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Investors Remain Worried Before Key Inflation Data
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It’s a curious week of trading thus far, which is perhaps putting it kindly. Pre-market futures are slightly lower at this hour, as investors look to avoid a fifth-straight down-session, even though there ought not be a ton of movement ahead of this week’s important market-related news, including Consumer Price Index (CPI) data Thursday and Q3 earnings season starting tomorrow with Pepsico (PEP - Free Report) .
What’s curious about this week is this very void of actionable news so close to these big moments just ahead. We know how nature abhors a void, and that goes for the stock market, as well. So yesterday, in steps JPMorgan (JPM - Free Report) CEO Jamie Dimon quotably expecting another -20% drop in equities, which caused a ripple of fear to tear through what normally would have been light positioning ahead of Pepsi’s earnings, and CPI following (the Producer Price Index [PPI] also reports tomorrow).
And with little on our plate ahead of today’s opening bell, the Dimon commentary resounds, probably louder than it should. After all, we’re primed for news this week, and he’s the first one to give it to us. To be fair to the JPMorgan Chair, he did say he wasn’t sure if the economy was going to experience a hard landing or a soft one; in the event of a hard landing, that’s where Dimon expects a stock market drop that would certainly bring the “pain” Fed Chair Jay Powell has been promising us since at least Jackson Hole.
Today we will get some new commentary from Cleveland Fed President Loretta Mester, which might be expected to counteract the “doom & gloom” scenario somewhat. However, this would pretty much ignore the fact that both Chicago Fed President Charles Evans and Fed Vice Chair Lael Brainard both spoke yesterday — with far more dovish tones than Dimon — and nobody cared. So don’t expect a lot of heavy lifting from Mester’s words today, informative though they likely will be. Mester herself has been on the dovish side of the Fed decision-makers, for the record.
A softer PPI number tomorrow morning, by the way, would indicate that wholesale inflation is weakening, which would be good news in and of itself, and may forecast lower CPI results, as those lower producer costs may make their way to the consumer. These don’t always happen in lock-step, however, so even if PPI does report lower than expected, that’s no guarantee CPI is going to drop by the same level.
It’s a waiting game, which is difficult. We want to act, we don’t want to wait. We want to cheat ahead — but to the extent market participants are taking that lead-off first base, it’s toward bearish news, not positive surprises. This is perhaps the clearest reason to see why we’re still trading in the red this pre-market.
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Investors Remain Worried Before Key Inflation Data
It’s a curious week of trading thus far, which is perhaps putting it kindly. Pre-market futures are slightly lower at this hour, as investors look to avoid a fifth-straight down-session, even though there ought not be a ton of movement ahead of this week’s important market-related news, including Consumer Price Index (CPI) data Thursday and Q3 earnings season starting tomorrow with Pepsico (PEP - Free Report) .
What’s curious about this week is this very void of actionable news so close to these big moments just ahead. We know how nature abhors a void, and that goes for the stock market, as well. So yesterday, in steps JPMorgan (JPM - Free Report) CEO Jamie Dimon quotably expecting another -20% drop in equities, which caused a ripple of fear to tear through what normally would have been light positioning ahead of Pepsi’s earnings, and CPI following (the Producer Price Index [PPI] also reports tomorrow).
And with little on our plate ahead of today’s opening bell, the Dimon commentary resounds, probably louder than it should. After all, we’re primed for news this week, and he’s the first one to give it to us. To be fair to the JPMorgan Chair, he did say he wasn’t sure if the economy was going to experience a hard landing or a soft one; in the event of a hard landing, that’s where Dimon expects a stock market drop that would certainly bring the “pain” Fed Chair Jay Powell has been promising us since at least Jackson Hole.
Today we will get some new commentary from Cleveland Fed President Loretta Mester, which might be expected to counteract the “doom & gloom” scenario somewhat. However, this would pretty much ignore the fact that both Chicago Fed President Charles Evans and Fed Vice Chair Lael Brainard both spoke yesterday — with far more dovish tones than Dimon — and nobody cared. So don’t expect a lot of heavy lifting from Mester’s words today, informative though they likely will be. Mester herself has been on the dovish side of the Fed decision-makers, for the record.
A softer PPI number tomorrow morning, by the way, would indicate that wholesale inflation is weakening, which would be good news in and of itself, and may forecast lower CPI results, as those lower producer costs may make their way to the consumer. These don’t always happen in lock-step, however, so even if PPI does report lower than expected, that’s no guarantee CPI is going to drop by the same level.
It’s a waiting game, which is difficult. We want to act, we don’t want to wait. We want to cheat ahead — but to the extent market participants are taking that lead-off first base, it’s toward bearish news, not positive surprises. This is perhaps the clearest reason to see why we’re still trading in the red this pre-market.