By Steve Goldstein
Critical information for the U.S. trading day
Well, that was something.
Inflation came in a bit below forecast, and then the rockets came out — the best one-day percentage rise for the S&P 500 since April 6, 2020, and the best one-day percentage rise for the Nasdaq Composite since March 24, 2020.
If inflation has truly peaked, there’s really just two questions — how fast will inflation come down, and will the Fed hikes designed to tame high prices drag the economy into a recession. “CPI peak is in,” declared Warren Pies, the founder of 3Fourteen Research, on Twitter. “The question is whether the data cools quicker than earnings deteriorate.”
Strategists at Citi say the next few weeks could be quite enjoyable. “In truth, it’s difficult to find any bearish catalysts between now and the December payrolls, CPI and FOMC,” said a team led by Jamie Fahy.
The bank put together a chart of all the downside CPI surprises since 2008, showing that typically, the equity market tends to rally for the following 60 days.
“This all doesn’t mean that we think equities are all of a sudden in a bull-market again. [Earnings per share] is a major risk in the first half of 2023, but over the next 2-6 weeks, the market can painfully squeeze for the bears,” they say.
Citi, it should be said, had been recommending investors short the S&P 500, so they missed out on Thursday’s fun, though the team says their put recommendation was bought at a price cheap enough to still be slightly profitable. They said their model suggests the bulk of shorts were initiated at 3760, meaning these positions are now heavily underwater.
Fahy and the Citi team also advise going long U.S. Treasurys and shorting the dollar vs. the Norwegian kroner . The Australian dollar, the New Zealand dollar, the British pound and the Swedish krona also have tended to rise when the S&P 500 climbs and the yield on the 10-year Treasury falls.
The market
The rally appears to have legs, with U.S. stock futures higher. Crude-oil futures climbed as China took a step to loosen its zero-COVID rules. The dollar was sharply lower vs. rivals. Follow MarketWatch’s live blog
The buzz
China said it’s reducing the amount of time passengers will be required to undergo quarantine in a relaxation of its strict zero-COVID rules. However, in Beijing, parks were closed as officials responded to a wave of COVID-19 cases.
It’s Veterans Day, so there are no economic releases from the government, though the University of Michigan’s consumer sentiment report for November is due at 10 a.m. Eastern. The holiday also means a break in the earnings release calendar.
There are still no calls made on House or Senate control. The New York Times says there are 222 districts where Republicans won or lead, which is more than the 218 needed for House control. In the Senate, there are indications Democrats will take both Arizona and Nevada, which will mean the Georgia runoff wouldn’t determine control of the upper chamber.
FTX bowed to the inevitable and said it’s filing for bankruptcy protection. Cryptocurrency lender BlockFi said it was pausing withdrawals in the wake of the turmoil at FTX, which had provided BlockFi with a $400 million credit facility.
Tesla (TSLA) CEO Elon Musk raised the specter of bankruptcy for Twitter, the social-media service he bought for $44 billion.
JPMorgan resumed coverage on Intel (INTC) with an underweight rating and a $32 price target, as the broker said it would take several years before Intel is able to reclaim technology leadership.
The White House said President Joe Biden will announce at the 27 U.N. Climate Conference that the U.S. Environmental Protection Agency is strengthening the agency’s proposed standards to cut methane and other harmful air pollutants from the oil and natural gas industry
The U.K. economy weakened by 0.7% in the third quarter, though that was partly due to the mourning period for the death of Queen Elizabeth II. The European Union forecast two quarters of negative growth, meeting the technical definition of recession.
Best of the web
Legendary investor Carl Icahn says it’s still a bear market.
Tinker Bell Economics — a take on the cryptocurrency landscape.
American vets in Ukraine train front-line medics
Top tickers
Here were the most active stock-market tickers as of 6 a.m. Eastern.
Ticker Security name TSLA Tesla GME GameStop AMC AMC Entertainment NIO Nio AAPL Apple AMZN Amazon.com MULN Mullen Automotive META Meta Platforms BBBY Bed Bath & Beyond APE AMC Entertainment preferreds
The chart
The Consumer Financial Protection Bureau on Thursday released this chart, showing that complaints about crypto services tends to move in line with the price of bitcoin. Fraud is the most frequent complaint, with romance scams among the most popular method, as well as so-called “pig butchering,” where fraudsters pose as financial successes and spend time gaining the victim’s confidence and trust.
Random reads
The awkward moment the United Nations secretary-general realizes he’s reading the wrong speech.
An 18-foot python ate an alligator. It didn’t end well.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton
-Steve Goldstein
(END) Dow Jones Newswires
11-11-22 0952ET
Copyright (c) 2022 Dow Jones & Company, Inc.
