Is Inflation Rearing its Head?

Broad positive market movement continues, signs of concerns, though, trickling in.By: Shlomo Cooper, Senior Analyst at Tradenet

The main Wall Street indexes rallied to greater historic highs yesterday, led by banking stocks after Fed Chairwoman, Janet Yellen, remarking that it would be unwise to wait too long to hike rates. Apple (AAPL) set a new historic high for the second day in a row, contributing to the gains on the 3 main indexes, the Dow Jones, S&P 500 and NASDAQ. Almost 90 days have now gone by since the S&P 500 fell 1% on a day. Market volatility has plummeted to its lowest level in 10 years.

Yellen related that pushing off a rate hike is likely to compel the central bank at a later point to tighten monetary policy faster, which could pose a recessionary threat. Likewise, Yellen voiced uncertainty about economic policy under a Trump administration. In her testimony before the Senate Banking Committee yesterday, Yellen did not note whether the Fed is still planning on hiking rates 3 times this year, nor did she signal whether the next rate hike will be in March or in June. Most analysts expect the next hike to be in June.

The banks expected to benefit from higher rates were those leading the market higher. Goldman Sachs (GS) rose 1.29%, Bank of America (BAC) jumping 2.82%. The financial sector (XLF) ended up by 1.16%, the banking sector (KBE) soaring 1.59%. Year-to-date, the banking sector is up 4.5%.

In summary for the day, the Dow Jones climbed 0.45%, the S&P 500 tacking on 0.4%. The NASDAQ rose 0.32%.

On the economic front, the Producer Price Index (PPI) rose 0.6% for January, double expectations. Annualized producer inflation now stands at 1.6%, a level not seen since 2014.

On the S&P 500, 60 stocks rose to new 52-week highs, without a single stock dipping to a new yearly low; on the NASDAQ, 124 stocks recorded new 52-week highs, 22 falling to new yearly lows.

About 6.7 billion shares changed hands on U.S. exchanges, in keeping with the 6.7 billion average over the last 20 trading days.

Wednesday: The producer inflation rate, which was twice the forecasted figure, is likely to weigh on consumer inflation figures expected today – especially in light of the fact that the energy and housing sectors were hot last month. A surprise surge in inflation is likely to heighten pressure on the Fed to hike rates, and possibly, as soon as the Fed’s March Open Market Committee meeting. Likewise, high inflation levels are likely to add another facet to Trump’s infrastructure spending and tax reform plans. After all, higher interest rates will exacerbate budget forecasts.

The two key reports today include retail chain sales and the Consumer Confidence Index, both likely to provide further hints into how close the Fed is to executing its next rate hike. Inflation figures are expected to come out at 8:30 N.Y. time and point to annualized inflation of 2.4%. In December, the annual inflation rate rose past 2% for the first time in 2 years. The Fed’s annual inflation target is 2%. The Consumer Price Index is expected to record January gains of 0.3%.

Another significant report today will be coming out at 8:30, i.e. January retail chain sales, the figure expected to climb 0.1% compared to the 0.6% gains recorded in December. Other figures today will include the Empire State Survey on manufacturing at 8:30, with industrial output coming out at 9:15 and business inventories at 10:00.

The U.S. Department of Energy will release its weekly crude inventory report at 10:30.

Trump is also expected to command attention today in light of his meeting with Israeli PM Binyamin Netanyahu.

The companies releasing their numbers today before opening include PEP and GRPN. After closing, be primed for the numbers of CSCO, AMAT, KHC, MAR, CAR and CBS.

Index Last Daily change R2 R1 PP S1 S2
DJX 20,504 0.45% Up          
SPX 2,338 0.40% Up 234.74 234.22 233.19 232.67 231.64
Nasdaq 5,783 0.32% Up 129.07 128.80 128.27 128.00 127.47

 

Wednesday’s Hot Stocks: PEP, PG, AIG, FOSL, ESRX, A

IPOs: None

Have a great trading day! 

Economic Calendar

 

DAY TIME (EST) Event Forecast Impact
Tuesday 8:30 PPI 0.3% High
Wednesday 8:30 CPI 0.3% High
Wednesday 8:30 Empire Manufacturing 7.0 Medium
Wednesday 8:30 Retail Sales 0.1% High
Wednesday 9:15 Industrial Production 0.0% Medium
Wednesday 10:00 Business Inventories 0.4% Medium
Wednesday 10:00 NAHB Housing Market Index 68 Medium
Wednesday 10:30 Crude Inventories Low
Thursday 8:30 Housing Starts 1220K Medium
Thursday 8:30 Initial Claims 245K High
Thursday 8:30 Philadelphia Fed 17.5 Medium
Friday 10:00 Leading Indicators 0.5% Medium

 

  

Earning Calendar

 

Symbol Company AM/PM Day
HCP HCP, Inc. AM Monday
RYAAY Ryanair Holdings plc AM Monday
TEVA Teva Pharmaceutical Industries Limited AM Monday
VNO Vornado Realty Trust PM Monday
NBL Noble Energy, Inc. PM Monday
DISCA Discovery Communications, Inc. AM Tuesday
DPS Dr Pepper Snapple Group, Inc. AM Tuesday
Q Quintiles IMS Holdings, Inc. AM Tuesday
TMUS T-Mobile US, Inc. AM Tuesday
TAP Molson Coors Brewing Company AM Tuesday
INCY Incyte Corporation AM Tuesday
DVN Devon Energy Corporation PM Tuesday
ESRX Express Scripts Holding Company PM Tuesday
A Agilent Technologies, Inc. PM Tuesday
AIG American International Group, Inc. PM Tuesday
PEP Pepsico, Inc. AM Wednesday
ADI Analog Devices, Inc. AM Wednesday
WMB The Williams Companies, Inc. PM Wednesday
LBTYK Liberty Global plc PM Wednesday
LBTYA Liberty Global plc AM Wednesday
AMAT Applied Materials, Inc. PM Wednesday
CBS CBS Corporation PM Wednesday
MAR Marriott International, Inc. PM Wednesday
NTES NetEase, Inc. PM Wednesday
MRO Marathon Oil Corporation PM Wednesday
NTAP NetApp, Inc. PM Wednesday
CSCO Cisco Systems, Inc. PM Wednesday
KHC The Kraft Heinz Company PM Wednesday
MGM MGM Resorts International AM Thursday
AEE Ameren Corporation AM Thursday
WM Waste Management, Inc. AM Thursday
ALXN Alexion Pharmaceuticals, Inc. AM Thursday
ED Consolidated Edison, Inc. PM Thursday
DVA DaVita Inc. PM Thursday
DLR Digital Realty Trust, Inc. PM Thursday
CPB Campbell Soup Company AM Friday
SJM The J. M. Smucker Company AM Friday
MCO Moody’s Corporation AM Friday
DE Deere & Company AM Friday

 

15.2.2017

Today’s Picks – Day Trading!

Symbol Breakout Breakdown Momentum Momentum
TIF 83.28   WUBA GNRC
AMGN 168.35   ACAD FLIR
ADSK 85.11   SLCA  
WFC 58.02   ACIA  
COG 24.33   CARA  
XPO 49.86   TEVA  
NOV 40.75      


New York Strategy Swing

# Date Stock Long\

Short

Statues Data Close Profit\

Loss

1 29.12.2016 JWN Short Close 6.1.2017 +3.45%
2 6.1.2017 TRGP Long Close 9.1.2017 +0.20%
3 9.1.2017 NVDA Long Close 17.1.2017 +1.02%
4 10.1.2017 TLRD Long Close 10.1.2017 -3.27%
5 13.1.2017 LW Long Close 26.1.2017 +0.09%
6 31.1.2017 ATI Long Close 7.2.2017 +0.09%
7 1.2.2017 AKAO Long Open   +11.84%
8 2.2.2017 DATA Long Close 6.2.2017 +13.09%
9 7.2.2017 GNC Short Close 9.2.2017 +3.26%
10 9.2.2017 PG Long Close 13.2.2017 -0.63%
11 9.2.2017 ATI Long Close 14.2.2017 +2.42%
12 13.2.2017 STX Long Open   +1.66%
13 14.2.2017 CXW Long Open   +1.75%
14            
15            
16            

 

Today’s Picks – Swing “New-York Strategy