Lots going on this morning…
The U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) reported a 7.5% increase in January versus last year’s same month. This is above Wall Street’s estimates of 7.3%. On a month-over-month basis, the numbers jumped by 0.6% compared to Wall Street’s estimate of 0.4%.
Markets were selling off on the news but not as bad as the early morning hours…
This might be because central banks prefer to use the personal consumption expenditures (PCE) as their main inflation gauge, which measures the change in goods and services consumed by all households, including nonprofit institutions. CPI measures the change in out-of-pocket expenditures.
It seems kind of the same… However, PCE generally tends to run lower than CPI.
This morning, we also received a new job report, which concluded another 223,000 individuals filed for unemployment last month. This is better than Wall Street’s estimate of 230,000, which could be accounting for a slight boost in stocks today.
Omicron also seems to have peaked on January 7 and has since been on a steady decline, which could also boost the job numbers.
Jobless claims indicate the economy’s strength, and being better than expected could signal that the Federal Reserve is in a good position to end it’s $120 billion monthly asset purchase by April and continues on the path of raising interest rates.
That would undoubtedly signal more volatility ahead.
The Game Plan
February 11 is the date we’ve been previously outlying an inflection point in the market, which is tomorrow. I’m concentrating on the semiconductor sector, or I think there’s an opportunity for a big play.
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