Equities manage to claw back to flat YTD, and we still expect new highs by late-Jan. This, however, is not a risk-on signal.

The video in this report is only accessible to members
The video in this report is only accessible to members
The video in this report is only accessible to members

VIDEO: We discuss how inflation remains arguably the single most important macro variable in next few months.  And once Fed sees the outsized role of auto insurance, will likely cut faster" (Duration: 6:15).

The video in this report is only accessible to members
The video in this report is only accessible to members

It may be hard to believe, but the S&P 500 is actually slightly positive YTD (+0.20%). The Nasdaq 100 is up modestly (+0.8%) and the Russell 2000 is down -5%. Given the rough start to 2024, the last 2 days have brought on modest improvements.

Many things have buffeted markets in the first days of 2024, but to me, the most important dynamic variable centers around the Fed and what framework is in place for cuts -- timing, etc. And the leading variable to that is the trajectory of inflation. Earlier this week, Fed Governor Waller poured cold water on the timing of cuts, saying he felt March was too soon. Others similarly chimed in. They simply are not convinced inflation is falling fast enough to warrant cuts and the bond market has since pushed interest rates higher. Our view remains that inflation is falling faster than many realize. And at the core is that housing and autos remain the primary driver of inflation. Last week, we highlighted that auto insurance accounted for near...

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