Weekly Raid #43 - PPI Pyoo?
We have another news-packed day today. Yesterday was fairly uneventful as we continue to hover around the 50DMA on the SPY.
News of the day
Today we have some additional inflation news out at 8:30 with the PPI. Similar to the CPI this measures the inflation rate among the prices of final goods before they are sold to retail locations. With yesterday’s print being hotter than expected (I don’t really care about Core numbers. Food and Fuel are really the most important items on the list), it would make sense that these are going to pop a bit as well.
We also have retail sales at the same time. This is a tougher report to gauge because it’s the value of sales, not the volume. This matters a lot because as prices have risen in the past few years, it makes retail sales look very healthy and that it’s “growing”, but in reality, the amount purchased keeps falling. Just look for yourself, if you spent $100 at a grocery store in 2019 vs. now, are you leaving with the same amount of goods? This would make a drop even more significant because it would mean that even at the higher prices people are buying less. This is just something to keep an eye on over time.
With retail sales due out this morning, I think it is worth touching on a few shadow reports that have come out over the past several days. First is the savings rate.
The savings rate has been declining since covid (which is expected because people had nowhere to go), but what is concerning about this is that people aren’t only saving less they are pulling from their savings more. This arguably is due to the fact that everything costs more and wages aren’t keeping pace.
The second part of that equation is credit card balances. In the past few years, balances have skyrocketed, and it’s been particularly noticeable in the last 9 months.
People typically dip into credit when cash is exhausted. So this dovetails well with the savings being depleted. This usually ends one of two ways, either wages catch up and debt starts to get paid off, or as prices continue and debt piles up bankruptcies explode. Unfortunately with the student loans getting turned back on for many this month, I see the second as the more plausible option. If that is something you are struggling with and want a second set of eyes on a budget. Please feel free to reach out on Twitter, I would be happy to take a look for you.
I don’t have much in the way of a watchlist today.
I am watching TSLA for a pop of $275ish for an assault back on $300. It’s a bit of a longer play though, and with TSLA it’s usually safer to use some form of spread. Those options are widowmakers if you aren’t careful
The second is HD. I am watching it settle in on the 50 DMA and am watching the rest of this week for a bounce off of it. As you know I don’t typically trade tomorrow, but I may make an exception for some longer-term stuff.
As always trade well and Good Luck
As always this is all for educational purposes only. You are solely responsible for your trades as I am for mine. Nothing in here should be construed as financial advice, but only educational content about the markets and my particular trading style