari went on record saying we are entering, the “best crypto-buying opportunity we’ll see in our lifetime…” Since then, Bitcoin has been up 166%. And smaller coins have exploded 820%, 1,593%... even 7,600%. 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Today, you will get the details, including Teeka’s [#1 Crypto Pick for 2024, completely FREE.]( [Click Here to Get the Details.]( [image]( [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2024 Omnia Research, LLC. All rights reserved. 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