Hello, welcome to the Dali briefing. It's September 14th, 2021. Amagulate. And here with me is Tony Greer of TG Macro that even the markets today a rethink of reflation yield on the 10 year US Treasury fell down to 1.26% at its low after consumer prices rose a less than expected one 10th of 1% in August.

That's the smallest increase since February now to be clear the year on year is still north of 5% on the headline 4% on core which excludes food and energy but it's the pace and the direction that investors were watching today and that month on month reading just wasn't as high as some had feared supporting those that had been arguing that the inflation that we're seeing is transitory or temporary in nature US stocks move lower the Dow down nearly 1% the S&P 5%

under a Nasdaq down around a half percent and Tony is this the beginning of the end of the reflation trade or do you think that the economy and prices are going to surprise on the upside what was your take on this Oh God forbid don't say the end of the reflation trade Maggie please the end of the

reflation trade is when we stop expanding the balance sheet and that's not having any time soon right this is a this to me is a very very navigable pullback.

It's worth it's worth analyzing though because it comes with you know 5 consecutive negative days in the S&P we're coming off one and a half percent loss last week in the S&P while that is generally followed by a rebound week right here as you see on our screens today we see prices under pressure again so this sell off has got a little bit of a sneaky element to it and I mean sneaky whereby all of a sudden we are creeping lower to the 50 day moving out

to the average in the S&P whereas all of the prior tips to the 50 day have been a really steep spike down at a quick return so this is a little bit of a different pace heading down to that level we usually see really steep tick index prints on the low extremes greater than 1500 sometimes as big as 2000 on the negative side during a sell off during this last week we've only seen maximum extreme tick indexes of minus 13

100 or so so it doesn't feel like that typical waterfall off of a headline it just feels like some deterioration from the highs and an orderly pullback so I'm going to treat it a little bit differently and I'm actually going to be believe it or not I'm acting a little bit more cautiously on this pullback as it is more orderly than the last several if you recall the last several they've been that same formula several three or four days on the downside a red to green day and recovery really quickly

this has a little bit more of an a war of attrition feel to it as different sectors kind of way on the S&P at different time so I'm taking a look at this at a little bit differently if you don't mind that yes so does that feel like it's got more downside to go if it's happening in this orderly way

it certainly that has crossed my mind you know because when the spikes stop being steep and price and short duration where they come back right away you're going to eventually get to a level where we're going to have a breakdown that's going to be a little bit steeper than everyone thought eventually we've got to visit the hundred day moving average for example you know just on a sort of technical dynamics basis we're going to get oversold at the highs we're going to excuse me overbought at the highs we're going to get oversold down there

and then I think the markets can get on their feet from a level this certainly plenty of exciting trades going on in the markets even though the S&P is backing off a couple basis points daily lately yeah what are we are we seeing anything in terms of rotation I felt like we've been talking a lot

of many of our guests are really we're really thinking about moving into some of the energy space financials we have people talking about industrials you know on the idea that we were sort of perhaps entering a new period

is that is that you know in question now that's a great question it Maggie it really is a great question because I've been I've had a really difficult time getting a handle on the rotation in the past four to six weeks I would say you know it hasn't been a clear sort of

lockdown rotation where technology gets going and the cyclicals back off and energy gets hit it hasn't been a clear cyclical rotation where you know transportation stocks

retail stocks financials industrials are rallying and sort of tech is taking a back seat with yields rising we haven't really seen that

the bond market today the credit markets market based inflation expectations have done

very little even in reaction or non-reaction we can say to the CPI data today break even five years either side of two and a half percent

choose tens curve fives bonds curve doesn't matter which segment you look at it's kind of surfing sideways and consolidating right now

10 year yields they're one in the quarter a bit at 140 somebody wake me up if that range breaks and I'll listen

but right you know but right now it doesn't seem to be you know it sounds like we're going to need a really serious economic

beat or miss to sort of jar the treasuries out of this range and I usually start to you know you usually feel like

the S&P gets comfortable with seeing the same treasury bond prices and the same curve prices and usually can get a

little bit of a rally going it seems like a couple of trades have gotten ahead of themselves and you know

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