Stock Markets Counting Down to US CPI Inflation Data Release

By: Nadeem_Walayat

It's CPI Tuesday! We usually get a fake out move going into CPI then a reversal soon after which given that the market has been falling since the 6th of March into CPI data release then we should be setting up for a reversal higher some time after release of CP LIE which chimes with my end of the correction expectations given that both primary (3900) and secondary (3820) correction targets have been fulfilled.

Last month my CPI forecast table suggested to expect 6.28% vs actual of 6.4%. For February the table expects a sharp drop to 5.66% vs consensus of 6%, actual is probably going to be somewhere between 5.66% and 6%, so a net positive CPI data release should give weight to the next Fed rate hike being 0,25% instead of 0.5%, with the really big CPI drop coming on April's data release after which I expect inflation will become more sticky.

However, then we have the impact of the SVB panic bank run that has resulted in tightening of credit markets and thus is deflationary to some degree, For more on the inflation mega-trend see ny previous article - https://www.patreon.com/posts/stock-market-to-78628081

The Fed once more BAILED OUT the banking crime syndicate to the extent that they can now go and gamble to their hearts content knowing that should their derivatives bets go belie up then the Fed and other central banks will step in to make depositors whole again. Okay, it's a little more complicated than that involving banks parking excess deposits in long dated US treasuries as they chased yields only to be hit by the Fed inflation curve ball rate hike cycle which means that if they are forced to SELL bonds to any significant extent then they are ALL BANKRUPT! Even the biggest of big banks! Simply they need to hold bonds to maturity to avoid booking the loss..

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By Nadeem Walayat

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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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