Pre-markets set up for a green week – September 9, 2022

Pre-markets set up for a green week – September 9, 2022

Friday September 9, 2022

Pre-markets are up again today, with a perhaps unexpected positive spin on futures, which are now poised to close the entire month in green for the first time. The Dow is +200 points, the S&P 500 +30 and the Nasdaq +100 points. We are after Labor Day, but still with relatively summer trading volume.

Overnight, cooler inflation out of China – Producer Price Index (PPI) reads +2.3% from +4.2% earlier – and this marks the first time in a while that the PPI numbers have fallen below the Consumer Price Index (CPI). The ongoing shutdowns, which continue to this day, are clearly hampering productivity, and yesterday we saw China cut its interest rate by 2%, at a time when most major economies in the West are raising interest rates. Anything to achieve some equilibrium in world markets, right?

Next week we have a few days where there are clusters of fresh, important data – nothing more than Tuesday’s US CPI printout for August. This will be the last CPI report before the next Fed meeting on monetary policy, and a significant pull of +8.5% (heading, yoy) could be the last chance to make the Fed change its mind about to raise the Fed fund rate by 50 basis points (bps) instead of 75. Therefore, the weaker the CPI data, the more likely it is for a rally on Tuesday.

Next Thursday we will also see new data on retail sales, Philly Fed and Empire State, import and export prices, industrial production and weekly unemployment claims. Like last month’s CPI, July retail sales were flat month over month. Import and Empire State both wallowed in negative territory a month ago. None of these data points are as important as CPI, but they do provide more tea leaves to read.

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