Good Tuesday morning. January CPI data is out with a .4% m/m increase in the headline number (3.1% inflation y/y) with core inflation coming in at .04% m/m (3.9% inflation y/y). Futures are lower (Dow Jones -340 points) on the news as rate cut hopes in March drop to a 17% probability. J Powell and team have been telegraphing this…they appear to have gotten this call right. 10 year yields are trading up to 4.28%.

Our forecast is unchanged; we expect the Fed to cut rates 3-4 times in 2024, as disinflation remains the primary theme of the year.

Reminder: during the 1995-2000 melt-up, the average 10-year yield was better than 5%, with a significant amount of time spent above 6% 10-year yields.

VRA Macro Call

With $6.5 trillion sitting in commercial money markets (right at ATH) and with Nasdaq still 3% below ATH’s, we have a powerful combination in place;

- There’s a mountain of liquidity to serve as support for equities (on any OB pauses). We expect at least half of this liq...