Massive CPI Report And Other Key Themes To Watch This Week

Another week is behind us, and it was filled with some exciting price action! The S&P 500 ($SPX) (SPY) finished the week down around 1%. The Dow Jones Industrials Index ($DOWI) (DIA) was up -0.17% for the week while the Nasdaq 100 Index ($IUXX) (QQQ) was -2.13% higher.

Tesla (TSLA) started the week strong as did so many other names, only to fade Thursday into Friday. Another favorite, Apple (AAPL) chopped around to finish the week slightly lower than it started. It was a busy week with earnings as well, but there appears to be a lull in those until the following week.

The upcoming week should have some excitement as well. Some additional earnings, CPI, Retails sales, Fed Speakers, and more. Here are 5 things to watch this week:

Earnings

Still ever-present are more earnings this week. There is a definite lull in reporting this week with around 100 calls per day, as compared to a few hundred over the past few weeks. Even with the slower pace this week we still have some giants like Coke (KO) reporting Tuesday morning before the market opens and John Deere (DE) reporting Friday before the market opens. While this week is a slower pace, next week we will see a significant uptick in reports.

CPI

One of the big hitters is back this week, CPI comes out Tuesday morning at 8:30 am Eastern. It's possible this produces some solid volatility as the US came out and quietly increased the prior two months numbers early last Friday morning. With the new revisions, if this comes in hotter than expected it's possible we see some sustained volatility and a possible move down in the indices. In the last few months, we have been told that inflation was cooling, but that may not actually be the case (just go to a grocery store). On the flip side, if CPI comes in cooler than expected it's possible we rocket higher on this positive news. 

Empire State Manufacturing 

On deck, Wednesday at 8:30 am is the Empire State Manufacturing index. This may not move the market the same way CPI or some of the other news releases will, but it has larger potential ramifications as a forward-looking indicator of overall economic health. Below 0 indicates worsening conditions in the economy, the last report was -32.9. With an estimated -18.4 this month it will be interesting to see what it comes out in. Hopefully, we continue to trend up and economic conditions continue to improve. Again while this may not immediately move the market it is something to keep an eye on in the future.

Retail Sales

Also coming out Wednesday at 8:30 am is Retail Sales and Core Retail sales. The main difference is Core Sales exclude automotive numbers. Either way, both numbers are anticipated to be positive which would indicate an increase in consumer spending. This could be seen as a positive by the overall market that has appeared slightly fearful of increasing rates. It is possible that how Retail sales are received will be dependent on CPI. If Inflation comes in hot, a higher-than-expected retail sales report may not be due to increased purchasing, but increased prices. The converse is also true, if CPI is cooler than expected the market may view the higher spending as a positive economic sign. 

Mortgage Delinquencies 

With PPI and a few other news releases this week, mortgage delinquencies may seem like a strange thing to key in on. However, rates have been creeping up for a year and inflation is still high regardless of what the reported number indicates. It is possible that this number could be a foreshadowing of things to come. It is unlikely that this moves the market the same way the other reports usually do, but watching if delinquencies rise or fall is often a solid indicator of what is to come in the overall economy. Definitely watch PPI and Unemployment in the US session, however, Mortgage data may start to play a role in market participation behind the scenes.

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

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