evening wrap, august 12

market vibes

“Data is the new oil.” Clive Humby

CPI was a bit of a head-scratcher this morning. Core inflation was 3.1%, and headline inflation was 2.7%. Therefore, volatile components like food and energy were the moderating elements of headline CPI.

Policymakers and analysts use core CPI to distinguish between temporary and structural changes in prices. Therefore, core CPI’s reflection indicates higher prices in more stable categories like shelter, medical care, and clothes; a higher core CPI means persistent upward pressures in non-volatile sectors or, in this case, trending sectors. In other words, inflation is going up. In spite of this seemingly unhappy news, the dollar went down… go figure… stocks and copper rallied

It is possible the keepers of the keys to 2905 Diehl Rd, Aurora, IL, had pre-programmed their models to buy at the bell regardless of the print. Or it is possible the stock market is discounting a strong U.S. economy next year with or without a rate cut, and all this nonsense about Jay Powell is fluff. At any rate, CPI was not favorable data for an FOMC rate cut in September.

NDX futures had a bizarre day: a new all-time high on the CPI prints, then a severe drop as the DOW shot higher, then a ferocious recovery into a position of leadership for the rest of the session. I have a feeling quite a few people had a “wait a minute” pause after the data, deconstructing it as I did, and then, like me, said, “What the hell, let’s buy it!” (Billy Beane: Does it matter how he gets on base? … Peter Brand: No, it does not.)

(NDX in 5 minute data chart below)

My internet is stuttering like the lawyer in My Cousin Vinny. So, I’m afraid brevity will be the soul of the wrap. A very brief checkdown of markets with very another brief summation in the vibe will have to do.