The Fed is expected to leave rates unchanged today while most central banks have been easing.

PRE-OPEN MARKET COMMENTS FED-DAY – China and the ECB have been cutting rates at a fast pace since last fall. They are not worried about inflation, they are trying to stimulate economic growth. To this point they have little to show for their efforts and global conditions continue to slide. Other central banks have been easing this year and Switzerland is even considering a rate cut that would put it into negative territory. These are dramatic actions.

These economic woes started way before Trump was elected and tariffs are not the issue. They won’t help matters, but they are not the root cause of the problem. Think about all of the global growth that has resulted from China in the last three decades. At one point they were building a city the size of Houston every month. Hyper-growth leads to excess capacity and that is what the entire world is dealing with now. The second largest economy in the world is on the verge of collapse and when you strip away that massive growth engine it affects everyone.

During the last two decades, debt has skyrocketed across the spectrum from consumers to municipalities to states and ultimately to the highest level – sovereigns. The US has an average bond duration of 3.5 years and that means we are having to refinance $9T of debt each year. US bond yields are rising even though economic conditions are softening and even though a rate cut this year is likely. The demand for US debt is declining as other countries use their cash reserves to fight their own domestic battles. The Prime Minister of Japan said that their fiscal and economic situation is worse than Greece in 2010. If not for the EU, Greece would have imploded.

Bond and currency markets are in a flux while gold is making new all-time highs. These are dangerous times and I don’t like what I see.

This morning initial jobless claims came in at 245K. It has stayed elevated for a few weeks and this will bode poorly on the jobs report. The last one looked better than it was because the headline number was 139K. Those who looked deeper noticed that 95K jobs had been removed from the prior two releases. Empire Manufacturing, ISM Manufacturing, ISM Services, Consumer Sentiment, Retail Sales and the Beige Book are just some of the recent data points that suggest weakness. The storm is brewing and it is coming to this market.

Yes, I am bearish even though the market is near an all-time high. I can’t discount what I see brewing on a fundamental basis. I am waiting for technical confirmation and I will be shorting with a trade duration that spans October.

The Fed is not going to ease today, but they should soften the tone. Inflation has come in and the job market is starting to soften. There is a 54% chance for a rate cut price into the September Fed Funds futures contracts.

From a technical perspective, the market has not been able to advance. The candle bodies have been tiny and that is a sign of resistance. We are also seeing selling pressure intraday and you can see that in the volatility on a five minute chart.

Ideally, Congress passes the Big Beautiful Bill before the 4th of July and the Fed softens their tone today. These outcomes will eliminate what I believe are the last bullish catalysts. I want the market to show me what if any upside remains. As we get closer to earnings season in a month, I believe companies will guide lower.

I’ve tried to get myself into a neutral market bias and I can’t get there. The technicals aren’t the worst, but based on what I see, a dip is coming and I would not have any long exposure at this level on a swing basis. The fundamentals are terrible and I believe that the “dip” will gain momentum and turn into a nasty drop.

Until all of this manifests, I am sticking to day trading. I am seeing nice opportunities on both sides. Overseas markets were down slightly in general and everyone is waiting for the Fed. The holiday tomorrow disrupts the trading week and I believe that triple witching will not be a big factor.

Any chance for a “surprise” from the Fed would be to the upside. The market is expecting the same “balanced” message. If they are a bit more dovish we could see a rally through SPY $605 and that could spark some short covering during triple witching. I see this as possible, but unlikely.

Support is at $595.50 and resistance is at $605.