The S&P 500 was unchanged, and the NASDAQ Composite, -0.43%, and yet market breadth was very impressive yesterday. 

Market Breadth	NYSE	NASDAQ
Advancers	2,218	2,683
Decliners	787	1,807
New Highs	48	71
New Lows	20	120
Up Volume	2.79 billion	3.02 billion
Down Volume	802.22 million	1.62 billion

Hence, 74% of the S&P 500 names were higher in the session, lifting the overall percentage of names above the 200-day moving average to 46%. I like the stealthy way participation is expanding.

Sector Performance & Heat Map

Only two sectors were lower, but they’re home to most of the mega-cap names in the S&P 500.

So, there was lots of green on the screen, even though the index closed with a crimson hue.

Industry Watch: Kicking the Tires or Something More?

Airlines soared.

Banks bounced.

Oil Service continues to gain traction.

Retailers popped.

These are all oversold industries, which put in solid sessions, but what does it mean long term?

Oversold Bounce: Any stock or sector, or index can become oversold. Right now, I would place airlines and retailers in this category.

Oversold Buy & Hold: Many banks are oversold based on fundamentals and could be much higher for investors with patience. Oil is in the same category.

This is ‘My Take’ from yesterday’s “Making Money with Charles Payne.”

Today is Consumer Price Index (CPI) Day, but it could also be mea culpa day or the closest we could get to it from the Federal Reserve.

As the members of the Fed, led by Chairman Powell, ascend to rock star status outside the confines of the world of academia and think tanks, they will have to learn there is more to it than just wrecking the economy, like a green room or a Miley Cyrus album cover.

NY Fed President John Williams commented today the Fed doesn’t pay attention to the Street’s Fed fund expectations, especially those that are too far out in the future. That’s interesting since they are modeling Fed funds and the economy a few years ahead and often shaping policy around those assumptions.

 

The Fed should bask in the glow of their growing fame; they have enormous power – more than any actor or athlete.

But understand that fame turns to infamy quickly.

 If the Fed can’t read the current tea leaves and see the trends, there will be an unnecessary pain.

Right now, I’m not sure if the Fed is too arrogant or just using the wrong playbook. But there won’t be any questions if they start demanding the removal of brown M&Ms in their hotel rooms and trigger a deep and unnecessary recession.

All Eyes on the Consumer Price Index (CPI)

A lot of folks on the Street think the number will come in higher than the consensus. Brace yourself.

CPI Estimates:

Portfolio Approach

There are no sector weighting changes this morning in our Hotline Model Portfolio.

Today’s Session

The CPI number came in slightly better than expected, so all the mavens descend upon financial television to proclaim it worse than expected. I get the notion of caution. But when these same mavens whine about markets moving in the opposition direction of their modeling, it’s because of moments like these.

Nothing goes up or down in a straight line.  Inflation will come down.  The rate hiking cycle will work, excess savings will dwindle (already has for half the nation) and tighter bank lending standards will also slow the economy.

CPI

CPI M/M	Actual	Consensus	Prior
Headline	0.1%	0.2%	0.4%
Core	0.4%	0.4%	0.5%
CPI Y/Y	Actual	Consensus	Prior
Headline	5.0%	5.1%	6.0%
Core	5.6%	5.6%	5.5%

 

Core is now higher than headline.

Super Core

The so-called super core (core service inflation excluding housing) came in nicely, but it was dismissed by the same folks that said it would be a lot hotter.

Last year, CPI was the biggest market mover but not so much this year.  Still the knee-jerk reaction was stocks up and bond yields down, and that’s the real message here.

It remains to be seen how the market shakes out, but there has been serious effort to dismiss the data, and that is a mistake.

Comments

As long as inflation is high, over 2-3 percent, I believe the Fed will continue to increase rates, regardless of the economic damage. Debby Deering on 4/12/2023 11:34:37 AM

The Fed and others are terrified of DeFi and the USD losing global supremacy and so are working to collapse small and regional banks, forcing consolidation into mega-nationals and then either nationalize or act in some form of concert with the remaining banks to introduce a national cryptocurrency. Charles on 4/17/2023 2:33:14 PM

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