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December PPI, Shutdown and more ?3

14:32 03-Feb-26

I've just watched as the House passed funding.  It should now head to the White House for Trump's signature.  Market indexes are seeing a small bump, but consistent with my analysis below, this is expected and shouldn't change the deleveraging trend we're seeing, especially since it furthers the peak Trump dynamic that I predicted.

On 2/3/26 9:22 AM, Esekla wrote:

As expected, the House is scheduled to vote on the essentially unchanged Senate funding package this afternoon, which I expect to pass narrowly.

The Senate did send funding bills to the House, which should vote today or tomorrow.  Everything would be funded through September, except DHS, which would get funding through next week, as negotiations on it proceed.  None of this represents efficient government, and no long term solutions that would move tax collection back toward local levels are being considered.  Similarly, it will apparently be up to the courts to protect states and constitutional rights, which is a slow process that won't come a head until at least the end of this month, along with Nvidia earnings.  This has lead to a broad sell off in commodities.  However, CrowdWisers observed that cratering index futures over the weekend improved steadily into the open, with only the Nasdaq remaining significantly negative.  To reiterate, most of what we're seeing in early trading looks like deleveraging and increased caution on AI spending just days after Nvidia's CEO sought to reassure the market.

On 1/30/26 9:30 AM, CrowdWisers Administration wrote:

The just-released statement from Fed governor Waller highlights the weak job market that this service has repeatedly called out, in contrast to Powell and other mainstream analysis.  It also affirms Powell's view as tariffs as a one-off inflationary effect, and advocates for the Fed to ignore that, just as it did with the massive long term economic damage that pandemic stimulus caused to working class.  It remains to be seen what the Fed will actually do going forward, but this heightens the concluding statement below, and re-raises the specter of the Volcker scenario that CrowdWisers has warned about for almost 4 years.

On 1/30/26 9:17 AM, CrowdWisers Administration wrote:

PPI numbers for December are out and, even though the market typically ignores this report even when it isn't delayed, one can understand why the White House might want to distract from it.  The +0.5% headline and +0.4% core are well above projections that ranged from two to three tenths of a percent.  Services jumped the most at +0.7%.

The market appears more likely to continue focusing on corporate earnings, where our parent CrowdWisers services has previewed and analyzed individual earnings from Alphabet, Microsoft, Tesla, Meta, Apple, Exxon, and Chevron over the past three days.  It also called out EchoStar movement as highlighting the fragility of the AI trade.  At the overall index level, though, the reports the reports, while not impressive, have exerted a steadying influence in the face of another possible federal shutdown.  USD is staging a broad rebound this morning as it appears that even if a shutdown does occur tonight, it is unlikely to last long.  Democratic demands for ICE include the body cameras forecast by CrowdWisers, and the White House is apparently agreeing.

The other theater from D.C. is also moving for precious metals, which are down significantly.  Warsh is the new Fed Chair nominee, though it may be a log confirmation process.  He has historically been a monetary policy hawk.  As a reminder, it was Trump who nominated Powell to the same position, despite his current displeasure.  The current nomination also shows how prediction markets do little more than follow news, and are no substitute for analysis.

Overall these developments skew moderately positive for the overall market for the short term, but raise the danger level as we head toward the midterms.

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