Ahead of CPI inflation, the market rose in expectation

Ahead of Thursday’s CPI inflation print, the stock market rose on Wednesday, extending previous gains for the week. The stakes for the Fed-critical report are high since most investors expect a lower CPI Print. 

Apple, Microsoft, Alphabet, Amazon, and Tesla all had gains on Wednesday, potentially signaling a modest recovery in tech in the works, or they could all plunge tomorrow. 

As we ring in the Year of the Rabbit, investors have high hopes for what this new year can bring to their portfolios.

I recommend reading Mish’s 2023 Outlook – a must-read resource that forecasts macroeconomic trends, markets, and commodities and is an enjoyable read!

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consumer price index median line chart year 2022

With the Federal Reserve’s expectations set that inflation will return to its target rate of 2% in 18-24 months, media coverage has recently been focused on this narrative, which is far from reality. 

There is no consensus on how much the US will grow; or how deep a recession might be felt. 

Energy prices have relaxed for now, which is positive. Shelter is 30% of CPI and trending higher. The prevailing narrative in the media today is that “inflation has peaked,” maybe, but it will not be 2% again for many years. 

The shelter component is 30% of the total CPI calculation. Wages are going up. Food is soaring. 

consumer price index food inflation line chart year 2022

Inflation will remain way above the Fed rate of 2%, and we will see if the CPI Print is softer tomorrow. It is positive if trending lower, but lower does not equal 2%.

With the end of 2022 and the turn of the New Year, investors must consider what lies ahead of tomorrow and beyond. 

As we enter 2023 the Year of the (Water) Rabbit – according to Chinese zodiacs –many stakeholders will need insight to profit in 2023.

Mish in the Media

Bloomberg BNN 01-11-23Global Inflation Points and Market Opportunity

Benzinga 01-11-23How to Grow Your Wealth in 2023

StockCharts – Final Bar 01-11-23Know Your Timeframe

Stock Market ETFs Trading Analysis & Summary:

S&P 500 (SPY) 389 support and 401 resistance

Russell 2000 (IWM) 179 support and 184 resistance

Dow (DIA) 336 support and 344 resistance

Nasdaq (QQQ) 274 support and 280 resistance

Regional banks (KRE) 56 support and resistance 62.

Semiconductors (SMH) Support is 216 and 224 resistance.

Transportation (IYT) 220 pivotal support and 230 is now resistance.

Biotechnology (IBB) 127 is pivotal support 138 overhead resistance. 

Retail support and 68 is now resistance.

Twitter: @marketminute

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.