October 12, 2022

Markets:

Stock futures traded flat Wednesday as investors weighed price data that came in higher than expected, signaling more interest rate hikes are ahead as the Federal Reserve looks to tame high inflation.

Stock futures pared gains from earlier in the morning when the September producer price index, a gauge of final-demand wholesale prices, came in higher than expected. The print was up 0.4% in September, more than the consensus estimate of a 0.2% increase, according to Dow Jones.

Investors will get more inflation data on Wednesday, when the September consumer price index report is released. The CPI number is a measure of price changes in a basket of common consumer goods and services.

The minutes from the Federal Reserve’s September meeting will also be released Wednesday. While Fed Chairman Jerome Powell has acknowledged that aggressive interest rate increases could be painful, the central bank will continue to charge forward in its fight to lower inflation.

Wednesday’s moves came after the S&P 500 and Nasdaq Composite fell 0.65% and 1.1%, respectively on Tuesday, to post their fifth straight day of declines. The Dow ended the day on a higher note, up about 36 points, but gave back most of its gains from a rally earlier in the session.

Stocks fell from their highs, and bond yields ticked up, when the Bank of England said its market intervention will be over soon and pension funds have just three days to rebalance positions.

Portfolio:

We enter the new trading session holding positions in WEAT, MPW, NBIX and PARA. This market swung wildly yesterday with a monster range for both sides of the trade. It tried to rip both sides of the trade yesterday, in fact, the last few trading sessions. This is why we are trying to continuously remind everyone to stay patient with these day to day moves. So far over the last week the Fed has basically stated inflation has not peaked and really no progress yet in reducing. Bonds continue to scream a story and we now enter the Fed minutes today and the crucial CPI number tomorrow. Expect whip saw action but trade the trend and right now it's broken price activity. A number of sectors continue to breakdown, and this is our short-term opportunity. Longer term, Monster opportunities developing. Mid-terms should be electric! Let's have a great session.