Friends, yesterday was CPI and today is PPI.
For those who don't know, here is a short write up:
The Producer Price Index (PPI) is a critical economic indicator that measures the average change over time in the selling prices received by domestic producers for their output. It's a barometer of inflation at the wholesale level, tracking changes in prices from the perspective of the seller rather than the consumer.
PPI differs from the Consumer Price Index (CPI), which measures price changes from the buyer's standpoint.
The PPI captures price movements in everything from raw goods to finished products, which can signal what consumers will later face in terms of costs.
If producers are paying more for their inputs or are receiving more for their final products, it's often only a matter of time before these costs trickle down to consumers, influencing the CPI.
Implications of PPI on the market are significant:
Inflation Signals:
A rising PPI suggests increasing prices at the producer level, which can indicate forthcoming inflation for consumers.
This can affect purchasing power and, consequently, consumer spending, a significant driver of economic activity.
Interest Rates:
Central banks, like the Federal Reserve in the U.S., monitor PPI as part of their mandate to manage inflation.
A consistently high PPI could lead to higher interest rates as the central bank attempts to cool inflationary pressures.
Corporate Margins:
For investors, PPI data can signal changes in profit margins for companies.
If producers cannot pass higher costs onto consumers, profit margins may shrink, potentially impacting stock prices.
Sector Impact:
Different sectors react to PPI changes differently.
For example, sectors with significant raw material costs, such as construction or manufacturing, might be more sensitive to changes in PPI.
Hopfully this sheds a bit of light on the implications of todays PPI numbers.
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Insiders and operators can hide everything from you except the VOLUME,
Yes, Volume is the only indicator which helped me making millions from the market.
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CPI thoughts:
In short: I’m bearish 🐻
All predictions are that it has cooled from last month and I’m thinking at best it comes inline with expectations. Oil and commodity prices have only continued to climb and I really think we are looking at a stagflation narrative starting to set in for now.
I personally don’t believe there will be a rate cut in summer and probably not one at all this year 🚨IF🚨 economic data stays strong. This has been my prediction since hot prints started rolling out this year.
Now the first two hot prints were “mansplained” away by Powell but I think that’s about to change. Things are going to start looking “sticky” as they say.
The pump EOD was because Bostic came out and said rate cuts sooner if jobs reports started coming in bad. Ok…… in what planet have any jobs reports come in bad yet? Zero (or almost zero)
There just simply isn’t enough time or prints for June cuts IMO unless they get real cool real fast. I always leave the room for the possibility I’m wrong.
I’ve been in the camp that we have been in a distributive phase since end of Feb and I still believe $NVDA earnings basically delayed the inevitable correction.
I’m not calling for a crash or anything stupid like that (I’ll leave that to “those” accounts), but I would like to see a 5-7% overall correction in the indexes before pushing higher towards year end.
I still believe we are a little over extended here and a healthy correction would be welcomed and necessary for a further push IMO.
I would like to see the prints come in warm at 3.5% with core around 3.9% to really get the correction kicked off.
If we come in inline with expectations I wouldn’t be surprised at all with a gap up and sell off.
I have no position other than my $TSLA puts that got Elon’ed 😂
Happy hunting.
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