More Inflation Readings, Consumer Sentiment And Other Key Themes To Watch This Week

The S&P 500 ($SPX) (SPY) started off the new year with a bang, closing 2.28% higher on Friday which was good for a 1.19% weekly gain. 

The Dow Jones Industrials Index ($DOWI) (DIA) was up +1.23% for the week while the Nasdaq 100 Index ($IUXX) (QQQ) was +0.82% higher.

Friday’s gains came on the back of a mixed NFP report, but the market rocketed higher to close the session. Tesla (TSLA) flirted with the $100 mark but also end up rallying to close the week over $110. Energy also finished up as demand numbers from overseas saw a bounce back. 

This week is the first full trading week of the year, and it will be exciting to have a full 5 days to trade. With a few weeks until earnings season, we are still at the mercy of the usual monthly and weekly news releases. Here are the top 5 releases to watch this week:

Powell

Tuesday Fed Chair Powell is speaking at a symposium in Sweden about the roles of Central banks and the mandates they have. This is not the typical press conference where what he says will be directly tied to a market reaction, but it's still possible that if he starts to go off script on what the Fed’s role is and should be, the market may react.

CPI

I feel like this gets written about weekly, but here we are with another inflation print. Non-Farm payrolls showed last week that the Fed still has some work to do to slow the economy down. Watching how the m/m CPI number comes out could give us further clues into whether or not what they are doing is working. The last few prints have come in lower than expected, and with oil/energy to have seemingly stabilized its possible that trend continues. If it does come in cooler than expected, it's possible that its fuel for the market to rally higher. 

Unemployment Claims

Unemployment claims come out at the same time as the CPI numbers on Thursday and it's possible that these two reports work in tandem. The Fed has been trying to slow everything down, so if unemployment comes out higher than expected it's possible the market also views that as a positive event. 

University of Michigan Consumer Sentiment 

Sentiment is a leading economic indicator, usually if it’s positive it’s a good sign for the market. However, with the Fed making it clear that they are trying to slow the economy down, it's possible that this is an instance where bad news is good news. If sentiment comes in softer than expected it’s possible the market rallies on the hopes that the Fed is doing their job well. Conversely a better than expected print could be seen as bearish by market participants as more rate hikes are inbound. 

Layoffs   

Something that is not a news release but has been in the news a lot lately are layoffs. These are obviously terrible on a personal level, but the market has yet to really react to all of the planned reductions. Amazon (AMZN) led the pack with an expected 18,000 layoffs, Salesforce (CRM) is expected to cut 10% of its workforce, and even Goldman Sachs (GS) is looking at plans to lay off a large quantity of its bankers. These things seldom have an immediate impact on the market, but as this market regime continues and rates continue to rise, it’s possible these large layoffs come back to haunt the market in the longer term. 

Best of luck this week and don’t forget to check out my daily options article.

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