1. Inflation Comes in Cooler Than Expected
This morning, U.S. CPI was reported. Across the board, the numbers came in lower than expected.
There are lots of questions right now, but keep in mind that one month’s data doesn’t make a trend.
As you may recall, we at Zulfiqar Research have been asking whether demand destruction is happening. This lower-than-expected CPI reading could be hinting at that.
Don’t forget: tomorrow we get U.S. PPI (inflation at the producer level) and the Bank of Canada’s interest rate decision. A hold is expected, but the statement and press conference should provide more color.
2. Markets React to the CPI Report
The initial reaction to the lower CPI number was falling bond yields and a weaker U.S. dollar.
At the time of writing, yields are off their lows.
The U.S. dollar remains close to its lows.
Let’s see. This is a developing story.
Rising yields and dollar were hurting some corners of the financial world.
3. Earnings Season Is Underway
In case you didn’t know, earnings season has begun. The next few weeks will be busy, and that also means stock-specific risk goes up. Knowing what you own and why will be very important.
This morning, IBM’s earnings reaction is really something.
The stock is down around 22%. Why? Because the company missed on earnings and said customers are too busy buying hardware.
We’ll likely get more surprises this earnings season. There has been too much complacency.
4. Gold Is Holding the Line
If you’ve been watching gold, you may have noticed the significant defense of $4,000.
We watched it all day yesterday, and it almost felt like there was a lot of stop hunting taking place, but buyers were there.
This morning, after the CPI report and the drop in bond yields and the U.S. dollar, gold is getting some relief.
$4,100 is the upside level to watch for now, while $4,000 remains key support.
The silver chart is about to make a death cross.
A big move is happening in copper this morning. If it holds above its 50-day moving average, that could be an encouraging sign.
5. Oil, Bitcoin & Fall Market Risks
Oil is popping on the latest war headlines. The Strait of Hormuz is back in the news. Could WTI make a run toward $85? That’s where the next major resistance sits.
Bitcoin is testing the $63,400–$64,500 range once again.
Trump’s approval ratings remain weak across the board. Does that mean some sort of stimulus could be coming for Americans before the midterm elections? And if so, will it matter?
Also, be very careful heading into the fall months. August through November could be a rough stretch for the markets. There are lots of risks out there, but very little attention is being paid to them.