A bull bear stalemate and it's all about the long bond now.

Hi, Peter Navarro here with the Economy and Market Rap for the week ending October 13th,

2023.

And this was one of the strangest weeks I've seen in the stock and bond markets in a very long time.

Recall from last week's missive, I noted a strong bullish reversal in the S&P 500 at the end of the week.

After eight weeks of correctly calling a bearish downward trend, this

bullish reversal warned me off of any notion of shorting the market and reinforced a pure cash call.

Absent further news, I fully expected this week to be in the green for the bulls

anticipating a continued downward trend in inflation, no Fed rate

hike in November, a continued strong jobs market, and an above trend third quarter GDP growth rate soon to be

announced that would augur well for corporate earnings and therefore stock prices.

Over the weekend, however, the Hamas hit the fan in Israel

with the most brutal forms of atrocities. This has triggered all-out war in the Gaza Strip, the specter

of another Arab oil embargo, think cutter here to begin with, a further drain on both the US arsenal and budget because

of anticipated aid and yet another refugee crisis. In the meantime, both a producer price index and consumer price index came out hot enough to suggest that the hope for downward trend in inflation is likely to be unsustainable and that is exactly what

the long bond the 10-year Treasury is telling us as it continues to firm upwards in yield while further depressing

bond prices. As for the actual data, the PPI, the producer price index, ticked up by 0.5% in just one month the third time in a row,

while the price at the pump went up by a whopping 5.4%.

Strip out the unpredictable food and energy sectors and the PPI still went up by 0.3%.

That's pretty hot.

On the CPI front, consumer prices in the US

nudged up by 0.4% in September, a bit cooler

...