EB Daily Market Report - Quick Update - Friday, June 10, 2022
Good morning all! As a reminder, I have an all-day meeting today, starting in just a few minutes. I wanted to get a quick update out to everyone.
The HUGE May CPI report was released at 8:30am ET and it showed that inflation remains hot and persistent. The headline number jumped 1.0%, while expectations were for a rise of 0.7%. If we strip out food and energy prices, the Core CPI increased 0.6%, slightly above the 0.5% rise expected. These numbers essentially guarantee us (if we weren't already guaranteed) that the Fed will remain quite hawkish with a 50-basis point hike coming later this month.
If you recall from Monday, I indicated to "beware" the dreaded red-filled candle that breaks us beneath the prior period of consolidation. Here was the chart I posted then:
Well, this is what we got yesterday:
That's a pretty close replica.
The news isn't the story, though. The story is the market's reaction. That's what I'll be interested in today and as we move forward. Does Wall Street digest this news and buy growth over value on a relative basis? What about aggressive sectors like XLK and XLY? Are they favored over XLP and XLU? These will be the clues to help us determine when it's getting safer to be fully invested on the long side. We're not there yet.
At last check, futures were as follows:
- DIA: -1.35%
- SPY: -1.59%
- QQQ: -1.88%
It certainly appears that we're going to begin the day deep in negative territory. Let's see if the bulls mount a rally into the weekend or if they run for the hills.
Have a great weekend and I'll be back on Monday with my regular DMR.
Happy trading!
Tom