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Inflation

Why the CPI Report Matters and Could be a Bullish Catalyst As long as inflationary expectations remained low after Jerome's last speech where he spoke about softening the increase in interest rates, which may or may not be the case, there is a good chance that inflation ticks down. This would confirm a 50bp hike for December, easing monetary policy and providing room for equities to continue their rally. While I think a lower CPI report is more likely in the near-term than a tick up in inflation, with a possible higher than 50bp increase and a decline in equites, it could go either way. Later, when the lagging effects of QT are felt, I expect a further decline in the market as discussed in my previous thesis. It is also possible that inflation stays near its current 7.7%, in which case there may not be too large of a response in equity markets tomorrow. The bigger the move in CPI, the bigger the move in equites. VIX is inching up in anticipation of this binary event. I am linking this thesis with "long" because I believe the negative CPI trend will continue and result in a near-term rally, but this is only because I feel there is a higher probability of this occurring, not that it is by any means certain. InTheMoney
AMEX:SPYLong
by InTheMoneyAdam
8
The Inflation of the 1980s Tells the Same Story: Pivot=DeclineI have heard both sides: 1) Historically, the Fed pivot will result in a decline in equities because they are pivoting in response to negative economic data which drags on equities, and 2) this time is different, negative economic data is positive for equites because it means inflation is on its way down. When people reference the former, for whatever reason, they don't take a look at the effective Fed Funds Rate in the high inflationary period of the late 1970's and early 80's and compare the Fed's pivot to equities. In the chart shown, you can see that once Volcker, the Chairman of the Fed, finally took a steadfast position against inflation and rose rates violently, inflation began to cool. Both in part of this raise in rates and the public's belief that Volcker had no intention of letting up, ridding the public of inflationary expectations. If you look at the charts, you can see that as inflation rose so did the markets. But as Volcker stamped his foot and pushed rates up, inflation began to cool. USIRRY, the third chart down, shows this. Equities began to decline due to this restrictive economic environment and belief the Volcker would not let up. Notice that, as a result, unemployment (bottom chart) began to rise. This had no positive impact on equities, contrary to what some might think because it would indicate inflation was being taken care of. Instead, the U.S. entered a recession and equities continued to decline. It was only once the Fed stopped lowering rates, unemployment peaked, and inflation neared their target rate did equities bottom. It is not fair to compare equities and pivots to the Great Recession or the .com Bubble, yet even in historical inflationary periods the same story plays out: the markets bottom well after the Fed pivots However, this time could be different in that Powell showed no hesitation in attacking inflation and destroying inflationary expectations. He has taken a direct lesson from history. As a result, unemployment could potentially peak faster than expected, inflation could decrease faster than expected, and equities could bottom faster than expected. I believe today's outcome will be similar to that of the early 80's, but that outcome will happen much, much faster. The markets have not bottomed in my opinion, but I expect them to in mid-late 2023. It's always best to keep equity exposure to avoid missing the bottom. Because you never know . InTheMoney
SP:SPXShort
by InTheMoneyAdam
6
Elliott Wave Review Ahead Of US CPI Data On EUR, NZD and BitcoinWe have a busy week ahead, with plenty of important data for the interest rates policy in US, UK and EU. We have US CPI already tomorrow, which will be interesting data as speculators will put their bets on FOMC decision which is scheduled a day later. From an Elliott wave perspective, I will focus on EURUSD and KIWI which can offer nice buying opportunities on a pullback. I will also look at bitcoin. Trade well, Grega
by ew-forecast
DXY WEEKLY OUTLOOK DXY 2 scenerios for this coming week (very heavy with CPI and FOMC this week) 1) Looking for a continuation melt on the dollar index with a small bear flag on the hourly timeframe. With a break of structure I can see further downside on the dollar which would give rise in the equities market. 2) Looking at the dollar index to form a double top at 106.5 - 107 region for better risk to reward sells which means this will give equites, crypto a short-term downside move as we are currently experiencing now which can serve as manipulation or liquidity grabs to the downside for further upside later in the week or the coming weeks. Inflations Prints (CPI TUESDAY 9.30 PM SGT) As per seen from the prints of previous month, inflation is easing. We will be looking for Tuesday's print to be lower than that of previous month of 0.4% to signify a continuation of easing prints for the months ahead. If inflation were to print higher than 0.4%, we can safely gauge that the prints of previous month was a "One Trick-Pony". We will be looking at a continuation of bearish equities market / stocks / crypt and gold and dollar dominance. Inflation prints is in direct correlation to the FOMC monetary policy. If inflation is easing due to constant aggressive rate hikes, we can be looking at the FEDs to ease rate hikes accordingly as well. The market has been pricing in a Fed pivot Phase 1 and expecting rate hikes to be eased this month printing at 50 BPS. We will be looking at dollar weakness and bullishness across all global markets when this happens.
TVC:DXYShort
by CJ_GOLDPIPS
XAUUSD - KOG REPORT!KOG Report: In last week’s KOG Report we said we didn’t have much confidence in the bullish move from the week before and were expecting a move to the downside. We suggested caution as there was a pattern that suggested a potential break of 1755 so we gave the resistance levels above and illustrated the 1806-10 region to look for a reaction in price and possible rejection. We wanted lower pricing and gave a reaction region of 1760-65 where we were hoping for a tap and bounce back to the upside. As you can see, it was a perfect point to point, LEVEL TO LEVEL move, resistance held, Excalibur confirmed, and we got the move into the support levels below with then another TAP AND BOUNCE back to where the price is now. A fantastic week in Camelot, not only on Gold with Excalibur hitting and completing numerous targets, but also Silver, US30, GJ and Oil to name a few. So, what can we expect in the week ahead? We’re going to start again this week with suggesting caution on the markets! There is a lot of news this week that will cause volatility and choppy price action as well as potential extreme swings. Markets have been lining up for a big move for a few weeks so expect the unexpected in the coming weeks. For this week we have extended the range we identified in early November which you can see the price has been playing well in. We’ll again prefer to see this tap that high in the early sessions before a potential reaction in price to give us the opportunity to short back down into the support levels below. So the 1806-10 price region is again the key resistance level for price to stay below and for us to see any attempt at the bearish move we’re looking for. The path shows the support level of 1770-75 as the first key level we would like to see, we will of course be using Excalibur to guide us which will give us more clearer and precise levels to target. This level of 1770-75 is important support this week, price needs to stay above this to the resume the swing to the upside and any attempt to break and hold above 1800! Now, we have also highlighted a lower level for a potential swoop of liquidity which is sitting just below the 1750 price region, due to the news events this week these extreme levels are very much possible, so please be careful with your entries and be patient. We’re expecting ranging, whipsawing, choppy price action this week so your risk model is really important as well as your lot sizes. They’re going to be grabbing liquidity so spikes up and down are very likely. Please do support us by hitting the like button, leaving a comment, and giving us a follow. We’ve been doing this for a long time now providing traders with in-depth free analysis on Gold, so your likes and comments are very much appreciated. As always, trade safe. KOG
FX:XAUUSD
by KnightsofGold
10
Very Bullish on SilverTwo years ago, I made a video on my YouTube channel, explaining why Silver OANDA:XAGUSD is forming a strong bullish reversal pattern. Currently, we're past Wave 1 and almost at the end of Wave 2 in the new bullish cycle. Now, apparently, there's a belief that silver isn't a store of value anymore; that cryptocurrencies have already replaced gold and silver for that matter; that silver is a consumption commodity like copper and lithium, so if we need more silver to make more electronic products, we can just recycle what we've already mined; that the major retail consumer of silver is someone who goes cheap on platinum or gold jewellery; the list goes on... In the video I linked above, I explained why I think silver is about to have a bull run, along with a general hands-on walk-through of my trading/investment analysis. The only development on top of what I said in the video is the rising demand for silver in the production of photovoltaics, which has more than doubled since 2012 in the quest to ditch fossil fuels. The total demand for silver in 2022 is at an all-time-high since 2012, at 1,101.8 million ounces, 71.5 million ounces short of the total supply. Now, for posterity, I placed a long order with Stop Loss at around $11 and profit target around $65. This is 2.618 of Wave 1, which is quite conservative, given that this bull cycle is not just fuelled by the hyper-inflation of the denominator (i.e., USD), but also the expected surge in demand for silver for industrial applications in the coming years. The aforementioned denominator is an interesting case. Across markets, the discussion revolves around the crash of Bitcoin, the crash of stocks, the crash of gold and silver, and so on. The question that should be asked is what are all these assets crashing against: a hyper-inflated, artificially maintained denominator, whose artificial maintenance has been successfully carried out so far, but I don't think is sustainable in the long run. When it is no longer feasible for the custodian of the denominator to artificially maintain the price of the asset, when other assets are allowed to be valued against the real value of the USD, the astronomical inflation in the price of commodities and BitCoin would be proportional to the astronomical inflation of the USD in the last decade. Speaking of artificiality, TVC:DXY is a prime example. I see many investors look at the TVC:DXY and claim that the Dixie has always been strong, that it's the strength of the USD that keeps gold and silver prices down. Well, TVC:DXY is the relative strength of a hyper-inflationary asset against a basket of other hyper-inflationary assets (EUR, GBP, CAD, etc.). A strong dollar doesn't mean a strong dollar against assets with limited or capped supply (as in BitCoin ). All it means is that the hyper-inflationary asset in question isn't as hyper-inflationary as its lavish siblings. Best, Davood.
FX_IDC:XAGUSDLong
by DavoodWadi
Powell Time The past two weeks have been relatively calm as Bitcoin traded in the $16,000 to $17,500 range. It appeared that the contagion effects from the FTX collapse were slowly starting to fade, however in the past few days more information has surfaced surrounding Grayscale Bitcoin Trust (GBTC) and its potential insolvency. On Wednesday GBTC closed down -7.42%, giving prospective buyers a record 43% discount on Bitcoin. Many are hypothesising that a large institutional investor is dumping shares of the ETF in order to patch a hole in their balance sheet and maintain solvency. After all, it has since been revealed that many institutional players, such as Grayscale’s parent company (Digital Currency Group), had significant exposure to FTX and its associated companies. You would assume that investors would flock to buy at these discounted levels, however Grayscale is currently being sued by hedge fund Fir Tree in order to investigate potential mismanagement and conflicts of interest. It’s likely that many investors will wait for the outcome of this litigation before making a definitive decision. In other news, Jerome Powell, chair of the Federal Reserve (Fed), gave a speech on 30th of November where he detailed that a 50 bps rate hike was coming. Interestingly, this immediately caused a surge in risk assets and equities, the opposite from what macroeconomic theory would predict. This is likely due to markets reacting to the higher probability of a “pause” (a period where a central bank holds rates constant to assess if and how its policies are working) based on Powell indicating that future rate hikes might be less significant. However, it appears that the market overreacted to this news as the gain in equities following the speech has since been wiped out as the S&P500 has corrected to the levels it was at prior to the speech. From a technical perspective, bears will be hoping for a break below the $15,500 support level which would likely bring new market lows not seen since 2020. This support has held since our last market update however it is yet to be retested. Additionally, since our last update where the MACD initially crossed its signal line, the short term upwards momentum played out and the histogram has remained bullish. Another important point to note is that the Money Flow Index (MFI) has been trending upwards since it bounced off oversold levels in early November. If this trend continues to play out and the oscillator moves towards 80, traders may look to exit long positions and start to look for short entries. The two key events to watch in the coming weeks are the December 13th announcement on U.S CPI inflation and the Federal Reserve's December 14th announcement on rates. If inflation comes in soft, it’s likely that risk assets and equities markets will see at least a short term increase in bullish momentum. Inflation figures will likely dictate the Fed's decision on rates the following day and will determine if they stick to the 50 bps hike that Powell hinted at. These two events will have a major bearing on short run market direction. However, if GBTC continues to capitulate and the fund does indeed unwind, the short term future will be bleak for crypto.
by Coinrule
1
GBP/USD edges higher, US PPI loomsThe British pound has posted slight gains today. In the European session, GBP/USD is trading at 1.2257, up 0.32%. After a rather uneventful week for the US dollar, next week could be marked by plenty of action, with a host of key releases on both sides of the pond. The BoE and Federal Reserve are expected to deliver 50 bp hikes, and we'll get a look at the latest inflation data from both the UK and the US. Like the Federal Reserve, the BoE has also circled inflation as public enemy number one, but Governor Bailey doesn't have the luxury of a strong economy to work with. With GDP in negative territory and inflation at a staggering 11.1%, the economy may already be experiencing stagflation, but Bailey can ill afford to allow inflation expectations to become more entrenched. Winter is likely to be a season of discontent, with railroad and other public workers threatening to go on strike, as the cost-of-living crisis has hit households hard. The Federal Reserve will be keeping a close eye on the US inflation report, which will be released just one day before the Fed's policy meeting. Inflation has eased over the past several months, but the Fed has been very cautious and is still reluctant to declare that inflation has peaked. The Fed has not looked kindly on market exuberance triggered by soft inflation reports, and paraded a stream of Fed members to remind investors that inflation remains unacceptably high and the fight to curb inflation remains far from over. The markets will get a look at US inflation data later today, with the release of the Producer Price Index (PPI). The index is expected to drop to 7.4%, down from 8.0%. A decline in PPI would reinforce expectations that we'll see a drop in CPI as well next week. 1.2169 and 1.2027 are the next support levels GBP/USD is testing support at 1.2169. Below, there is support at 1.2027
by OANDA
1
How To Prepare For Rising PricesA blog article discussing how inflation is impacting family budgets, what it means for household budgets in the US, and some basic strategies people can use to help manage by RobinhoodFX Robinhoodfx. Intro In recent months, we've seen inflationary pressures building in the U.S. economy. Prices for key commodities like crude oil and agricultural products are rising, and wages are starting to creep up as well. All of this points to one thing: higher prices for consumers in the months ahead. How can you prepare for rising prices? Here are a few tips: Know where your money is going. Track your spending for a month or two so you have a good understanding of where your money goes each month. This will help you identify areas where you can cut back if necessary. Make a budget and stick to it. Once you know where your money is going, it's time to create a budget that ensures you're spending wisely. Be realistic in your assumptions about inflation and make sure your budget can withstand a bit of financial volatility. Invest in yourself. Inflation erodes the value of assets like cash and bonds, so it's important to invest in assets that hold their value or even increase in value over time. One great way to do this is to invest in yourself through education or job training that will make you more valuable in the workforce. Stay disciplined with your spending. When prices start rising, it's tempting to spend more freely since "everything is going up." But if you want to stay ahead of inflation, it's important to keep your spending under control and focus on essential purchases only What is Inflation? Inflation is the rate of increase in the price of goods and services over time. It is measured as the percentage change in the consumer price index (CPI) or producer price index (PPI). Inflation can be caused by a variety of factors, including excess money supply, government spending, and global factors such as commodity prices. Excess money supply is when there is more money in circulation than there are goods and services to purchase. This can happen when the Federal Reserve prints more money or banks lend out more money than they have on deposit. Government spending can also cause inflation if it exceeds tax revenue. When the government spends more than it takes in through taxes, it has to print more money to cover the deficit. This increases the money supply and can lead to inflation. Global factors such as commodity prices can also affect inflation. For example, if the price of oil rises, this will likely lead to higher prices for gas and other products that use oil as an input. How Do Inflation Rates Affect Prices? Inflation rates can have a significant effect on prices, particularly over the long term. When inflation is high, prices tend to rise, and when inflation is low, prices tend to fall. In general, higher inflation rates mean that consumers will pay more for goods and services, while lower inflation rates mean that they will pay less. How Does Inflation Affect Prices? Inflation is the rate at which the prices of goods and services in an economy increase over time. The main drivers of inflation are changes in the demand for goods and services, and changes in the supply of money. When there is more money chasing after fewer goods and services, prices go up. The opposite happens when there is less money chasing after more goods and services; prices go down. What Does This Mean for Consumers? For consumers, inflation can have both positive and negative effects. On the one hand, rising prices can erode the purchasing power of their incomes, making it difficult to afford basic necessities or maintain their standard of living. On the other hand, inflation can be beneficial if it leads to higher wages and salaries; as long as wages grow at a faster rate than prices, consumers will be better off. What Does This Mean for Investors? Investors need to be aware of how changes in inflation might affect their portfolios. For example, investments in Treasury bonds become less attractive when inflation is high because the fixed payments on these bonds lose value relative to other investments that offer higher Rising Costs: Why are They Happening Now? There are a number of factors that are causing prices to rise in the United States. The most significant factor is the increasing cost of labor. Wages have been rising steadily for the past few years, and this is putting pressure on businesses to raise prices in order to cover their increased costs. Other factors that are contributing to rising prices include the increasing cost of raw materials, such as oil and gas, as well as transportation costs. These costs are being passed on to consumers in the form of higher prices for goods and services. inflation is also playing a role in driving up prices. The Federal Reserve has been keeping interest rates low in an effort to stimulate economic growth, but this has led to higher inflationary pressures. As prices start to increase, Americans will have less purchasing power and will be forced to cut back on spending. The rising costs of health care are also putting upward pressure on prices. The Affordable Care Act has led to increased demand for health care services, which has driven up prices. In addition, the aging population is requiring more medical care, which is also contributing to higher costs. All of these factors are leading to rising prices across the economy. American consumers will need to brace themselves for higher prices for goods and services in the months and years ahead. How Everyday Consumers Can Best Prepare for the Potential Impact There are a few things that everyday consumers can do to best prepare for the potential impact of rising prices in the U.S. First, it’s important to be aware of what’s happening in the economy and how it might affect your finances. Second, make sure you have an emergency fund in place in case prices go up unexpectedly or you lose your job. Third, consider ways to cut costs so you can save money. Finally, invest in yourself and your career so you’re prepared for any changes that might come. The Ramifications of Higher Unemployment and Lower Employment Rates Unemployment and lower employment rates have a number of ramifications. Perhaps the most obvious is that fewer people are employed and earning an income. This can lead to less spending, which can in turn lead to less economic activity and slower growth. Additionally, when people are unemployed or underemployed, they may have difficulty meeting their basic needs, which can lead to increased stress and anxiety levels. This can also result in social problems such as crime. Additionally, unemployment can have a ripple effect on businesses, as they may have to lay off workers or cut back on hours/wages. Lastly, high unemployment rates can lead to political instability. Solutions to Fighting Inflation Inflation is a major concern for Americans and it is on the rise. Luckily, there are steps that you can take to prepare for rising prices and protect your finances. One of the best ways to fight inflation is to invest in assets that will hold their value or appreciate over time. This includes investing in stocks, real estate, and precious metals. These investments will increase in value as the cost of living goes up, giving you a buffer against inflation. Another solution to fighting inflation is to create a budget and stick to it. This will help you keep track of your spending and make sure that you are not overspending on items that are likely to increase in price. Additionally, saving money each month will give you a cushion to fall back on if prices do start to rise rapidly. There are many other solutions to fighting inflation, but these are two of the most effective. If you are concerned about rising prices, take action now and start preparing for the future. Conclusion If you're worried about rising prices in the United States, there are a few things you can do to prepare. First, start by evaluating your spending and see where you can cut back. Then, make sure you have an emergency fund in place so that unexpected expenses don't throw off your budget. Finally, keep an eye on inflation rates and invest in assets that will hold their value over time. By following these steps, you can protect yourself from rising prices and maintain your financial stability.
FOREXCOM:XAGUSDEducation
by RobinhoodFX
Another Rejection?!?!?If history will repeat itself based on this trendline then we know how to position ourselves with proper risk management. Levels are mapped out if we get another big correction. Love it or hate it, hit that thumbs up and share your thoughts below! Every day the charts provide new information. You have to adjust or get REKT. Don't trade with what you're not willing to lose. Safe Trading, Calculate Your Risk/Reward & Collect! This is not financial advice. This is for educational purposes only.
SP:SPXShort
by rnaofs