Is the "Ugly Stick" out and about today? Not for bonds, and not really for equities either. I mean, the week looks a little different right now than it did last night. Resistance in the S&P 500 (^GSPC) this morning has been met by Monday's lows. But days are long, and this one is far from over. I think we have to crack 2093 to the downside to get some real ugly.
1) If you read me, you know that I'm watching gold like a hawk. (Get it...like a hawk?) I very nearly increased my allocation toward the precious metal this morning, even with it resting near the top of any recent chart. What held me back was my expectation that the Fed will try to talk toughish on Wednesday. While the likelihood of a rate increase that day is zero percent, we all know what the FOMC wants to do, and I think that the good doctor will make perfectly clear that July is still on the table. If she does that, gold will see a temporary swoon at that time.
2) Will the tough talk hurt Treasurys as well? That's a lot harder to foresee. The easy answer is ... of course it will. This, however is 2016, and there are no easy answers. The amount of foreign money coming into these markets is staggering. Talk of an oncoming rate hike is certainly not going to discourage someone who looks at a 1.6% yield like it's the last can of beans on the planet.
3) It's just a tad difficult to look at market statistics today, and not think of that guy in the jester costume in the "Safety Dance" video from the 1980s. There is mid-day strength in not just gold, and U.S. Treasurys, but money has also moved into the VIX, staples. The utility sector index is hanging around the flatline as well. If the S&P 500 makes a run for 2108, you will see these trends abate somewhat.
4) Not at all out of the woods, gang. Rig count at 1:00 p.m. ET could still throw a zig or zag in your path.
5) Lunch? I'm stuck eating healthy for now. Can't believe it. Really works, gang. Short run tonight, long run in the morning—rain or shine.