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Inflation is on the Decline

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Last Week’s Market Activity

The markets loved the fact that economic data releases came in inline with expectations this past week, leading to green across the board.  The Dow and S&P were up just under 2% on the week, while the Nasdaq and Russel were up just over 3% and 4%, respectively.  CPI is clearly on the decline, and many believe that we’re out of the woods in terms of inflation.

Macroeconomic Indicators

Last week, everyone was paying attention to the CPI release, which met analyst expectations on all fronts.  This, of course, is a huge positive catalyst for markets, as inflation has been a key metric for the Fed for months now.  However, there are a couple of metrics that went relatively unnoticed this past week, such as real hourly earnings and consumer credit.  Real hourly earnings came in with a 2.2%, which is quite a large increase.  Whereas consumer credit missed expectations by more than 10% to the upside, with analysts forecasting a $25 billion increase, and the actual number coming in at $28 billion.

Upcoming Market Catalysts

Things are beginning to heat up this week, as we’ve got CPI data coming out on Thursday.  Analysts are pegging December’s Consumer Price Index at 6.6%, down from 7.1% in November.  While inflation seems to have calmed down from the summer highs, there may have been some volatility in certain goods during the holiday season, leading to higher-than-expected inflation.  In addition to CPI data, we’ll also get some information on consumer credit.  This will give us an idea of how the consumer is fairing amidst some trying economic times.

Notable Earnings Releases

Earnings season is beginning to ramp up this week, with some huge companies reporting earnings, such as:

01/17 – Morgan Stanley (MS), Goldman Sachs Group (GS), United Airlines (UAL)
01/18 – The Charles Schwab Corporation (SCHW), Kinder Morgan (KMI), Discover Financial Services (DFS), J.B. Hunt Transport Services (JBHT)
01/19 – Procter & Gamble (PG), Netflix (NFLX), Fastenal Company (FAST)

Big banks will continue to report earnings this week, with MS, GS, SCHW, and DFS reporting.  It will be interesting to hear what each bank has to say, as last week, banks reported a mixed bag of earnings.

UAL will give us an update on the travel industry, likely echoing what DAL had to say last week.  Additionally the energy giant KMI will also be reporting earnings this week.  Their commentary will likely move oil and gas stocks in a major way, so listening in on their call will be key!

Lastly, NFLX will lead the charge in terms of big tech earnings.  After a few quarters of dismal earnings last year, and some major changes to their business model, everyone will be keen to hear what they have to say this week!

⚡ Watchlist ⚡

Monitoring the market conditions this week.

⚡ Trade Wins from Last Week ⚡

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