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We’re still mostly flat to start another day of trading, which suggests tomorrow morning’s Consumer Price Index (CPI) report for March is what market participants are awaiting before pushing or pulling markets in any particular direction. As we’ve already pointed out yesterday, an Inflation Rate of +6% in February looks to take on a 5-handle for the first time since September of 2021.
The only index looking to creep ahead of the CPI number is the small-cap Russell 2000, but this may be in the service of a realignment of small-cap stocks relative to the rest of equities, which had gotten out of whack over the past few weeks. This was likely in line with fears that the regional bank crisis was more meaningful with smaller growth names, and the hedge was against any contagion in that space. But with that threat seemingly having abated by now, small-caps are now moving to where the Dow, Nasdaq and S&P 500 have been trading for the past week or two.
It’s not just CPI results we’re awaiting, either: the Producer Price Index (PPI) comes out Thursday, along with Weekly Jobless Claims — which are now readjusted to include the new climate of heavier layoffs, and not just in Tech — and Retail Sales results on Friday. The two main economic pillars that have looked resistant to higher interest rates have been the labor market and consumer spending. Both of these will have been addressed as of the month of March by the end of this week.
Let us not forget Q1 earnings season, either. In the olden days, before Alcoa (AA - Free Report) split up, its early quarterly report was considered to have kicked off a new season of earnings results. Now there’s more of a trickle into the big Wall Street banks — JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) — which report on Friday. Delta Air Lines (DAL - Free Report) reports a day earlier, and Paris-based luxury retailer LVMH (LVMUY - Free Report) a day earlier than that.
On the labor force aspect of things, Goldman Sachs is out this morning with a report explaining how labor supply in the U.S. has fully recovered to pre-Covid trends, three years after a massive crater of layoffs took a robust American economy into a deep but short-lived recession. Higher wages welcomed many workers back into the fold over time (which helped inflation get its hooks in the economy), but now, according to Goldman, with more labor supply we’re now seeing lower wage gains — and this will assist in bringing inflation down.
Image: Bigstock
Flat Markets Bespeak Importance of CPI Data
Tuesday, April 11th, 2023
We’re still mostly flat to start another day of trading, which suggests tomorrow morning’s Consumer Price Index (CPI) report for March is what market participants are awaiting before pushing or pulling markets in any particular direction. As we’ve already pointed out yesterday, an Inflation Rate of +6% in February looks to take on a 5-handle for the first time since September of 2021.
The only index looking to creep ahead of the CPI number is the small-cap Russell 2000, but this may be in the service of a realignment of small-cap stocks relative to the rest of equities, which had gotten out of whack over the past few weeks. This was likely in line with fears that the regional bank crisis was more meaningful with smaller growth names, and the hedge was against any contagion in that space. But with that threat seemingly having abated by now, small-caps are now moving to where the Dow, Nasdaq and S&P 500 have been trading for the past week or two.
It’s not just CPI results we’re awaiting, either: the Producer Price Index (PPI) comes out Thursday, along with Weekly Jobless Claims — which are now readjusted to include the new climate of heavier layoffs, and not just in Tech — and Retail Sales results on Friday. The two main economic pillars that have looked resistant to higher interest rates have been the labor market and consumer spending. Both of these will have been addressed as of the month of March by the end of this week.
Let us not forget Q1 earnings season, either. In the olden days, before Alcoa (AA - Free Report) split up, its early quarterly report was considered to have kicked off a new season of earnings results. Now there’s more of a trickle into the big Wall Street banks — JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) — which report on Friday. Delta Air Lines (DAL - Free Report) reports a day earlier, and Paris-based luxury retailer LVMH (LVMUY - Free Report) a day earlier than that.
On the labor force aspect of things, Goldman Sachs is out this morning with a report explaining how labor supply in the U.S. has fully recovered to pre-Covid trends, three years after a massive crater of layoffs took a robust American economy into a deep but short-lived recession. Higher wages welcomed many workers back into the fold over time (which helped inflation get its hooks in the economy), but now, according to Goldman, with more labor supply we’re now seeing lower wage gains — and this will assist in bringing inflation down.
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