CPI Prep: Metals Scenarios Today are an Indication of Weak Shorts
Today
CPI Estimates
What banks agree on
Where they differ
Scenarios
Good morning.
The Dollar is up 43 bps. Bonds are flat after a very poor auction yesterday. Stocks are up 15 to 55 bps. Gold is down $4. Silver is down 15 cents. Oil is down 41c. Nat Gas is up 3c. Crypto has bounced from the death spiral that is FTX driven. BTC is up 3% and ETH is up 9.5%. Grains are mixed and stable.
Trader’s Take on Gold and Silver:
CPI today, and we get to see if the metals rallies were just shorts covering before an important data number or if there is some wind beneath this. Point being, IF inflation comes in as expected or even lower, how do metals react?
CPI WEAKER: Gold and and Silver *should* go up from more shorts covering. But how high and how far? And are banks starting to buy as “buy season” encroaches? There is no new money allocated yet. Weak hands will buy strength today
CPI STRONGER: We almost *know* what happens if inflation comes in hot. They sell off. What we care about their is how low and how long does the market stay down this time. Strong hands will buy dips today
CPI AS EXPECTED: This is the fun one. If it comes in as expected, then we get to truly see without bias who the weaker hands are. if up, then shorts are still scared to death. If down, then we know they are done, and dip buying is hazardous. Strong hands may watch, weak hands ( longs and shorts) may act
Remember: React, Reassess, Reality are the 3 stages of any market move after a big data number
1- CPI Estimates:
BOA- Headline CPI likely increased by 0.5% m/m in October, owing in part to the first increase in energy prices in four months.
JPM-We forecast 0.6% headline CPI next week…This week’s CPI will be the most important factor to shape the expectations for December FOMC
GS- We expect a below-consensus 0.44% increase in core CPI in October (vs. 0.5% consensus)
CITI- We expect core CPI in October to moderate slightly with a 0.43%MoM
CONTINUES AT BOTTOM