Inflationary Data
The narratives in the markets right now are sky high and rising inflation, European recession, and de-globalization. All of the negative geopolitical tensions around the world are the supposed cause for this. Essentially only cause for actual real inflation is the expansion of the money supply. Mainstream media will not say it but all of the "money printing" during the pandemic is the main cause of the current inflation. The inflation situation as well as a very strong US dollar is exacerbating the recession situation in Europe ad well as other parts of the world like Sri Lanka. All of this is killing equity markets as the Federal Reserve is fighting inflation by raising interest rates at a rapid pace, which strengthens the dollar even more, and increases the cost of borrowing capital. This is bad for corporate profits world wide.
So when will the madness end? Nobody knows for sure. But you can follow inflationary data to see when the slowdown is happening. The Consumer Price Index (CPI) is a measure of inflation based off of the consumers perception. This makes it a lagging indicator as consumers are the last in line to feel inflation.
Directly below you can see Month-over-Month CPI reading. Inflation is still rising and not slowing down. You want to see a CPI reading below 0 to see that inflation is slowing. The Fed has mentioned several times that they will keep raising interest rates until inflation is showing an obvious slowdown.
So when will the madness end? Nobody knows for sure. But you can follow inflationary data to see when the slowdown is happening. The Consumer Price Index (CPI) is a measure of inflation based off of the consumers perception. This makes it a lagging indicator as consumers are the last in line to feel inflation.
Directly below you can see Month-over-Month CPI reading. Inflation is still rising and not slowing down. You want to see a CPI reading below 0 to see that inflation is slowing. The Fed has mentioned several times that they will keep raising interest rates until inflation is showing an obvious slowdown.
There are other measures of inflation are treated as leading indicators of inflation. The Producers Price Index (PPI) and the Purchasing Managers Index (PMI) are leading indicators of inflation as producers and purchasing managers are on the front end of the supply chain and feel the effects of inflation first. The Fed pays close attention to these numbers.
Basically for the effects of inflation to seem less apparent we need to see the cost of goods and services come down. How do they come down? The cost of inputs must come down. For services cost to come down there must be less demand for employment and/or a larger supply of a workforce. So keep an eye on economic data releases that pertain to jobs numbers or unemployment. For the cost of goods to come down then price of inputs needs to come down. It can be overwhelming and time-consuming to follow every single commodity future's price. But there are some indices and ETFs that follow a broad basket of commodities like precious metals or energy. I've included a list of these types ticker symbols that I glance at regularly.
$Barclays Bank Plc (JJG.US)$ $iPath Bloomberg Commodity Index Total Return ETN (DJP.US)$ $PowerShares Actively Managed Exchange-Traded Commodity Fund Trust PowerShares Optimum Yield Diversified Commodity Strategy (PDBC.US)$ $Invesco DB Commodity Index Tracking Fund (DBC.US)$ $Swedish Export Credit Corp Pub Elements Lkd To The Ice Bofaml Cmdty Idx (GRU.US)$ $Abrdn Precious Metals Basket ETF (GLTR.US)$ $Ishares Bloomberg Roll Select Commodity Strategy Etf (CMDY.US)$ $Teucrium Agricultural Fund Etv (TAGS.US)$ $INVESCO ELECTRIC VEHICLE METALS COMMODITY STRATEGY NO K-1 ETF (EVMT.US)$ $Swedish Export Credit Corp Pub Elements Lnkd To The Ice Bofml Cmdty Idx (FUE.US)$
Basically for the effects of inflation to seem less apparent we need to see the cost of goods and services come down. How do they come down? The cost of inputs must come down. For services cost to come down there must be less demand for employment and/or a larger supply of a workforce. So keep an eye on economic data releases that pertain to jobs numbers or unemployment. For the cost of goods to come down then price of inputs needs to come down. It can be overwhelming and time-consuming to follow every single commodity future's price. But there are some indices and ETFs that follow a broad basket of commodities like precious metals or energy. I've included a list of these types ticker symbols that I glance at regularly.
$Barclays Bank Plc (JJG.US)$ $iPath Bloomberg Commodity Index Total Return ETN (DJP.US)$ $PowerShares Actively Managed Exchange-Traded Commodity Fund Trust PowerShares Optimum Yield Diversified Commodity Strategy (PDBC.US)$ $Invesco DB Commodity Index Tracking Fund (DBC.US)$ $Swedish Export Credit Corp Pub Elements Lkd To The Ice Bofaml Cmdty Idx (GRU.US)$ $Abrdn Precious Metals Basket ETF (GLTR.US)$ $Ishares Bloomberg Roll Select Commodity Strategy Etf (CMDY.US)$ $Teucrium Agricultural Fund Etv (TAGS.US)$ $INVESCO ELECTRIC VEHICLE METALS COMMODITY STRATEGY NO K-1 ETF (EVMT.US)$ $Swedish Export Credit Corp Pub Elements Lnkd To The Ice Bofml Cmdty Idx (FUE.US)$
The most important commodity to follow is oil. Oil or oil byproducts are used in one way shape or form in just about every good or service. The production and transportation of goods and the facilitation of services all require oil. So we need the price of oil to come down in a big way to see it affect inflation positively.
$SPDR Dow Jones Industrial Average Trust (DIA.US)$ $Invesco QQQ Trust (QQQ.US)$ $SPDR S&P 500 ETF (SPY.US)$ $iShares Russell 2000 ETF (IWM.US)$ $VIX Index Futures(OCT4) (VXmain.US)$ $Gold Futures(DEC4) (GCmain.US)$ $Powershares Exchange Traded Fd Tst Db Us Dollar Index Bullish Fund Etf (UUP.US)$ $SPDR Gold ETF (GLD.US)$ $iShares Silver Trust (SLV.US)$ $Ishares Iboxx $ High Yield Corporate Bond Etf (HYG.US)$ $Ishares Iboxx $ Investment Grade Corporate Bond Etf (LQD.US)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $Crude Oil Futures(NOV4) (CLmain.US)$
$TENCENT (00700.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $CSI 300 Index (000300.SH)$ $FTSE Singapore Straits Time Index (.STI.SG)$ $NIO-SW (09866.HK)$ $NIO Inc. USD OV (NIO.SG)$ $NIO Inc (NIO.US)$ $BILIBILI-W (09626.HK)$ $Bilibili (BILI.US)$ $Baidu (BIDU.US)$ $BIDU-SW (09888.HK)$ $XPeng (XPEV.US)$ $Li Auto (LI.US)$ $BYD COMPANY (01211.HK)$ $BYD Company Limited (002594.SZ)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
$TENCENT (00700.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $CSI 300 Index (000300.SH)$ $FTSE Singapore Straits Time Index (.STI.SG)$ $NIO-SW (09866.HK)$ $NIO Inc. USD OV (NIO.SG)$ $NIO Inc (NIO.US)$ $BILIBILI-W (09626.HK)$ $Bilibili (BILI.US)$ $Baidu (BIDU.US)$ $BIDU-SW (09888.HK)$ $XPeng (XPEV.US)$ $Li Auto (LI.US)$ $BYD COMPANY (01211.HK)$ $BYD Company Limited (002594.SZ)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Iwanttolive : Well written
meruson : first principles - printing lots of money equals inflation
SpyderCall OP meruson : its the basic intro to economics 101. The main stream media is saying inflation is mostly caused by the supply situation or the Russian war. its kind of comical
Mike Hunt : This Is my number one contrarian indicator. I’m going LONG. Last time it was at this position was right before that July and August multi week rally
SpyderCall OP Mike Hunt : sometimes it is good to be greedy when others are fearful. the age old wall street proverb
SpyderCall OP Mike Hunt : put premiums are near all time highs also. perfect scenario for a rug pull.
Mike Hunt SpyderCall OP : Melt Up commence
BeBlessed SpyderCall OP : you meant a rebound is nearing before making new low?
meruson SpyderCall OP : welcome to media halloween party