Morning Commentary
You know those Snickers commercials where someone’s having a bad day then bites the candy bar, and their friend asks, “Better?” Can someone bring a box of Snickers to the NASDAQ Composite?
Market Breadth |
NYSE |
NASDAQ |
Advancing |
1,834 |
2,049 |
Declining |
1,536 |
2,634 |
52 Week High |
127 |
95 |
52 Week Low |
61 |
160 |
Up Volume |
2.20B |
1.86B |
Down Volume |
1.27B |
2.09B |
Beige Book Highlights noted by Glassdoor:
Glassdoor
Consumer Price Index (CPI)
it’s important to breakdown the different drivers when trying to decipher when we might get relief from this persistent inflation. Overall, the CPI report surged to its highest level since June 1982, and a lot of that came from so-called flexible sources.
All of this stuff is supposed to react quickly to changes in supply and/or demand. But so far, neither equation has changed; in fact, flexible inflation has gotten a lot hotter in the last three months.
Larger components include new vehicles, gas (utility) prices, lodging away from home, and motor fuel.
Flexible |
Total |
Core |
12 - month |
17.9 |
18.6 |
3 - month annual rate |
21.9 |
21.7 |
The real challenge is Sticky inflation is 70.1% of relative importance, led by Owner Equivalent Rent (OER), medical care, household furniture, and education. This stuff is not going to ebb in price unless there is a depression.
Sticky |
Total |
Core |
12 - month |
3.7 |
3.5 |
3 - month annual rate |
4.7 |
4.4 |
The bottom line is unwinding this Gordian Knot of higher prices will take a while, and the wage spiral just has to exhaust itself, which I think could happen between now and midyear. But wages only plateau, not pull back.
Portfolio Approach
We are adding a new position in Technology this morning to our Hotline Model Portfolio.
Today’s Session
December PPI headline number of 9.7% was a doozy, but even though it crushed consensus, I cannot say it was not expected. Moreover, the monthly change of +0.2% was half of what was expected and a sharp decline from November. The Omicron factor is affecting airlines and other parts of the economy.
The Ten-Year yield edging lower suggest the street is now comfortable with four rate hikes.
We are watching the dollar selloff as cash is rotating into emerging markets and multinational US corporations.
For the EEM, it’s all about whether the China tech wreck is over. There has been strong buying of late.
Tweet |
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4/24/2024 9:26 AM | BUYING THE DIP |
4/23/2024 1:25 PM | Bloom Off Rose |
4/23/2024 9:32 AM | WHAT HAPPENED TO THE BRAVADO? |
4/22/2024 1:22 PM | Pins and Needles |
4/22/2024 9:30 AM | LIVE BY THE SWORD … |
4/19/2024 1:20 PM | Fair Chunk of Rotation |
4/19/2024 9:35 AM | DON’T OVERREACT |
4/18/2024 1:37 PM | Didn’t Break Down |
4/18/2024 9:40 AM | MARKET OFF SCRIPT |
4/17/2024 1:59 PM | Facing Pressure |
4/17/2024 9:37 AM | POWELL STILL WANTS TO HELP |
4/16/2024 1:35 PM | Muted |
4/16/2024 9:42 AM | FEAR ARRIVES |
4/15/2024 1:17 PM | Making a Statement |
4/15/2024 9:45 AM | Equal Opportunity Drubbing |
4/12/2024 1:37 PM | Pressure Overall |
4/12/2024 9:42 AM | WHO YA GONNA CALL? |
4/11/2024 1:38 PM | No Urgency |
4/11/2024 9:27 AM | Tough Sledding |
4/10/2024 1:22 PM | Hang In There |
4/10/2024 9:51 AM | HERE COMES THE LATEST RATIONALE FOR PERSISTENT INFLATION |
4/9/2024 1:56 PM | Fighting the Trend |
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