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Big Inflation Prints on Deck This Week

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Monday, May 13th, 2024

We have an important week for the markets on tap. Wednesday brings us Consumer Price Index (CPI) numbers for April, which will be preceded by the Producer Price Index (PPI) wholesale report on Tuesday. Expectations for both are to tick up 10 basis points (bps) month over month but to come down year over year. Core year over year results are looking to reduce from the +2.8% reported a month ago on wholesale, and from +3.8% a month ago on retail. Any surprises to the downside may be considered positive for the markets.

In addition to these key inflation metrics, we have other important data out as well. Retail Sales for April, Empire State manufacturing and a Homebuilder Confidence survey — both for May — will add to this week’s data haul. In addition, earnings reports for major retailers are out this week, too: Home Depot (HD - Free Report) , Macy’s (M - Free Report) and Walmart (WMT - Free Report) join other quarterly releases from potentially impactful companies like Cisco Systems (CSCO - Free Report) , Alibaba (BABA - Free Report) and John Deere & Co. (DE - Free Report) .

This morning, a consumer credit report is out from Equifax. In it, we see consumer credit delinquencies are on the rise — +0.4% for Autos and +0.9% for Bankcards were the two most conspicuous prints — depict a growing credit problem, with higher price points and interest rates meeting something of a tapering off in wage earnings. Gone are the pandemic-era high levels of savings rates; the American consumer, while not as indebted as prior to the pandemic (2019) and well off the 2009 level credit concerns, nevertheless show an increasing level of debt. This is not expected to be much of a problem, however, unless employment levels suddenly soften.

Meanwhile, stock market trading is back in as big way. The Dow is coming from its strongest week of the year so far, now riding an eight-session winning streak. All major indices are solidly positive over the past month, with the S&P 500 and Nasdaq leading the way year to date, up +9% or more. At this hour, the Dow is up another 75 points (though down from triple digits earlier this morning), the S&P is +13 and the Nasdaq is +70 points.

Tencent Music Entertainment (TME - Free Report) shares are up this morning. Results from the subsidiary of Tencent Holdings (TCEHY - Free Report) were ultimately mixed: earnings of 13 cents per ADS missed the Zacks consensus by a penny, while top-line sales of $937 million was well ahead of the $904.3 million anticipated. Growth of 6.8 million new paying customers in the quarter — both among music listeners and social media — is good news both for the Guangdong-based company and the Chinese economy as a whole.

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