September 14, 2022

Markets:

Stock futures were mostly flat on Wednesday after another hot inflation reading sent the major averages tumbling to their worst day since June 2020 and dampened investors’ expectations of a less hawkish Federal Reserve.

The Dow sank more than 1,200 points Tuesday, or nearly 4%, while the S&P 500 lost 4.3%. The Nasdaq Composite dropped 5.2%.

The market moves came after August’s consumer price index report showed headline inflation rose 0.1% on a monthly basis despite a drop in gas prices.

The hot inflation report left questions over whether stocks could go back to their June lows or fall even further. It also spurred some fears that the Federal Reserve could potentially hike even higher than the 75 basis points markets are pricing in.

Some traders are now expecting a full point rate hike from the U.S. Federal Reserve at its September meeting, according to the CME FedWatch tracker of Fed funds futures bets.

The probability of a 100-basis-point rose to 33% from 0%, and the chance for a three-quarter point hike fell to 67% from 91% a day earlier.

Portfolio:

We enter the new trading session holding positions FIGS, COMM, AI, and ENVX. Absolutely stunning the dramatic price activity that has taken place in this market over the last two weeks. I know it's difficult to see at times but this is setting up for a massive move within the markets. The next event is the Fed meeting in September and then a focus on mid-terms begins. Just keep in mind, CPI is lagging and has some really uneasy components for future readings. Just stay patient here and let's continue to pinpoint opportunity.