October 13, 2022

Markets:

Stock futures fell Thursday morning, erasing earlier gains, after a key consumer inflation report came in hotter than expected, signaling that the Federal Reserve will likely continue with aggressive interest rate hikes.

Futures for the Dow Jones Industrial Average fell 420 points, or 1.44%. S&P 500 and Nasdaq 100 futures slumped 1.74% and 2.44%, respectively.

The reversal in early gains came after the September consumer inflation report came in higher than economists expected. The consumer price index increased 0.4% for the month, more than the 0.3% estimate from Dow Jones. On an annual basis, inflation was up 8.2%.

The report signals that inflation is a persistent problem even amid interest rate hikes from the central bank. Going forward, the Fed will likely have to keep delivering increases and keep rates high until there are signs that inflation is cooling off.

Thursday’s CPI report comes a day after the government said the producer price index, another inflation gauge, rose more than expected.

On top of that, investors digested minutes from the September Federal Reserve meeting. The minutes showed the central bank expected to keep hiking interest rates until it sees receding inflation. But one comment made some think the Fed might instead slow the rate hikes, if not roll them back, if financial markets tumult continued.

Portfolio:

Absolutely violent turn this morning in premarket.  Expect further swings as traders / investors digest the latest CPI numbers.  We enter the session holding positions in WEAT, MPW, NBIX, and PARA.  So many opportunities will be created from this but short term we are broken.  Argument could be made for 3200 – 3300 on the S&P now but we are watching 3500 closely.  So much to come over the next few weeks anow, stage has been set!  This is our time now and let's end 2022 in a monster way!