After learning, we have a 7% year-over-year inflation with income growth lagging behind more than 2%; the bulls found reason to push the DIA, SPY, and QQQ higher.  However, the IWM closed lower, and we should keep in mind despite the sharp rally, the Nasdaq and Russell remain below their 50-day averages.  This morning we will turn our attention to jobless claims and another reading on inflation with the PPI report.  Remember that we kick-off the big bank earnings Friday morning, so plan your risk accordingly.

Asian markets closed mixed with the Nikkei leading the selling.  European trade cautious this morning with small gains and losses with concerns about U.S. inflation.  However, investors seem to not share those concerns with the U.S. futures, pointing to a bullish open with jobless claims and PPI reports just ahead. 

Economic Calendar

Earnings Calendar

We have a light day on the Thursday earnings though we have more stocks listed with only a few confirmed reports.  Notable reports include DAL & TSM.

News & Technicals’

“It’s hard to process what’s happening right now, which is most people are going to get Covid,” acting FDA Commissioner Janet Woodcock said.  First, however, she said the U.S. must ensure the record levels of new infections do not disrupt essential services.  For example, the World Health Organization reported record numbers of cases of Covid-19 globally for a single week amid the omicron surge.  A report from the WHO published Tuesday noted that the highest numbers of new cases over the week came from the U.S., with 4.6 million new cases.  But hospitalizations are lower than previous surges, though the death rate remains unsustainably high.  According to a report from Douglas Elliman and Miller Samuel, the average apartment rent in Manhattan hit $4,440 in December.  The more widely watched net effective median rent rose to $3,392 — the highest level for December on record, the report said.  While many landlords are trying to work with existing tenants to limit the increases, some are being quickly priced out of a market they could finally afford in 2020.  According to new figures published on Wednesday, U.S. inflation came in at 7% in December on an annual basis, its highest print since 1982.  Curto told CNBC on Wednesday that the higher carbon and energy prices required to achieve governments’ emission reduction aims would prevent the kind of “normalization” that would pull inflation back down towards central bank targets.  Treasury yields are rising again in early Thursday trading, with the 10-year trading up to 1.7571% and the 30-year trading at 2.0985%.

We had a choppy price action day closing slightly bullish despite the 7% year-over-year inflation rate at the highest level since 1982.  The market reaction is surprising considering that rising wages and salaries are more than 2% behind the rising cost to the consumer.  The average cost of inflation to the consumer is now $5000.  While the DIA, SPY, and QQQ remained bullish and the technical picture improved, the QQQ and the IWM remained below their 50-day averages.  We will get another key inflation report before the bell with the PPI and weekly jobless claims.   Remember, Friday; we have retail sales, industrial production, and the big bank reports coming from BLK, C, JPM, and WFC as you plan forward.  So, let’s get ready for another dose of price volatility.

Trade Wisely,

Doug