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Futures Storm Higher Ahead Of Last Most Important Datapoint Of 2022

Futures Storm Higher Ahead Of Last Most Important Datapoint Of 2022

After a dismal start to December, US futures extended their gains to a…



Futures Storm Higher Ahead Of Last Most Important Datapoint Of 2022

After a dismal start to December, US futures extended their gains to a second day ahead of today's critical economic data: the final consumer prices print due of 2022 which in turn precedes tomorrow's final for 2022 FOMC meeting where Powell is expected to slow the pace of hiking to 50bps. Contracts on the S&P 500 rose 0.6% higher by 7:45 a.m. ET while Nasdaq 100 futures gained 0.7%. The underlying benchmarks advanced on Monday in anticipation Tuesday’s inflation data and Wednesday’s Federal Reserve decision will establish a slower pace of interest-rate increases. The greenback halted a two-day rally, while Treasuries gained. Oil futures extended gains by another 0.5% after almost sliding below $70 on Monday on signs of further easing in China’s Covid rules. Oil traded higher by 0.5% on signs of further easing in China’s Covid rules.

Overnight news centered around further re-opening headlines in Greater China (especially Hong Kong) and a decline in German inflation MoM (although in-line with expectations). On the CPI front, Goldman expects a 0.2% rise MoM (vs cons .3%) as a decline in used cars, hotels and apparel prices should help the headline number (on the flip side expect rebound in airfares and another gain in car insurance). Full preview here. There are no major earnings.

In premarket trading, Oracle shares rose 2.5% after the software company reported second-quarter results that beat expectations. Analysts were positive about the company’s execution and revenue growth in the quarter amid tough macro conditions. Pinterest Inc. also gained, rising 3.75%, after Pinterest (PINS US) shares rise 3.7% after Piper Sandler lifted the social networking site to overweight from neutral, noting multiple tailwinds heading into 2023 that are separate from the health of the ad market. here are the other notable premarket movers:

  • NetApp stock declines 2.2% on thin volumes as Morgan Stanley cut it to underweight. The broker cut PT to $58 from $66 as a name where the backlog is smaller and estimates are more at risk; raises Coherent (COHR US) to overweight.
  • Magenta Therapeutics jumps 48% after the biotechnology company released a positive update on clinical trial data for a drug called MGTA-117 treating acute myeloid leukemia patients.
  • Mirati Therapeutics shares rally 18% after the biotech company’s cancer drug Krazati (adagrasib) won approval from the FDA. The drug’s label was as expected, which analysts said was also a positive development.
  • Keep an eye on US internet stocks as Citi sees a “significant reset” for the sector in 2023 and says the long-term secular attractions still outweigh the near-term challenges.
  • It initiates coverage on 16 stocks, though Amazon remains its top internet sector pick, followed by Meta (META US) within online advertising.
  • Watch Carrier Global and nVent Electric as both stocks are downgraded to sector weight from overweight at KeyBanc, which is cautious that sentiment on late-cycle industrial names has peaked.
  • Keep an eye on Fiverr, Xometry and Zillow as all three stocks were initiated with buy ratings at Citi, which expanded its coverage of online marketplaces, with a preference for stocks leading their respective categories across autos and real estate.
  • Equinix stock may be in focus as it was upgraded to outperform from market perform and named among ‘best ideas for 2023’ at Cowen, with the company seen as strongly positioned to weather a tough economic outlook.
  • Credit Suisse says it is positive on the long-term outlook for US industrial tech stocks but more cautious on the near-term, in a note initiating coverage on eight stocks in the sector.

Stocks retreated last week over concerns that strong US economic data will force the Fed to remain aggressive in tightening policy. This inflation print will be closely monitored as traders assess the impact of higher rates on prices. If economists’ projection for a 7.3% expansion in the US consumer price index for November is on target, it would be the lowest reading in 11 months and the fifth consecutive drop. While that would still leave inflation much higher than the Fed’s target of 2%, it could justify a slowdown in the pace of monetary tightening, with a projected half-point move on Wednesday. However, it also leaves the bar low for disappointment and a selloff. A 7.3% print would also spark a 2%-3% gain in stocks according to JPMorgan, which provided the following market reaction matrix:

  • Prints 7.8% or higher. Inflation moving higher after the November print would likely have investors questioning whether the Nov was an aberration and if inflation is reaccelerating from here. Further, the near-term inflation outlook is muddled as the Chinese reopening could prove to be inflation. SPX down 4% - 5%; Probability 5%
  • 7.5% - 7.7%. If the CPI is to miss hawkishly, the misses this year have ranged from 10bps – 30bps. The 20bps+ misses have triggered an average -2.3% move in the SPX. Should this outcome occur, given the recent bear rally, we could see a more dramatic move here. SPX down 2.5% - 3.5; Probability 25%
  • 7.2% - 7.4%. This inline print is a market positive event but given positioning being less light than in November but is historically low. This could initiate short-covering as well as shifting the near-term trading range higher, potentially from 3700 – 3900 to 3850 – 4150. SPX +2% - +3%; Probability 50%
  • 7.0% - 7.2%. A bullish outcome that could pull terminal rate lower despite expectations for higher DOTS being released the next day. While 2 data points is not a trend, this may embolden bulls especially if commodity prices continue their decline. SPX +4% - 5%; Probability 15%
  • 6.9% or lower. A print here could be the technical end of the bear market, putting this latest rally at a more than 20% move from its lows in October. The logic here is that not only is inflation dissipating but its pace is accelerating. This would give increasing confidence in projections of headline inflation falling ~3% in 2023. Further, if inflation is at 3%, irrespective of the labor market conditions, it seems unlikely that the Fed would hold the terminal rate at 5%. Any Fed pivot will rip Equities. SPX +8% - 10%; Probability 5%

One thing is certain: expect a big move - options are implying a 2.3% move in the S&P today, in line with recent swings which are among the highest in history.

“Today’s US CPI data will give us an idea on how the market pricing for the Fed’s terminal rate will clash with the dot plot projections that will come out tomorrow, and that will, in all cases, hammer any potentially optimistic market sentiment,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note. “Therefore, even if we see a great CPI print and a nice market rally today, it may not extend past the Fed decision on Wednesday.”

November CPI is expected at +0.3% m/m and +7.3% y/y; easing supply constraints, discounts to clear excess inventory, a downturn in interest-rate sensitive sectors, and lower energy prices are all factors effecting this month’s print. Our full preview can be found here, and this is the CPI forecast by bank:

  • 7.2% - Barclays
  • 7.2% - Credit Suisse
  • 7.2% - Goldman Sachs
  • 7.2% - Bloomberg Econ
  • 7.2% - Citigroup
  • 7.2% - Morgan Stanley
  • 7.2% - Wells Fargo
  • 7.3% - HSBC
  • 7.3% - JP Morgan Chase
  • 7.3% - UBS
  • 7.3% - Bank of America
  • 7.4% - SocGen

Meanwhile, the US central bank is expected to hike interest rates by 50 basis points on Wednesday.

“I wouldn’t be so bullish on the upside to a softer print. I’m afraid I’d be a bit more bearish on the downside if we get a stronger than expected number,” said Altaf Kassam, State Street Global Advisors’ EMEA head of investment strategy and research in an interview with Bloomberg Television. “I don’t think the market is quite positioned that strongly for the upside. but at the same time, we do expect the numbers to keep trending downwards.”

In Europe, the Stoxx 50 rose 0.5% with tech, banks and energy the strongest-performing sectors in Europe. On the data front, German CPI was -.5% MoM vs cons -.5% (still 10% YoY), while German ZEW economic sentiment improved for the third straight month (highest reading since Feb). Regional focus will turn to central bank decisions later in the week (BOE, ECB and SNB on Thursday. European equity benchmark recovered from Monday’s losses as traders awaited the US release but were also mindful of the European Central Bank’s rate decision due Thursday. The continent’s policymakers are expected to follow the Fed with their own half-point hike. Meanwhile, data showed that UK wages are rising at close to a record pace, maintaining pressure on the Bank of England to keep hiking interest rates despite a worsening economic outlook. Here are some of the most notable European movers:

  • Elior climbed as much as 11% after Citi upgraded the stock to buy, saying it sees a pathway toward deleveraging in coming weeks on conclusion of chairman’s strategic review.
  • Synthomer shares rise as much as 6% after the company said it would sell its laminates, films and coated fabrics businesses to Surteco North America Inc. for a total enterprise value of approximately $255 million.
  • Temenos shares rise as much as 5.2% after the software firm said a US financial institution is extending its relationship with the Swiss company.
  • Lufthansa shares jump as much as 4.8% after the German airline raised its earnings forecast for 2022, boosting shares of regional peers Air France- KLM and British Airways-owner IAG.
  • Banco BPM gains as much as 4.5% in Milan, the most intraday since Nov. 9, to lead gains on the FTSE MIB index after Fondazione Enasarco completed the purchase of a ~1.97% stake in the lender at a price higher than yesterday’s close.
  • Rolls-Royce Holdings slides as much as 4.1% after JPMorgan placed stock on negative catalyst watch as the broker believes that when new CEO Tufan Erginbilgic addresses investors in February, he’s likely to flag weaker-than-expected free cash flow and a strained balance sheet.
  • Erste shares fall as much as 3.7% after it was cut to underperform from market perform at KBW on a difficult setup for the Austrian lender into 2023 and an unattractive valuation.
  • EMS-Chemie falls as much as 3.4% after it was cut to hold at Stifel with the broker saying it expects a weak 4Q for the polymers maker leading into a tough start to 2023.
  • Novozymes shares falls as much as 2.2% after the company was downgraded to equalweight from overweight at Barclays.

Asian stocks eked out a small gain as Hong Kong scrapped more of its Covid restrictions, supporting sentiment ahead of inflation data that could impact the trajectory of future US interest rates.The MSCI Asia Pacific Index rose as much as 0.5%, led by financial and industrial shares. Key gauges in Hong Kong advanced while Chinese stocks linked to reopening were mostly higher, after the city’s leader said restrictions on international arrivals going to bars or eating at restaurants will be removed.  Most markets rose as some investors held onto hopes that US consumer price inflation — due later Tuesday —  could be soft enough to justify a slowdown in rate increases by the Federal Reserve, which sets policy later this week. The inflation data will be more critical than the Fed’s decision, according to Xi Qiao, managing director for global wealth management at UBS Group AG.

“It’s all going to depend on CPI numbers, whether the Fed is going to pivot or not,” she said on Bloomberg Television.  Asian stocks are up about 17% since hitting their lowest level in more than two years in October, boosted by China’s rapid shift away from its zero-tolerance approach to Covid. It remains down about 18% of the year, thanks to its earlier losses from global monetary tightening and China’s draconian lockdown measures. 

Japanese equities climbed ahead of US’ reading on consumer prices as a Federal Reserve Bank of New York survey report showed that inflation worries are subsiding.  The Topix Index rose 0.4% to 1,965.68 as of market close in Tokyo, while the Nikkei advanced 0.4% to 27,954.85. Takeda Pharmaceutical Co. contributed the most to the Topix’s gain, increasing 2.7%. Out of 2,164 stocks in the index, 1,231 rose and 790 fell, while 143 were unchanged. “If the US CPI growth, released tonight, is as expected, they would have fallen for the fifth month in a row,” said Hideyuki Ishiguro, a senior strategist at Nomura Asset Management. “As the slowdown in inflation becomes decisive, there may have been some moves to adjust positions in the US market.” 

In FX, the Bloomberg dollar spot index is unchanged; DKK and EUR are the weakest performers in G-10 FX, NOK and AUD outperform. The greenback was steady to weaker against most of its Group-of-10 peers, though most pairs were confined to recent, narrow ranges. Commodity currencies led the advance while the Swiss franc was the worst performer. The Treasury curve bull flattened

The euro traded in a narrow $1.0528-1.0561 range. Yields on German and Italian debt was mostly steady or slightly higher. Overnight volatility in euro-dollar may be off its 2022 highs, yet remains elevated before the much anticipated US CPI release. The gauge trades at 21.19% after touching a one-month high Monday at 23.32%; this suggests a breakeven of around 100 dollar pips

The pound inched up, advancing a fifth straight day against the US dollar, the longest rising streak in over two months. Gilts extended opening losses, pushing yields 5-7bps higher as money markets raised bets on Bank of England rate hikes ahead of its decision Thursday

Australian and New Zealand dollars advanced as China’s ambassador to the US said that the nation will continue to relax its strict Covid measures. However, gains were slowed by option-related selling attached to large strikes. Bonds in the two nations eased

The yen neared a December low against the dollar before erasing losses


In rates, Treasury futures drifted higher over Asia, early European session and outperforming core European rates with gains led by long-end of the curve. US yields richer by up to 3.5bp across long-end of the curve with 2s10s, 5s30s spreads flatter by 1.2bp and 1.7bp on the day; 10-year yields around 3.58%, outperforming bunds and gilts by 3bp and 8bp in the sector. Gilts 10-year yield up some 7 bps to 3.27% while money markets add to their BOE peak rate bets, pricing the bank rate to climb to 4.75% by August. USTs and bunds 10-year yields relatively muted in comparison, trading within Monday’s range. US auction round concludes with $18b 30-year bond reopening at 1pm, follows Monday’s 10-year note sale which tailed the WI by almost 4bp and a solid 3-year note sale. The US session focus includes November inflation print at 8:30 a.m. New York.

In commodities, WTI drifts 1% higher to trade near $73.91. Spot gold rises roughly $3 to trade near $1,785/oz.

Looking at the day ahead now, and the main highlight will be the aforementioned US CPI release for November. Otherwise though, we’ll get UK employment and Italian industrial production for October, the German ZEW survey for December, and the US NFIB small business optimism index for November. Otherwise from central banks, we’ll get the BoE’s latest Financial Stability Report and subsequent press conference.

Market Snapshot

  • S&P 500 futures up 0.3% to 4,003.75
  • MXAP up 0.2% to 157.43
  • MXAPJ up 0.2% to 513.26
  • Nikkei up 0.4% to 27,954.85
  • Topix up 0.4% to 1,965.68
  • Hang Seng Index up 0.7% to 19,596.20
  • Shanghai Composite little changed at 3,176.33
  • Sensex up 0.7% to 62,552.76
  • Australia S&P/ASX 200 up 0.3% to 7,203.27
  • Kospi little changed at 2,372.40
  • STOXX Europe 600 up 0.4% to 438.53
  • German 10Y yield little changed at 1.95%
  • Euro little changed at $1.0538
  • Brent Futures up 2.0% to $79.54/bbl
  • Brent Futures up 2.0% to $79.56/bbl
  • Gold spot up 0.2% to $1,784.14
  • U.S. Dollar Index down 0.12% to 105.01

Top Overnight News from Bloomberg

  • While equity traders are bracing for potentially significant stock swings after Tuesday’s US inflation data, their currency counterparts look a little more circumspect. Overnight expectations for swings in major currencies like the yen, euro and Australian dollar are elevated but well off their highs of the year. In fact they indicate the currencies are unlikely to break out of their recent trading ranges
  • The gap between yields on one-year Treasury Inflation-Protected Securities and similar- dated nominal government notes stands at 2.18%, reflecting market expectations for the average inflation rate over the coming year. That would require price gains to slow by more than 5 percentage points, a pace seen in only three instances in the past six decades
  • UK average earnings excluding bonuses were 6.1% higher in the three months through October than a year earlier. That’s the most since records began in 2001, barring the height of the coronavirus pandemic
  • Strikes and industrial action had the biggest impact on the UK in 11 years in October — two months before the latest round of protests crippled public services. At least 417,000 days of work were lost due to labor disputes in October, the most since November 2011, the Office for National Statistics said Tuesday
  • The BOE has recommended the UK take swift regulatory action to strengthen the pensions market after recent bond market turmoil exposed shortcomings in its oversight
  • The investor outlook for Germany’s economy improved to its highest level since Russia’s invasion of Ukraine — the latest sign that concerns over a deep winter slump are receding. The ZEW institute’s gauge of expectations climbed to -23.3 in December from -36.7 the previous month, better than economists polled by Bloomberg had predicted
  • China’s Covid wave is rippling through the nation’s financial industry, with currency volumes falling as traders call in sick and banks activating backup plans to keep operations running smoothly
  • China is delaying a closely watched economic policy meeting due to start this week after Covid infections surged in Beijing, according to people familiar with the matter
  • Hong Kong will remove a ban on international arrivals going to bars or eating at restaurants, and stop requiring people to use a health app to enter venues, Chief Executive John Lee said at a press conference Tuesday. He didn’t mention whether the government will retain the mask mandate

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were mostly kept afloat following the gains on Wall St where the major indices unwound recent losses although the upside was capped in Asia ahead of US CPI data and a slew of central bank rate decisions. ASX 200 was underpinned by strength in tech, industrials and financials, albeit with gains limited by weakness in miners and after an improvement in consumer confidence was offset by a deterioration in business surveys. Nikkei 225 briefly reclaimed the 28,000 level which it failed to sustain amid tentativeness before the risk events. Hang Seng and Shanghai Comp were varied as Hong Kong benefitted from reopening optimism amid reports that quarantine-free travel is to begin in January and with Chief Executive Lee announcing an easing of restrictions, while the mainland lacked conviction after weaker-than-expected financing data and with Japan and the Netherlands agreeing in principle to join the US in controlling exports of chipmaking equipment to China.

Top Asian News

  • China's ambassador to the US Qin Gang said he believes China's COVID-19 measures will be further relaxed in the near future and international travel to China will become easier, according to Reuters.
  • China-Hong Kong quarantine-free travel is to begin in January, according to a report citing local press. Hong Kong Chief Executive Lee later announced an end to the COVID contact tracing app requirement and will eliminate the three-day arrival monitoring period, while the Amber code on international arrivals is to be lifted on Wednesday.
  • Japan and Netherlands have agreed in principle to join the US in tightening controls on exports of advanced chipmaking equipment to China, according to people familiar with the matter cited by SCMP. Japanese Trade and Industry Minister Nishimura stated that they will take appropriate measures on chip-related export curbs to China taking into consideration each country's regulations, while they are checking with Japanese companies on the impact of chip curbs to China and are not hearing of any major impact.
  • Japan's government is to use construction bonds for part of SDF facilities as part of efforts to boost spending, according to Kyodo. However, Japanese Finance Minister Suzuki later stated there was no decision yet on whether to issue construction bonds to pay for developing self-defence forces facilities and that generally speaking, it is difficult to regard bonds as a stable funding source, according to Reuters.
  • China intends to allocate over CNY 1tln as a support package to bolster the domestic semiconductor industry, via Reuters citing sources.
  • China will delay its economic policy meeting amid a surge in COVID cases in Beijing, Bloomberg reports.

European bourses are firmer across the board Euro Stoxx 50 +0.8%, though action has been choppy with fresh drivers limited. Sectors were initially mixed, but have since moved more convincingly into the green, with Tech outpacing. Stateside, US futures are firmer across the board, though have been choppy alongside European peers but the magnitudes less pronounced pre-CPI, ES +0.5%.

Top European News

  • EU lawmakers agreed to tougher draft labour rules for the gig economy ahead of negotiations with EU countries to work out the details, according to Reuters.
  • Swiss SECO Forecasts: confirms its previous assessment. The Swiss economy is expected to grow at a significantly below-average rate of 1.0% in 2023, followed by 1.6% in 2024.
  • Germany VDMA engineering group confirmed 2022 and 2023 forecasts for German engineering production; sees +1% real production growth in 2022, and a 2% decline in 2023.
  • BoE Financial Stability Report: Urgent and robust measures needed to fill gaps in LDI fund regulation; must remain resilient to higher level of rates than they can now withstand.


  • DXY is bid, but has been unable to convincingly breach the 105.00 mark despite a brief foray to 105.09, with peers generally contained vs USD.
  • At the top of the pile is the AUD despite NAB data with Westpac consumer metrics assisting ahead of RBA's Lowe, lifting to 0.6800.
  • CAD & NOK have seen a modest rebound given benchmark pricing and in wake of recent pressure, particularly in the CAD.
  • EUR is modestly softer despite constructive ZEW data, albeit mixed vs exp., while USD/JPY has slipped after a failed test of 138.00.
  • PBoC set USD/CNY mid-point at 6.9746vs exp. 6.9758 (prev. 6.9565)

Fixed Income

  • EGBs have been pressured throughout the morning, with Bunds initially lagging though they have staged a marked rebound to downside of just 20 ticks.
  • Amidst this, Gilts were dented by relatively soft UK supply, though have since reverted to pre-auction levels while BTPs were bid on their own outing.
  • USTs buck the trend and remain modestly firmer ahead of 30yr supply and US CPI.


  • Overall, the crude benchmarks have been relatively steady throughout the European morning posting upside in excess of 1.0% and remain towards the top-end of yesterday’s parameters.
  • Spot gold and silver are modestly firmer despite the choppy, but ultimately modestly constructive, risk tone. Though, the yellow metal is capped by USD 1790/oz and the 200-DMA a dollar below.
  • Ecuador's state oil firm Petroecuador said a weather power outage affected hundreds of wells in its most productive blocks, according to Reuters.
  • Italy PM Meloni says the majority of EU member states back a dynamic gas price cap; EU Commission's energy proposal is still in adequate.


  • US shipped the first portion of its grid equipment aid to Ukraine, according to US officials.
  • EU ambassadors unanimously approved in principle a financial support package to provide Ukraine with EUR 18bln in 2023, according to the Czech Republic.
  • South Korean envoy for Korean peninsula peace said North Korea is becoming more aggressive and blatant in its nuclear threat, while South Korea, Japan and the US will coordinate sanctions and close gaps in the international sanctions regime. Furthermore, the US envoy for North Korea said Pyongyang's behaviour presents one of the most serious security challenges in the region and beyond, while the Japanese envoy for North Korea said the three countries have elevated their security cooperation to an unprecedented level and they will examine all options including counter-strike capabilities and will be more vigilant against North Korea's cyber threat, according to Reuters.

US Event Calendar

  • 06:00: Nov. SMALL BUSINESS OPTIMISM, est. 90.5, prior 91.3
  • 08:30: Nov. CPI MoM, est. 0.3%, prior 0.4%
  • 08:30: Nov. CPI YoY, est. 7.3%, prior 7.7%
  • 08:30: Nov. CPI Ex Food and Energy MoM, est. 0.3%, prior 0.3%
  • 08:30: Nov. CPI Ex Food and Energy YoY, est. 6.1%, prior 6.3%
  • 08:30: Nov. Real Avg Hourly Earning YoY, prior -2.8%, revised -2.7%
  • 08:30: Nov. Real Avg Weekly Earnings YoY, prior -3.7%, revised -3.5%

DB's Jim Reid concludes the overnight wrap

I'm still trying to recover from watching the last episode of one of the most popular TV series this year last night, namely "The White Lotus". It was a brilliantly uncomfortable series to watch. No spoilers here though. On the last EMR before Xmas I always list my top 10 TV series/box sets of the year. This will feature highly but there is currently an unusual number one that we just finished watching over the weekend. It was brilliant but I suspect not many of you will have seen it. The clue is that it is a dramatised true story about an event that happened 50 years ago this year. Anyone that gets it from that clue will win the highest-value prize our compliance team can authorise - a very big well done email.

Today we have the last in the series of another 2022 epic and that's the final US CPI to be released this year. Indeed, we don't get many days as important as the next two, and the US CPI today and the FOMC tomorrow are likely to be the difference between a big Santa Claus rally and a visit from Scrooge ahead of Christmas. Bear in mind the S&P 500’s best and worst day of the year so far have both come on a CPI day, and it was only last month that the downside surprise triggered a seismic market reaction, leading to the biggest one-day gain for the S&P 500 (+5.54%) since April 2020, and the largest daily decline in the 2yr Treasury yield (-24.7bps) since 2008. Since close of business the day before the last release the S&P 500 is +6.46%, 2yr yields -20.4bps, 10yr yields -49.6bps and the USD index -5.05%.

The big question now is whether last month’s positive surprise was like July’s, which was then followed by far more negative prints in August and September, or whether this is the start of a more durable shift in inflation that would allow the Fed to ease off.

Our colleagues in the Asset Allocation team (link here) wrote on Friday about event vol heading into the CPI data and the FOMC decisions. Their view is that a build-up of massive vol premium heading into the last two CPI prints (and its subsequent dissipation) was a key driver of the outsized rallies. They think that if the event vol premium stays at current levels, then a post-event rally is still more likely, whereas a selloff would require inflation to surprise strongly on the upside. So if they're right the risk/reward favours a rally after these two big events this week.

In terms of what to look out for today, our US economists are expecting a +0.21% monthly gain in headline CPI (consensus 0.3%), which in turn would take the year-on-year measure down to +7.2% (consensus 7.3%). On core CPI, they see it coming in at a stronger +0.29% (consensus 0.3%), which would take year-on-year measure to +6.1% (consensus 6.1%). And if we do get a surprise on either side, look out for whether that’s broad-based or driven by outliers, since one of the factors driving last month’s rally was optimism that this was a broader decline in inflation. That said, whatever the number is there won’t be any chance to hear from Fed officials, since they’re now deep into their blackout period ahead of tomorrow’s decision.

Ahead of the CPI release, yesterday saw 10yr US Treasuries edge +3.3bps higher to 3.61%, albeit having come back from an intraday low of 3.52%. The intraday turnaround started early in New York trading but was probably helped by a 10yr auction that didn’t have the best reception. It remains to be seen if that was the result of wary investors ahead of CPI or just holiday-induced lack of liquidity. For their part, 2yr Treasuries largely moved in parallel, climbing +3.1bps to 4.38%.

There was a bit of an increase in terminal rate pricing, with Fed funds futures for the May 2023 meeting up +2.0bps to 4.98%. But fundamentally it’s still in the range around 5% where it’s been for the last two months, and the big question is whether today’s release will see it durably break out from that zone in either direction. Over in Europe, there was also a modest rise in yields ahead of Thursday’s ECB decision, with those on 10yr bunds (+0.8bps) and OATs (+0.8bps) moving higher, with BTPs (-0.6bps) retreating a touch.

In the meantime, US equities posted a strong recovery following last week’s declines, with the S&P 500 up +1.43% on the day. Energy stocks were the biggest driver of that amidst a rally in oil prices, and Brent crude (+2.48%) advanced to $77.99/bbl, moving back into positive territory on a YTD basis. Overnight they’ve risen a further +1.31%, advancing to $79.01/bbl on the back of optimism about China’s reopening boosting the demand outlook. However, at the other end of the equity leaderboard were the megacap tech stocks, with the FANG+ index down -0.14% on the day. And back in Europe, equities lost ground as they caught up with the late US selloff on Friday, with the STOXX 600 down -0.49%.

Overnight, Asian equity markets have put in a mixed performance after rising shortly after the open. The Hang Seng (+0.38%) is in positive territory following the news that Hong Kong is further easing its Covid restrictions, and it was confirmed that the ban on international arrivals going to bars or restaurants would end, and people would no longer require to scan a QR code to enter venues. That was particularly beneficial to more Covid-sensitive assets, such as airlines and leisure stocks. Elsewhere, the Nikkei (+0.40%) is trading higher whilst the Shanghai Composite (-0.06%), the CSI 300 (-0.19%) and the KOSPI (-0.25%) have moved lower. In the meantime, US equity futures are pointing modestly lower ahead of today’s CPI release, with contracts on the S&P 500 (-0.06%) and the NASDAQ 100 (-0.13%) both down a bit.

There wasn’t much on the data side yesterday, although the Fed did get some promising news on inflation expectations, since the New York Fed’s latest survey showed expectations decreasing over all time horizons. For instance, the one-year measure fell to a 15-month low of +5.2%, and the three-year measure ticked down to +3.0% (vs. +3.1% previously). Elsewhere, UK GDP rose by a slightly faster-than-expected +0.5% in October (vs. +0.4% expected), but that growth was partly driven by the bounceback from the September bank holiday for the Queen’s funeral.

To the day ahead now, and the main highlight will be the aforementioned US CPI release for November. Otherwise though, we’ll get UK employment and Italian industrial production for October, the German ZEW survey for December, and the US NFIB small business optimism index for November. Otherwise from central banks, we’ll get the BoE’s latest Financial Stability Report and subsequent press conference.

Tyler Durden Tue, 12/13/2022 - 08:08

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‘The Official Truth’: The End Of Free Speech That Will End America

‘The Official Truth’: The End Of Free Speech That Will End America

Authored by J.B.Shurk via The Gatestone Institute,

If legacy news corporations…



'The Official Truth': The End Of Free Speech That Will End America

Authored by J.B.Shurk via The Gatestone Institute,

If legacy news corporations fail to report that large majorities of the American public now view their journalistic product as straight-up propaganda, does that make it any less true?

According to a survey by Rasmussen Reports, 59% of likely voters in the United States view the corporate news media as "truly the enemy of the people." This is a majority view, held regardless of race: "58% of whites, 51% of black voters, and 68% of other minorities" — all agree that the mainstream media has become their "enemy."

This scorching indictment of the Fourth Estate piggybacks similar polling from Harvard-Harris showing that Americans hold almost diametrically opposing viewpoints from those that news corporations predominantly broadcast as the official "truth."

Drawing attention to the divergence between the public's perceived reality and the news media's prevailing "narratives," independent journalist Glenn Greenwald dissected the Harvard-Harris poll to highlight just how differently some of the most important issues of the last few years have been understood. While corporate news fixated on purported Trump-Russia collusion since 2016, majorities of Americans now see this story "as a hoax and a fraud."

While the news media hid behind the Intelligence Community's claims that Hunter Biden's potentially incriminating laptop (allegedly containing evidence of his family's influence-peddling) was a product of "Russian disinformation" and consequently enforced an information blackout on the explosive story during the final weeks of the 2020 presidential election, strong majorities of Americans currently believe the laptop's contents are "real." In other words, Americans have correctly concluded that journalists and spies advanced a "fraud" on voters as part of an effort to censor a damaging story and "help Biden win." Nevertheless, The New York Times and The Washington Post have yet to return the Pulitzer Prizes they received for reporting totally discredited "fake news."

Similarly, majorities of Americans suspect that President Joe Biden has used the powers of his various offices to profit from influence-peddling schemes and that the FBI has intentionally refrained from investigating any possible Biden crimes. Huge majorities of Americans, in fact, seem not at all surprised to learn that the FBI has been caught abusing its own powers to influence elections, and are strongly convinced that "sweeping reform" is needed. Likewise, large majorities of Americans have "serious doubts about Biden's mental fitness to be president" and suspect that others behind the scenes are "puppeteers" running the nation.

Few, if any, of these poll results have been widely reported. In a seemingly-authoritarian disconnect with the American people, corporate news media continue to ignore the public's majority opinion and instead "relentlessly advocate" those viewpoints that Americans "reject." When journalists fail to investigate facts and deliberately distort stories so that they fit snugly within preconceived worldviews, reporters act as propagandists.

Constitutional law scholar Jonathan Turley recently asked, "Do we have a de facto state media?" In answering his own question, he notes that the news blackout surrounding congressional investigations into Biden family members who have allegedly received more than ten million dollars in suspicious payments from foreign entities "fits the past standards used to denounce Russian propaganda patterns and practices." After Republican members of Congress traced funds to nine Biden family members "from corrupt figures in Romania, China, and other countries," Turley writes, "The New Republic quickly ran a story headlined 'Republicans Finally Admit They Have No Incriminating Evidence on Joe Biden.'"

Excoriating the news media's penchant for mindlessly embracing stories that hurt former President Donald Trump while simultaneously ignoring stories that might damage President Biden, Turley concludes:

"Under the current approach to journalism, it is the New York Times that receives a Pulitzer for a now debunked Russian collusion story rather than the New York Post for a now proven Hunter Biden laptop story."

Americans now evidently view the major sources for their news and information as part of a larger political machine pushing particular points of view, unconstrained by any ethical obligation to report facts objectively or dispassionately seek truth. That Americans now see the news media in their country as serving a similar role as Pravda did for the Soviet Union's Communist Party is a significant departure from the country's historic embrace of free speech and traditional fondness for a skeptical, adversarial press.

Rather than taking a step back to consider the implications such a shift in public perception will have for America's future stability, some officials appear even more committed to expanding government control over what can be said and debated online. After the Department of Homeland Security (DHS), in the wake of public backlash over First Amendment concerns, halted its efforts to construct an official "disinformation governance board" last year, the question remained whether other government attempts to silence or shape online information would rear their head. The wait for that answer did not take long.

The government apparently took the public's censorship concerns so seriously that it quietly moved on from the collapse of its plans for a "disinformation governance board" within the DHS and proceeded within the space of a month to create a new "disinformation" office known as the Foreign Malign Influence Center, which now operates from within the Office of the Director of National Intelligence. Although ostensibly geared toward countering information warfare arising from "foreign" threats, one of its principal objectives is to monitor and control "public opinion and behaviors."

As independent journalist Matt Taibbi concludes of the government's resurrected Ministry of Truth:

"It's the basic rhetorical trick of the censorship age: raise a fuss about a foreign threat, using it as a battering ram to get everyone from Congress to the tech companies to submit to increased regulation and surveillance. Then, slowly, adjust your aim to domestic targets."

If it were not jarring enough to learn that the Office of the Director of National Intelligence has picked up the government's speech police baton right where the DHS set it down, there is ample evidence to suggest that officials are eager to go much further in the near future. Democrat Senator Michael Bennet has already proposed a bill that would create a Federal Digital Platform Commission with "the authority to promulgate rules, impose civil penalties, hold hearings, conduct investigations, and support research."

Filled with "disinformation" specialists empowered to create "enforceable behavioral codes" for online communication — and generously paid for by the Biden Administration with taxpayers' money — the special commission would also "designate 'systemically important digital platforms' subject to extra oversight, reporting, and regulation" requirements. Effectively, a small number of unelected commissioners would have de facto power to monitor and police online communication.

Should any particular website or platform run afoul of the government's First Amendment Star Chamber, it would immediately place itself within the commission's crosshairs for greater oversight, regulation, and punishment.

Will this new creation become an American KGB, Stasi or CCP — empowered to target half the population for disagreeing with current government policies, promoting "wrongthink," or merely going to church? Will a small secretive body decide which Americans are actually "domestic terrorists" in the making? US Attorney General Merrick Garland has gone after traditional Catholics who attend Latin mass, but why would government suspicions end with the Latin language? When small commissions exist to decide which Americans are the "enemy," there is no telling who will be designated as a "threat" and punished next.

It is not difficult to see the dangers that lie ahead. Now that the government has fully inserted itself into the news and information industry, the criminalization of free speech is a very real threat. This has always been a chief complaint against international institutions such as the World Economic Forum that spend a great deal of time, power, and money promoting the thoughts and opinions of an insular cabal of global leaders, while showing negligible respect for the personal rights and liberties of the billions of ordinary citizens they claim to represent.

WEF Chairman Klaus Schwab has gone so far as to hire hundreds of thousands of "information warriors" whose mission is to "control the Internet" by "policing social media," eliminating dissent, disrupting the public square, and "covertly seed[ing] support" for the WEF's "Great Reset." If Schwab's online army were not execrable enough, advocates for free speech must also gird themselves for the repercussions of Elon Musk's appointment of Linda Yaccarino, reportedly a "neo-liberal wokeist" with strong WEF affiliations, as the new CEO of Twitter.

Throughout much of the West, unfortunately, free speech has been only weakly protected when those with power find its defense inconvenient or messages a nuisance. It is therefore of little surprise to learn that French authorities are now prosecuting government protesters for "flipping-off" President Emmanuel Macron. It does not seem particularly astonishing that a German man has been sentenced to three years in prison for engaging in "pro-Russian" political speech regarding the war in Ukraine. It also no longer appears shocking to read that UK Technology and Science Secretary Michelle Donelan reportedly seeks to imprison social media executives who fail to censor online speech that the government might subjectively adjudge "harmful." Sadly, as Ireland continues to find new ways to punish citizens for expressing certain points of view, its movement toward criminalizing not just speech but also "hateful" thoughts should have been predictable.

From an American's perspective, these overseas encroachments against free speech — especially within the borders of closely-allied lands — have seemed sinister yet entirely foreign. Now, however, what was once observed from some distance has made its way home; it feels as if a faraway communist enemy has finally stormed America's beaches and come ashore in force.

Not a day seems to go by without some new battlefront opening up in the war on free speech and free thought. The Richard Stengel of the Council on Foreign Relations has been increasingly vocal about the importance of journalists and think tanks to act as "primary provocateurs" and "propagandists" who "have to" manipulate the American population and shape the public's perception of world events. Senator Rand Paul has alleged that the DHS uses at least 12 separate programs to "track what Americans say online," as well as to engage in social media censorship.

As part of its efforts to silence dissenting arguments, the Biden administration is pursuing a policy that would make it unlawful to use data and datasets that reflect accurate information yet lead to "discriminatory outcomes" for "protected classes." In other words, if the data is perceived to be "racist," it must be expunged. At the same time, the Department of Justice has indicted four radical black leftists for having somehow "weaponized" their free speech rights in support of Russian "disinformation." So, objective datasets can be deemed "discriminatory" against minorities, while actual discrimination against minorities' free speech is excused when that speech contradicts official government policy.

Meanwhile, the DHS has been exposed for paying tens of millions of dollars to third-party "anti-terrorism" programs that have not so coincidentally equated Christians, Republicans, and philosophical conservatives to Germany's Nazi Party. Similarly, California Governor Gavin Newsom has set up a Soviet-style "snitch line" that encourages neighbors to report on each other's public or private displays of "hate."

Finally, ABC News proudly admits that it has censored parts of Robert F. Kennedy Jr.'s interviews because some of his answers include "false claims about the COVID-19 vaccines." Essentially, the corporate news media have deemed Kennedy's viewpoints unworthy of being transmitted and heard, even though the 2024 presidential candidate is running a strong second behind Joe Biden in the Democrat primary, with around 20% support from the electorate.

Taken all together, it is clear that not only has the war on free speech come to America, but also that it is clobbering Americans in a relentless campaign of "shock and awe." And why not? In a litigation battle presently being waged over the federal government's extensive censorship programs, the Biden administration has defended its inherent authority to control Americans' thoughts as an instrumental component of "government infrastructure." What Americans think and believe is openly referred to as part of the nation's "cognitive infrastructure" — as if the Matrix movies were simply reflecting real life.

Today, America's mainstream news corporations are already viewed as processing plants that manufacture political propaganda. That is an unbelievably searing indictment of a once-vibrant free press in the United States. It is also, unfortunately, only the first heavy shoe to drop in the war against free speech. Many Chinese-Americans who survived the Cultural Revolution look around the country today and see similarities everywhere. During that totalitarian "reign of terror," everything a person did was monitored, including what was said while asleep.

In an America now plagued with the stench of official "snitch lines," censorship of certain presidential candidates, widespread online surveillance, a resurrected "disinformation governance board," and increasingly frequent criminal prosecutions targeting Americans who exercise their free speech, the question is not whether what we inaudibly think or say in our sleep will someday be used against us, but rather how soon that day will come unless we stop it. After all, with smartphones, smart TVs, "smart" appliances, video-recording doorbells, and the rise of artificial intelligence, somebody, somewhere is always listening.

Tyler Durden Sun, 05/28/2023 - 23:00

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Never Short a Dull Market; AI is Sexy, But Everyone Hates Oil

There’s an old adage of Wall Street, which says: "never short a dull market." And while AI is getting all the press these days, the oil market is about…



There's an old adage of Wall Street, which says: "never short a dull market." And while AI is getting all the press these days, the oil market is about as dull as it gets. This, of course, brings the energy sector to the top of my contrarian alert list.

This is not to say that I'm buying oil-related assets with both hands. It just means that, at this point, it makes more sense to look at energy as a value asset, as it is oversold and ripe for a move up whenever the right set of variables required to deliver such a move line up just right.

In the current world, the variables could line up just right as early as today.

There are No Oil Bulls Left

Nobody loves oil.

The level of bearishness expressed by futures traders is at least equal to where it was during the pandemic, and after the Silicon Valley Bank (SIVB) collapse. The International Energy Agency (IEA), forecasts that, of the expected $2.8 trillion in energy investments for 2023, roughly $1.7 trillion will be allocated to low carbon energy sources, including nuclear, solar, and other potential sources. Only $1.1 trillion will be invested in fossil fuels.

And according to the Financial Times, auctioneers in Texas are trying to unload two brand new fracking rigs, which together cost $70 million, for a starting combined bid of just below $17 million.

Supply is the Primary Influence on Oil Prices

Meanwhile, oil companies are quietly merging with competitors, and exploration outside the United States is continuing aggressively, with new discoveries being frequently announced. 

Simultaneously, the U.S. active rig count is slowly falling, led by natural gas. The price of gasoline is steadily rising, as the market begins to price in future supply reductions. Just in my neck of the woods, regular unleaded is up some $0.32 in the last week alone.

That doesn't sound like an industry that's planning on fading away. It sounds like an industry that's hunkering down and waiting for better times and preparing to squeeze supply in order to boost prices.

Charting the Oil Sector

The price chart for West Texas Intermediate Crude, the U.S. benchmark (WTIC), shows the depressed price picture which has led investors to walk away. And, until proven otherwise, there are plenty of sellers at the $75-$80 price area, where a sizeable Volume by Price bar highlights the point of resistance.

At first glance, there little difference in the general price behavior for Brent Crude, the European benchmark. (BRENT) where there is a resistance band defined by VBP bars between $80 and $90. A closer look reveals an uptick in Accumulation Distribution (ADI) and the semblance of some nibbling in On Balance Volume (OBV). It's subtle, but it's there.

The oil stocks are far from a bull trend. The Energy Select Sector SPDR ETF (XLE) is trading below its 200-day moving average, facing resistance put from $78 to $90 (VBP bars).

So why bother? Simply stated, OPEC has an upcoming meeting on June 3-4. The cartel is not happy about the prices and the way things are evolving. The Saudi oil minister recently warned bearish speculators to "watch out." And my gut is doing flips when I think about oil, as I see gasoline prices creep up when I drive to work.

But mostly, it's because there are no oil bulls left. This is what we saw in the technology sector a few months ago before its current rally. In early 2023, the tech sector was pronounced dead. The stories were all about the technology sector shuddering as the economy slowed. How about this one, from March 2023, which breathlessly announced a 5.2% decrease in semiconductor sales on a month to month basis and an 18.5% year to year drop?

Yet, as validated by the recent AI-fueled rally, the bad news first marked a bottom, while preceding a significant move up in tech shares.

Never short a dull market.

I've recently recommended several energy sector picks. You can have a look at them with a free trial to my service. In addition, I've posted a Special Report on the oil market which you can gain access to here.

Bond and Mortgage Roller Coaster Reverses Course

Expect negative news about the effect of rising mortgage rates on the homebuilder industry. That's because, as the chart below illustrates, there is a tight and very close correlation between rising bond yields, mortgage rates, and the homebuilder stocks (SPHB).

Moreover, the rise above 3.75% on the U.S. Ten Year Note yield (TNX) has triggered headlines about mortgage rates climbing above 7%. What the news isn't reporting is that, once bond yields roll over, which they are likely to do at some point in the future when the economy shows more signs of slowing and the Fed finally admits that they must pause, is that mortgage rates will drop and demand for new homes will once again pick up. Thus, we will see the homebuilders pick up where they left off.

As things stood last week, SPHB seems to have made a short term bottom.

For now, expect a continuation of the backing and filling in the homebuilder stocks. But, if I'm right and bond yields reverse course, the homebuilders are likely to rally again.

For an in-depth comprehensive outlook on the homebuilder sector click here.

NYAD Holds Above 200-Day Moving Average. SPX Joins NDX in Breaking Out. Liquidity is Shrinking.

The New York Stock Exchange Advance Decline line (NYAD) tested its 200-day moving average on an intra-week basis but did not break below the key technical level. On the other hand, NYAD remained below its 50-day moving average, which is still an intermediate-term negative.

Moreover, with the major indexes (see below) breaking out to new highs, we remain in a technical divergence as the market's breadth is lagging the action in the indexes. This is of some concern, given the fade in the market's liquidity, as I point out below.

The Nasdaq 100 Index (NDX) extended its recent breakout, closing the week well above 14,200. The current move is unsustainable, so some sort of pullback and consolidation are likely over the next few days to weeks. Both ADI and OBV remain encouraging.

What's more bullish is that the S&P 500 (SPX) finally broke out above the 4100–4200 trading range on 5/24/23. On Balance Volume (OBV) is perking up while the Accumulation Distribution (ADI) indicator is very encouraging.

We may be seeing a shift from a short-covering rally to a fear-of-missing-out buyer's rally.

VIX Holds Steady

The CBOE Volatility Index (VIX) remained below 20, as it has since March 2023. This remains a positive for the markets, as it shows short sellers are staying away at the moment.

When the VIX rises, stocks tend to fall, as rising put volume is a sign that market makers are selling stock index futures to hedge their put sales to the public. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying, which causes market makers to hedge by buying stock index futures. This raises the odds of higher stock prices.

Liquidity is Getting Squeezed

The market's liquidity is now in a downtrend. The Eurodollar Index (XED) is now below 94.5, and looks weak. A move above 95 will be a bullish development. Usually, a stable or rising XED is very bullish for stocks.

To get the latest up-to-date information on options trading, check out Options Trading for Dummies, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!

#1 New Release on Options Trading!

Good news! I've made my NYAD-Complexity - Chaos chart (featured on my YD5 videos) and a few other favorites public. You can find them here.

Joe Duarte

In The Money Options

Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling Trading Options for Dummies, rated a TOP Options Book for 2018 by and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.

The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.

To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit

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Costco Tells Americans the Truth About Inflation and Price Increases

The warehouse club has seen some troubling trends but it’s also trumpeting something positive that most retailers wouldn’t share.



Costco has been a refuge for customers during both the pandemic and during the period when supply chain and inflation issues have driven prices higher. In the worst days of the covid pandemic, the membership-based warehouse club not only had the key household items people needed, it also kept selling them at fair prices.

With inflation -- no matter what the reason for it -- Costco  (COST) - Get Free Report worked aggressively to keep prices down. During that period (and really always) CFO Richard Galanti talked about how his company leaned on vendors to provide better prices while sometimes also eating some of the increase rather than passing it onto customers.

DON'T MISS: Why You May Not Want to Fly Southwest Airlines

That wasn't an altruistic move. Costco plays the long game, and it focuses on doing whatever is needed to keep its members happy in order to keep them renewing their memberships.

It's a model that has worked spectacularly well, according to Galanti.

"In terms of renewal rates, at third quarter end, our US and Canada renewal rate was 92.6%, and our worldwide rate came in at 90.5%. These figures are the same all-time high renewal rates that were achieved in the second quarter, just 12 weeks ago here," he said during the company's third-quarter earnings call.

Galanti, however, did report some news that suggests that significant problems remain in the economy.

Costco has done an incredibly good job at holding onto members.

Image source: Xinhua/Ting Shen via Getty Images

Costco Does See Some Economic Weakness

When people worry about the economy, they sometimes trade down when it comes to retailers. Walmart executives (WMT) - Get Free Report, for example, have talked about seeing more customers that earn six figures shopping in their stores.

Costco has always had a diverse customer base, but one weakness in its business may be a warning sign for its rivals like Target (TGT) - Get Free Report, Best Buy (BBY) - Get Free Report, and Amazon (AMZN) - Get Free Report. Galanti broke down some of the numbers during the call.

"Traffic or shopping frequency remains pretty good, increasing 4.8% worldwide and 3.5% in the U.S. during the quarter," he shared.

People shopped more, but they were also spending less, according to the CFO.

"Our average daily transaction or ticket was down 4.2% worldwide and down 3.5% in the U.S., impacted, in large part, from weakness in bigger-ticket nonfood discretionary items," he shared.

Now, not buying a new TV, jewelry, or other big-ticket items could just be a sign that consumers are being cautious. But, if they're not buying those items at Costco (generally the lowest-cost option) that does not bode well for other retailers.

Galanti laid out the numbers as well as how they broke down between digital and warehouse.

"You saw in the release that e-commerce was a minus 10% sales decline on a comp basis," he said. "As I discussed on our second quarter call and in our monthly sales recordings, in Q3, big-ticket discretionary departments, notably majors, home furnishings, small electrics, jewelry, and hardware, were down about 20% in e-com and made up 55% of e-com sales. These same departments were down about 17% in warehouse, but they only make up 8% in warehouse sales."

Costco's CFO Also Had Good News For Shoppers

Galanti has been very open about sharing information about the prices Costco has seen from vendors. He has shared in the past, for example, that the chain does not pass on gas price increases as fast as they happen nor does it lower prices as quick as they sometimes fall.

In the most recent call, he shared some very good news on inflation (that also puts pressure on Target, Walmart, and Amazon to lower prices).

"A few comments on inflation. Inflation continues to abate somewhat. If you go back a year ago to the fourth quarter of '22 last summer, we had estimated that year-over-year inflation at the time was up 8%. And by Q1 and Q2, it was down to 6% and 7% and then 5% and 6%," he shared. "In this quarter, we're estimating the year-over-year inflation in the 3% to 4% range."

The CFO also explained that he sees prices dropping on some very key consumer staples.

"We continue to see improvements in many items, notably food items like nuts, eggs and meat, as well as items that include, as part of their components, commodities like steel and resins on the nonfood side," he added.


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