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Economic Data Deluge

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Nineteen years to the day, the attacks on Lower Manhattan and Washington DC are being commemorated in a moment of silence on the floors of Wall Street. This comes as futures are in the green at this hour, following another 1.5-2% selloff in market indexes during regular trading Thursday.

Ahead of today’s open, we see new Consumer Price Index (CPI) numbers for August, a day after the Producer Price Index (PPI) surprised to the upside a bit. Here we see the same: +0.4% beat expectations by 10 basis points, though down from the +0.6% posted for July. The PPI index also surpassed estimates to 0.3% from 0.2% expected.

On the core read (ex-food & energy pricing, which can be rather volatile month over month compared to other sellable items), we see a doubling of expectations, to +0.4% — directly in-line with what we saw from PPI results yesterday. Year over year, headline CPI reached +1.3%, with core at +1.7% — the highest we’ve seen that particular read since pre-pandemic levels in March.

All of this suggests that inflation, while not ramping up to the Fed’s past expectations, is still at work, albeit modestly. Consider these numbers out this morning come with zero static from interest rates or credit vulnerability, courtesy the Federal Reserve; that we don’t see even stronger inflation reads based on such metrics has led to economists’ head-scratching the world over.

Market indexes would need a big rally to bring us back to where we were five trading days ago, but only subtle gains would bring us positive results for this holiday-shortened week. What it seems to have happened once September returned is that suddenly people began to pay attention to things like Congress failing to pass a replacement relief bill to the CARES Act (which expired in late July), jobless claims plateauing at over 800K per week, forest fires in the Western U.S. reaching all-time-high disaster levels, and 900 deaths per week in the U.S. from Covid-19.

The stock market has provided plenty of heavy lifting through these troubled times. But it is not, after all, a worker of miracles. Now that cooler temps are beginning to descend on the country (apart from California, Oregon and Washington State), perhaps cooler heads will prevail among market participants, as well.