CPI carnage crashes equities to levels not seen since…last Thursday

CPI carnage crashes equities to levels not seen since…last Thursday

Here is what you need to know on Wednesday, September 14:

Carnage! It is not often you see a sell-off of such magnitude on the back of one economic data point. The market clearly had Goldilocks in mind and psychologically was positioned that way. In my note yesterday I also thought it would take a while for inflation to prove its stickiness and thought the penny would not drop for another two or three releases.

I did say the risk-reward trade was lower, so at least that is some comfort even if I did not take my own advice. By now many of you may have seen the exciting stat that all Nasdaq 100 stocks finished lower on Tuesday. This is a pretty rare event, but so too was the price action. Falls of over 5% are not all that common, and such a huge move has taken us back to levels we have not seen in some time. Last Thursday to be exact.

Yes, that is right. For all the panic and talk we are merely back to where we were four trading days ago! I did say we would see some chop, and sometimes it is hard to see the chop from the trees. Time now for a bit of reassessment before the big money comes in and likely bashes us some more. Already bonds are on the move, and the equity risk premium looks all wrong, so we will have to go lower. P/E ratios also look too high, so both P and E will have to come down. Warning though: nothing goes down in a straight line.

After the CPI, the dollar went on a charge, which has somewhat paused today as the BOJ checked rates. This means they are trying to warn about possible intervention to weaken the yen. It likely will not work though and is just saber rattling. The dollar index is weaker at 109.44. Oil is confused as talk of the US refilling the SPR at $80 gives some support. Note it would take nearly a year to refill, so this is more bluster. Oil is at $87. Bitcoin also is a high-duration asset, so it collapsed after the CPI to $20,200 now. Gold is at $1,704.

See forex today

European markets are lower: Eurostoxx flat, FTSE -0.3%, and Dax -1%.

US futures are also higher: S&P 500 +0.3% Nasdaq +0.8% and Dow +0.4%.

Wall Street top news (QQQ) (SPY)

US CPI higher than expected leads to market rout.

Fed funds futures now see a 33% chance of a super-sized 100bps rate hike next week.

META: South Korea fines over privacy laws.

Alphabet (GOOGL): same as above. Also, the EU orders it to pay over Android dominance.

Apple (AAPL) to use Taiwan Semiconductor (TSMC) chips for iPhones and Macbooks next year-Nikkei.

Twitter (TWTR) shareholders say yes to Elon Musk takeover.

Johnson & Johnson (JNJ) plans a $5b buyback as it reaffirms its outlook.

Starbucks (SBUX) up 1% on 3-year growth projections.

Paolo Alto Networks (PANW): 3 for 1 stock split.

Modern (MRNA) CEO says it can supply China with vaccines.

Upgrades and downgrades

Source: WSJ.com

Economic releases

This News is Published from Google Alert – CPI.

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