Looking back at the scorching CPI number that dropped last week, I’ve got to tell you — the market’s reading this all wrong if they’re still betting on Federal Reserve rate cuts anytime soon.
With Kevin Warsh taking the center stage for his historic first FOMC rate decision on Wednesday, I don’t see how they can cut.
Not in this environment. The data just doesn’t support it. Inflation is still running hot enough that the Fed can’t justify easing, no matter how much Wall Street wants cheaper money.
On top of that, we saw this play out clearly late last week: Markets were perking up early, then headlines about potential military action against Iran hit, and that was the end of that move.
Escalating U.S.-Iran friction is pushing traders into risk-off mode, which only makes the Fed more cautious.
When geopolitics start moving markets intraday, central bankers aren’t about to open the door to easy money.
Trump’s Inflation Comments Add a Confusing Twist
Then you’ve got recent political soundbites throwing gasoline on an already jittery market.
When Trump went on camera and said he loves inflation, followed by tough talk on Iran, the market didn’t like either. He pulled a Fed guy move and put his foot straight in his mouth.
Political rhetoric doesn’t change monetary policy, but it does whip traders around.
You get a Trump pump and then all of a sudden they dump it. That’s the kind of environment we’re trading in.
This is why pros stay focused on what the data supports, not what a politician says into a microphone.
Short bursts of optimism are getting sold, not chased, because nobody wants to get caught leaning the wrong way when the next headline hits.
Goldman Got It Wrong — And That Tells You Something
Goldman Sachs (GS) made predictions about how the CPI would move gold. They were wrong.
They said the print would send gold below key levels, yet all I can find is buyers stepping in.
My read is simple: Either the analysts misjudged the setup or big players were pushing prices around to reload at a discount.
In markets like this, you get head-fakes engineered by size or created by bad assumptions, and both retail and pros end up scrambling.
This is why I hedge. A lot of these morning sessions are full of fake-outs, and sharp intraday traders are using those pops and drops to lock in gains.
I put the hedge on for that exact reason, and if you grabbed the S&P 500 (SPY) puts I flagged ahead of Thursday’s violent flush, you should be doing incredibly well.
The moves around CPI were gift-wrapped for anyone positioned for volatility rather than waiting for a clean rate-cut narrative.
The bottom line: Hope isn’t a strategy. Don’t confuse wishful bets on rate cuts with actual opportunity.
Trade what’s real, not what you want to be true.
Geof Smith
Geof Smith Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram: https://t.me/+lm8_Nq3Su104NmFh
- YouTube: https://www.youtube.com/@FinancialWars
Important Note: No one from the ProsperityPub team or Geof Smith Trading will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. I’ll Share a Massive Gold Opportunity on Zoom
The no. 1 asset in the world recently dipped below $4,500 off strong jobs reports and uncertainty about the future of the Fed…
Especially around interest rates.
Now the question is… should you be worried?
Absolutely not…
In fact, this might be your only window to get in on a new massive rally higher…
And at 3 p.m. ET, I’ll be going live with my buddy Alex Reid to show you how to take action…
By tapping into a consistent pattern on gold’s price action…
A pattern that has helped lock in a 95.6% win rate on all live trade signals…
Now, I won’t make reckless guarantees when it comes to trading…
BUT that’s like winning 9 outta every 10 signals.
If you want to get in on the action before the next opportunity lands…
Tap Here to Join the Zoom Room
Disclaimer: We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. Since 12/05/2024, the trading approach discussed today has published 68 signals. 65 have returned as winning trades, for a 95.6% win rate. The average return per trade, winners and losers combined, has been 12.65% on an average holding period of 10 days.
