Markets: Inflation takes its toll. Markets drop even though the beginning of earnings season was good.
The S&P roller coaster last week: up, down, up slightly, down, and down.
Fed testimony: The Fed Chair is required to testify before Congress (both the House and the Senate) twice each year. Jerome Powell fulfilled that obligation last week. The main topic… inflation. Powell acknowledged that the economy has rebounded faster than the Fed expected. He also acknowledged that inflation is a lot higher than the Fed hoped it would be. And that it would remain elevated in the coming months (a new statement). But that it was still “transitory”. For more on this check out my radio piece from this week.
Inflation: We got two updates last week. Wholesale inflation (the PPI) was expected to rise from 6.6% to 6.8%. The actual number came in at 7.3%. In six months, the PPI has risen from 0.8% up to 7.3%. If wholesale prices are going up that should logically flow to the consumer. Consumer inflation rose was expected to stay at 5.0% but rose to 5.4%. In six months, the CPI has risen from 1.4% up to 5.4%.
Jobless claims: The weekly number came in at 360,000. It’s the fifth straight week under 400,000.
Radio: Last week I updated Bill on the latest inflation numbers and discussed the Federal Reserve’s response. Here’s the link: https://parker-wealth.com/bill-and-chris-podcasts/bill-and-chris-fri-7-16. Bill and I normally chat on Fridays at 6:38a, 7:38a, and 8:38a on 1100AM.
Retail sales: Last month’s read came is at -1.3%. Expectations were for this read were for -0.4%. The actual number beat expectations coming in at +0.6%. Retail sales are up +18% YOY.
Focus of the week: While we’ll get a couple of updates on Housing this week, Markets had a rough day today (Monday). In spite of the new corporate earnings season (a tailwind), Markets battled concerns over inflation last week, and concerns today (this week) that Covid might slow global economic growth. Will Markets rebound tomorrow, or will the sell-off continue?
Earnings season: It continues. Some of the companies reporting this week: Anthem, AT&T, Biogen, Chipotle, Coca-Cola, CSX, Intel, J&J, Netflix, Southwest Airlines, Twitter, Union Pacific, United Airlines, and Verizon.
Indicator focus: Housing starts (Tue); existing home sales and jobless claims (Thu).