Oil Pushes Inflation Higher, Awaiting the Fed – Sep 15 Market Recap
Indices
- Dow 34,618, +42 or +0.12%.
- Nasdaq 13,708, -53 or -0.39%.
- MSCI EAFE 2,108.22, +34.2 or +1.65%.
- S&P 4,450, -7 or -0.16%.
- USD10Y 4.322%, +6.4bp or +1.50%.
- WTI Crude $91.20/bbl, +$3.97 or +4.55%.
Oil Pushes Inflation Data Higher, Awaiting the Fed.
Crude oil continued to climb higher on the back of news week before last that Saudi Arabia and Russia were going to extend their voluntary production cuts. Crude’s march, starting the year at $78.07 (West Texas Intermediate, WTI) and finishing this week at $91.20, a 16.8% increase year to date, has begun to trickle into the inflation data. While neither year over year number for either Consumer Price Index (CPI) nor Producer Price Index (PPI) moved materially, it was the month over month numbers that jumped, and gasoline was more than half the increase of the month over month headline CPI print.
Despite the hotter inflation data, the odds of a rate hike pause when the Fed releases its statement on Wednesday are overwhelming at the time of this writing, 98%. In addition, one of the data points that Fed Chair Jerome Powell likes to discuss, inflation expectations, came in at a multi-year low on Friday; the University of Michigan one and five-year inflation expectations were 3.1% and 2.7% respectively. The probability of another pause at the November meeting has risen to 72.3% vs 53% a week ago.
One situation that bears watching is the unprecedented labor strike of the United Auto Workers against all three of Detroit’s auto manufacturers, General Motors, Ford Motor, and Stellantis (maker of Jeep, Fiat, Dodge, Chrysler, among others) announced on Friday. This is the first time in the UAW’s history that the union has stopped working at all three firms simultaneously.
Next Week
Another fairly quiet week is on tap with the Fed’s expected pause to be confirmed on Wednesday, Philadelphia Manufacturing and Initial Jobless Claims on Thursday, and flash estimates of services and manufacturing from S&P Global on Friday. The lone earnings report of interest belongs to Federal Express, which reports on Wednesday.
Economic Calendar
- Monday – N/A.
- Tuesday – N/A.
- Wednesday – Fed Interest Rate Decision and accompanying press conference with Fed Chair Powell. Earnings: FedEx (FDX).
- Thursday – Initial Jobless Claims, September Philadelphia Fed Manufacturing Index.
- Friday – September S&P Flash Services and Manufacturing PMI.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
SEP 15 Daily Trading Recap…
Monday – Dow +87 to 34,663, Nasdaq +156 to 13,917, S&P +30 to 4,487, USD10Y +3.0bp to 4.288%.
- Nine of eleven S&P sectors traded higher, led by Consumer Discretionary, Communication Services and Consumer Staples.
- Oracle (ORCL) traded down –9.23% after missing revenues but beating earnings consensus expectations.
Tuesday – Dow -17 to 34,646, Nasdaq -144 to 13,733, S&P -25 to 4,461, USD10Y +2.4bp to 4.264%.
- Eight of eleven S&P sectors traded lower, led by Technology, Communication Services and Consumer Discretionary.
Wednesday – Dow -198 to 34,443, Nasdaq -148 to 13,872, S&P -31 to 4,465, USD10Y -1.5bp to 4.249%
- Six of eleven S&P sectors traded higher, led by Utilities, Consumer Discretionary, and Communication Services.
- August Headline CPI was higher as expected at +0.6% vs last month’s +0.2% print. YoY Headline CPI moved higher to 3.7% vs 3.6% expected and vs +3.2% last month. Gasoline prices contributed to over half of the monthly increase.
- August Core CPI increased to +0.3% vs +0.2% expected and last month’s +0.2%. YoY Core CPI fell to +4.4% as expected vs +4.7% last month.
Thursday – Dow +331 to 34,907, Nasdaq +112 to 13,926, S&P +37 to 4,505, USD10Y +3.9bp to 4.288%.
- All eleven S&P sectors traded higher, led by Real Estate, Utilities, and Materials.
- Jobless claims rose for the first time in five weeks to 220,000 vs the 225,000 forecast and last week’s slightly revised higher print of 217,000 (originally 216,000).
- Headline August PPI rose to +0.7% vs expectations of +0.4% and last month’s +0.4% print. YoY Headline PPI rose to +1.6% up from +0.8% last month.
- Core August PPI rose to +0.2% vs +0.2% and last month’s +0.4% print. YoY Core PPI fell to +2.2% from +2.4% last month.
- August U.S. Retail Sales were strong at +0.6% vs +0.4% expected and last month’s +0.7% print.
- Adobe (ADBE) beat earnings and reported revenues in line with expectations; ADBE traded down 1.98% post-close.
Friday – Dow -288 to 34,618, Nasdaq -217 to 13,708, S&P -54 to 4,450, USD10Y +3.4bp to 4.322%.
- All eleven S&P sectors traded down, led lower by Technology, Consumer Discretionary, and Energy.
- September Empire State Manufacturing jumped almost 21 points from August’s number to post a +1.9 print vs –10 expected and –19 last month.
- September University of Michigan Consumer Sentiment fell month over month to 67.7 down from 69.5 last month and below the 69.2 consensus forecast.
- September University of Michigan one and five-year inflation expectations were the lowest since January 2021 and December 2020 at 3.1% and 2.7% respectively.
- The United Auto Workers announced a simultaneousl strike against the big 3 of General Motors (GM), Ford Motor (F), and Stellantis (STLA, makers of Jeep, Fiat, Chrysler amongst others) for the first time in the union’s history.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.