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Dear Clients,
The most widely anticipated economic report, CPI, is today at 8:30 AM EST.
What is the market setup into the report? And what can investors expect?
Plus, the importance of taking Wall Street Strategist forecasts with a “grain of salt.”
Let’s dive in 👇🏻
— The We Study Markets team
CPI Reported Today at 8:30 AM EST
The S&P 500 closed yesterday at 5,209, still 1% within its all-time closing high of 5,254.
A continuation of strong equity performance, in our view, hinges primarily on today’s CPI report which is set to be released at 8:30 AM EST.
Consensus expects Core CPI MoM of 0.3
Anything above this should trigger a de-rising in equities as it is a signal to the fed that inflation could possibly be reaccelerating
On the contrary, and what we think is more probable, is a soft reading (below 0.3), which should trigger a move higher for stocks
A “worse case scenario” for the release is a soft print and stocks fall (this would signal stocks falling on good news)
A “best case scenario” is a hot print and stocks rise (when stocks can rally on bad news, that’s usually bullish)
Technical Setup into CPI Day
The technical setup is somewhat eerie heading into CPI day.
Why?
We recently got a “bearish engulfing” candlestick on a daily chart and this preceded equity weakness in mid-2023.
Does this make us outright “bearish?”
No.
We still think stocks can rally an additional +6-8% through year-end from here
But it won’t be in a straight line
And a “hot print” could be the “breather” that stocks need before finishing the year strong
