Michael Hartnett: Sell the rally

The excellent Michael Hartnett at BofA. Sounds right to me. Though I am more dovish on inflation than Hartnett, I see that as very negative for earnings as margins collapse.

Heard on the Street: “Everything expensive but everything full”…NY cabbie on state of local economy; recessions caused by redundancies & refinancings, neither visible now.

The Tale of the Tape: Tesla 58% vs -20% in MOVE index of US Treasury YTD…most painful trade always “apocalypse postponed”; rally kick-started by ugliest of CPI reports on Oct 12th, likely ends with pretty“ peak Goldilocks” inflation print (e.g. 0.1/0.2% on wages in Jan payroll); we say fade SPX >4.2k, Q1 highs likely before Valentines Day.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.