Wash, rinse, repeat.
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Author: pebblewriter
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Charts I’m Watching: Nov 16, 2023
Futures have been pegged at the same breakout level for the past 48 hours now…
…as WTI has now reached our 74.25 target from August.
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PPI Confirms Price Weakness
PPI tumbled to -0.5% in October (1.3% YoY), the biggest drop since pandemic era April 2020. Core PPI was unchanged MoM and rose 2.4% YoY.
Commodity price weakness was the main culprit, with gasoline’s 15.3% plunge leading the way. The print isn’t all rainbows and unicorns. A slump in PPI could also be interpreted as a sign of economic slowdown and the loss of pricing power. Stay tuned…
Futures have given up much of their overnight ramp, but are still up as we approach the open. As contrary as it might sound, the market is due for a pullback in order to backtest some of its recent gains.
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October CPI Unchanged
October CPI came in unchanged following a 0.4% increase in September. For the year, CPI dropped to 3.2% from 3.7% in September. Core came in at 4.0% YoY and 0.2% MoM.
Futures soared on the print.
As we have anticipated for the past several months, it was a sharp drop in gas prices which produced the equity-friendly print. From CPI Continues Falling on July 12:As we discussed last month, the benefit from YoY price declines in oil/gas has maxed out unless prices continue to fall. In other words, central bankers might need to drive oil/gas prices even lower.
From June’s No Surprise:
It’s important to note that oil/gas mustn’t rally any further. If gas were to level out at current levels, the strong positive correlation between YoY gas prices and CPI indicate that inflation would be on the rise from now through the end of the year.
And, Powell: Inflation Not Over:
… there is little chance of inflation not bouncing back up unless oil and gas prices collapse from current levels.
The breakout in July following OPEC’s production cut was followed by an incredible increase in geopolitical risks related to the Israel-Hamas war. Yet oil and gas prices are lower than they have been in almost two years.
It might not be a big enough drop to help Americans forget the 6.7% annual increase in shelter expenses. But, it’s certainly enough to break stocks out of their latest swoon.
Mission accomplished.
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All Eyes on CPI
This is one of the biggest weeks for economic data in quite some time. We get October CPI tomorrow, PPI and retail sales on Wednesday, initial claims on Thursday, and housing starts and permits on Friday. Of all these data, CPI looms largest for the markets.
Recall that September core CPI came in at 4.1% YoY, with shelter (+7.2% YoY) accounting for over 70% of the increase. With the recent sharp drop in mortgage rates, shelter could remain stubbornly high, complicating the Fed’s inflation fighting efforts and thus paring the market’s optimism.
Futures are off moderately in advance of tomorrow’s data after nailing our channel top target.
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Charts I’m Watching: Nov 10, 2023
Futures have bounced back from yesterday’s disappointing outing, but are still off recent highs with some very consequential economic data coming next week.
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Charts I’m Watching: Nov 9, 2023
If you liked the last four sessions, you’ll love the way this one is shaping up.
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Charts I’m Watching: Nov 8, 2023
VIX and the 10Y have both reached key chart pattern support.
It’s a little early for a sprint to the barn. Will the algos take a breather?continued for members… (more…)
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Charts I’m Watching: Nov 7, 2023
Futures are off slightly but still hugging the 50-day moving average as we approach the open.
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Charts I’m Watching: Nov 6, 2023
Things are very quiet this morning following last week’s spasmodic rally on a collapse of vol and sharp drop in the 10Y.
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