Pay Attention to This Week's Inflation Reports

 

This week is the perfect time for anyone interested in economic numbers to pay attention. The Consumer Price Index (CPI) will be released on Wednesday and analysts expect it to show a 6.5% increase from the same period last year, which is slightly lower than November’s 7.1%. On Friday we’ll receive import and export prices as well as the University of Michigan sentiment numbers, which usually provide guidance on expectations for future spending habits. Investors and market watchers will be closely following these reports so they can determine if the economy is accelerating or decelerating in regard to inflation so they can make informed decisions.

The CPI report measures changes in consumer prices of goods and services such as housing, food, transportation, medical care, and more—essentially covering all areas that are important for consumer spending. Analysts predict that this month's CPI report will reveal a 6.5% increase from the same period last year, which is slightly lower than November's 7.1%. This could indicate a slowing of inflationary pressure but there are other factors at play here too, such as rising energy costs due to increased demand caused by cold winter weather across the northern US states. These factors need to be taken into consideration when analyzing the CPI report and forming conclusions about inflationary pressures in the economy. 

On Friday we'll also receive import and export prices figures which measure changes in prices paid by US customers for foreign-made products. This data provides insight into how much product costs are increasing over time and gives investors an idea of whether or not there may be opportunities for cheaper imports or higher priced exports down the road. It also gives an indication of how much demand there is for foreign-made goods within the US market, giving clues about consumer confidence levels in different parts of the country or world depending on where those goods originate from.

Finally we'll get our hands on the University of Michigan sentiment numbers which measure consumer attitudes towards current economic conditions as well as their expectations for future spending habits. Attitudes towards current conditions give us an idea about how confident people feel about their current financial situation while expectations tell us whether consumers think that things are going to improve or get worse economically in months ahead—both extremely valuable pieces of information when trying to form an opinion about potential inflationary pressures building up in an economy like ours right now! 

This week is going to be an important one when it comes to analyzing inflation trends around the world as well, so it pays off to pay attention!  Make sure you keep your eyes open this week for any potential news reports related to these three key indicators because they could have a huge impact on your portfolio!

Today I will be watching the market through 10:00 AM seeking indications of trend directions.  I have prepared seven (7) Spreads for possible trading on ORCL, WYNN, BA, DHI, HUM, ANET and ADM.  There are four Bull Call spreads and three Bear Put spreads in this group and the market will dictate which one will be entered, when and at what strikes. Should the market do what it has been doing lately, going sideways after the first half hour or hour the day may just pass without any trading at all.  Spreads in SPY, IWM and QQQ may be employed in the absence of more definitive setups.

 For those interested a full copy of our watch list and breakdown can be found at Trading with AlphaVL.

 

Good luck and Good Trading!