📈 Is Inflation Back?

This is what the markets think.

PPI Results

Yesterday before market open we received PPI data, and it came in higher than expected.

Consensus was 0.2% month-over-month and we came in at 0.4%. While this may not look like a lot, it is a pretty significant miss and a hot number.

Year-over-year, CPI is at 3.4%, a level we have not seen since 18 months ago.

We also saw jobless claims come in above expectations at 242K vs. 220K consensus.

Market Reaction

We saw the markets sell off yesterday on this news for a few reasons.

First, it means that corporate profits are shrinking.

We saw CPI yesterday come in in-line, while PPI is rising.

CPI is what consumers pay for products. PPI is what it costs corporations to produce them.

So, if prices for consumers are steady while prices for corporations are rising, this means that profit margins are falling, which is bad for equities.

Second, it calls the amount of future rate cuts into question. With this PPI reading that suggests inflation may be sticky, the Fed may be cautious in their approach to cutting rates out of fear of inflation returning.

Above the cursor shows the 8:30 AM bar after PPI is released and you can see that we rejected that level all day. This will be key to watch today.

There are a few names that I am very bullish on right now and will likely be trading this morning. Watch this video to find out what the names are: