The US market is riding high on the three Es, exuberance, earnings & easing of rates on the agenda...

WATCH a quick take of my interview on Ausbiz today:

1. The major catalyst this week is the Fed's preferred inflation gauge, PCE for December, if it falls below the Fed's 3% target, (consensus expects a 3% print),it could mark a flag for equities to move up.

a. And US earnings season kicking into gear. There have been more downgrades than upgrades, so the benchmarks might be set lower so there are opportunities for earnings BEATS.

b. Outlooks could be solid on the back of rate cut expectations and relatively strong employment

2. The Fed blackout period is ON-so we may not get market jitters from Fed speak, as we are now in a blackout period ahead of the Jan. 30-31 FOMC meeting.

3. Consider, the US Fed funds futures sharply pared bets back of a March rate cut and the S&P500 recovered and hit record highs.

a. Expectations of a March cut dropped from 80% at the start of January to 50%..

This was due to

- inflation markers rising (oil, uranium and shipping costs and insurance),

- plus, the big catalyst was that Fed Governor Christopher Waller, said the Fed was in no hurry to cut rates.

So…..this tell me, the market is optimistic about the year ahead and can look past the Fed speak noise and inflation creeping up again... All hail the three Es.