Friday Chart Book

February 14, 2025

Happy Valentine’s Day! Don’t we all love these markets? Optimism around a Ukraine/Russia deal has reached its peak on Thursday. A hotter-than-expected CPI print didn’t leave the US Dollar strong for too long and promptly reversed. Trump first announced reciprocal tariffs just to kick the can further down the road. Classic. He never seizes to disappoint.

Source: Dall-E

What’s going on? Thursday’s PPI print caused a bond reversal and propelled risk assets higher, which makes sense given the relief in bonds and the continuing weakness in the Dollar. This is the very definition of a Goldilocks environment. How long will it last? I don’t know, but there are plenty of cross-currents, and the fact that inflation expectations are still somewhat elevated while the US Dollar is weakening despite all the tariff talk suggests that there are flow dynamics out of US assets into global markets, signified by the outperformance of non-US equities over the past few months. This needs careful observation as we might be turning into a regime shift.

PPI final demand rose 0.4% over the month and 3.5% over last year’s print, which was modestly stronger than consensus expectations. Why did the market like the seemingly hotter print? Based on elements of CPI and PPI, the street now expects a softer core PCE inflation print (the Fed’s favourite figure). This would bring the year-on-year rate from 2.8% to 2.5%.

This week, once again, has demonstrated how important it is to keep a calm, strategic, process-oriented approach to investing and trading. If you were chopped around in this week’s volatility, you shouldn’t be surprised. The signal-to-noise ratio is diminishing rapidly. Political ad-hoc announcements make these markets hard to trade. Stay nimble out there.

A Ukraine/Russia peace deal seems to take a few by surprise, with European stocks and the EUR rallying strongly in the process. What can we expect? I’m cautiously optimistic that some sort of deal might be reached or at least some plan for such an outcome should be reached. Let’s see, I’m no expert in politics, but given Trump’s leverage, everyone is incentivised to come to a hopefully lasting solution. Implications of a positive outcome would likely see yields fall and European equities rally. EUR/PLN has already seen a large rally, so some of the good news has already been priced.

Source: Paper Alfa Engine Room

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This is a reminder that you can now also use my models in TradingView scripts, which I made available for subscribers to use on their charts. This is not for free and incurs an additional cost. I am also in the process of making one of my intra-day models available. This will come at no additional cost to existing users, but new admissions will see a price increase.

Here is a little preview. These are 15 min bars for the ES (mini-SPX future). This is still in refinement mode, but the results so far are encouraging. I’m trying to incorporate volume into the mix as well, which should be interesting. I’m running a few backtests to test for robustness. Stay tuned.

Source: Paper Alfa Engine Room

If you are interested, ping me an email with your TV username. Note that only paying subscribers will be granted access. No exceptions.

Let’s now go into more detail and read what my friend Macro D has in store for us. We then scan the multitude of charts I have updated below. 250+ charts, to be more precise.

Let’s go.