Market 05/16: Inflation Survey Still Hard to Believe

This Sunday Viet Hustler team takes a week off, there might be no macroeconomics articles, Saturday articles will still post as usual.

Instead, Steve will post video on why the World Can't Abandon the Dollar at 3:00PM Central on Saturday.

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• Ranking FED Chairs Since 1950

• Mar-a-Lago Agreement: How Trump Rearranges the World Order

• Business Valuation: DCF & Rule of 40

• 5 Historical Asset Bubbles & Lessons for Investors

Apex still 80% off

Inflation and consumer surveys continue to be "hard to believe"

• Short-term inflation expectations up to 7.3% and long-term to 4.6%

• Consumer expectations at lowest since … 05/1980

→ Market barely reacts

New home starts continue to drop sharply

• Housing starts only +1.6% MoM below +4.0% forecast after plunging -10.1% in March

• Building permits -4.7%, 4x worse than -1.2% forecast

• New homes almost entirely multi-family

• Single Family inventory continues to rise, builders cut new starts

→ Contrary to real estate market expectations, fear of mortgage rates staying high until year-end is eroding confidence

Market: No sellers on OpEx day

After first hour of indecision

0DTE flow almost one-sided push after SPX AM OpEx

Zooming out, today's move isn't that big but supported by liquidity. Buyers dominate internals with VIX dipping slightly.

On OpEx, almost all current OpEx at 5900 and 6000 levels with 5900 holding during morning pullback. 0DTE flow pushes market up with SPX in “gamma sensitive” state - near 6000 calls thought dead early revive, dragging positive delta hedge pushing market.

Back to OpEx:

• OpEx is an Unpinned event

• Market loses pinning to major gamma levels but resistance levels also disappear above and below

• I.e., if OpEx heavy on calls, post-OpEx push weakens like this one

  • However, impact more post-OpEx, not necessarily on OpEx day

• On OpEx day, opposite effect in gamma-sensitive environment, market more slippery

→ Today's OpEx more bearish for market - simply out of options fuel to pull up

Longer term, biggest market risk still yields. Until 10Y <4.0%, risk lingers.