Investors are on edge as fears of a severe economic downturn return. Data yesterday revealed a sharp slowdown in both US retail sales and manufacturing activity, while producer prices remained above +6%.

Economy

Slowing growth and high inflation are two of the three key components of "stagflation." The third is high unemployment. While payroll data so far does not reflect massive job losses, layoff headlines from the tech and financial sectors are maybe creating the illusion that the job market is cratering.

Bulls want to believe that things may not be as bad as they appear on the surface, however. The decline in retail sales was only -1.1% for the month. Compared to last year, sales in December were up +6%. Bulls are also pointing out that while the Producer Price Index at a year-over-year rate of +6.2% is still far above the Fed's target inflation rate of +2%, it is also a substantial move down from November's rate of +7.3%.

As for layoffs, keep in mind that the tech sector actually only accounts for a small share of the US job market. Overall, layoff announcements remain below pre-pandemic levels.

Data to watch

Today, investors are anxious to hear from Federal Reserve Vice Chair Lael Brainard with bulls hoping she takes a more positive tone about the progress made so far in bringing down inflation. Comments from other Fed officials this week have mostly stuck to the script of "higher rates for longer," and really no cheers about how much it has moved down. In fact, most officials seem more concerned that inflation could spike again if the Fed ends its tightening program too soon.

China's reopening adds to that possibility with some anticipating a surge in commodity prices, particularly energy, which could put upward pressure on global inflation. Economic data today includes Housing Starts and the Philadelphia Fed Index.

On the earnings front, Netflix is one of the biggest highlights with the streaming giants results seen as a preview for what's to come in the weeks ahead when Silicon Valley behemoths start weighing in. Other earnings due today include American Airlines, Concentrix, Fastenal, Netflix, and Procter & Gamble.

No Representation Is Being Made That Any Account Will Or Is Likely To Achieve Profits Or Losses Similar To Those Discussed Within This Site, Support And Texts. Our Forecasts and other Texts on this Website Should Be Used As Learning Aids. If You Decide To Invest Real Money, All Trading Decisions Are Your Own. The Risk Of Loss In Trading Commodities and Stocks Can Be Substantial. You Should, Therefore, Carefully Consider Whether Such Trading Is Suitable For You In Light Of Your Financial Condition. Futures and stock trading is speculative. It involves the potential loss of investment. Past results are not necessarily indicative of future results. Futures trading is not suitable for all investors.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD defends 0.6400 after Chinese data dump

AUD/USD defends 0.6400 after Chinese data dump

AUD/USD has found fresh buyers near 0.6400, hanging near YTD lows after strong China's Q1 GDP data. However, the further upside appears elusive amid weak Chinese activity data and sustained US Dollar demand. Focus shifts to US data, Fedspeak. 

AUD/USD News

USD/JPY stands tall near multi-decade high near 154.50

USD/JPY stands tall near multi-decade high near 154.50

USD/JPY keeps its range near multi-decade highs of 154.45 in the Asian session on Tuesday. The hawkish Fed expectations overshadow the BoJ's uncertain rate outlook and underpin the US Dollar at the Japanese Yen's expense. The pair stands resilient to the Japanese verbal intervention. 

USD/JPY News

Gold: Buyers take a breather below $2,400 amid easing geopolitical tensions

Gold: Buyers take a breather below $2,400 amid easing geopolitical tensions

Gold price is catching a breath below $2,400 in Asian trading on Tuesday, having risen over 1% in the US last session even on a solid US Retail Sales report, which powered the US Dollar through the roof. Easing Middle East geopolitical tensions and strong Chinese data could cap Gold's upside. 

Gold News

SOL primed for a breakout as it completes a rounding bottom pattern

SOL primed for a breakout as it completes a rounding bottom pattern

Solana price has conformed to the broader market crash, following in the steps of Bitcoin price that remains in the red below the $65,000 threshold. For SOL, however, the sensational altcoin could have a big move in store.

Read more

Israel-Iran military conflict views and takeaways

Israel-Iran military conflict views and takeaways

Iran's retaliatory strike on Israel is an escalation of Middle East tensions, but not necessarily a pre-cursor to broader regional conflict. Events over the past few weeks in the Middle East, more specifically this past weekend, reinforce that the global geopolitical landscape remains tense.

Read more

Majors

Cryptocurrencies

Signatures