Gold's Lid May Be Loose

Market Rundown: CPI Prep

VBL

and

CJC

Sep 11, 2024

∙ Paid

Housekeeping: Good Morning.

Gold revaluation is a process not an event

Today:

Premium Analysis: CPI Prep: The "Possible Tiebreaker"
News: Debate Data

Premium Analysis: CPI Prep: The "Possible Tiebreaker"

HEADLINE CPI expected
- 3.2% YoY. (same as July)
- equals +0.2% M/M
CORE CPI expected
- 2.5% YoY, (down from 2.9% in July)
- equals +0.2% M/M

Wall Street has a good handle on CPI this month (see dispersion of predictions chart) Therefore they believe CPI should not change expectations one way or the other. At this point, the Fed has its mind made up one way or the other anyway.

The FED ALREADY KNOWS THE NUMBER.. So if it comes in super low, then 50bps is on the table. Otherwise.. meh…. Which all means the street believes CPI should be a non event

Implying if CPI is anywhere in their ranges.. amateurs will be playing.

If it is a non event from a data POV, the behavior of the market will be entertainment. It will be ameteur hour. If the market does nothing, then everyone is properly positioned

If CPI wildly surprises on the data front low, then how the market acts will tell you how much money is waiting to buy… if it wildly suprises HIGH, then we get to see how many people are still hoping for 50 bp cut.

CONTINUES AT BOTTOM

News: Debate Summary

US Vice President Harris said she supports small businesses and will offer a tax cut for these businesses, while she added that Trump left them with the worst unemployment rate, an economic recession and the worst attack on democracy since the Civil War. Harris stated that Trump got them into economic wars and that he thanked the Chinese President but is attacking him today. Furthermore, she said Trump favours campaigning on issues instead of solving them and that 81mln Americans fired Trump which is hard for him to realise.
Former President Trump reiterated that millions of migrants are pouring into the country illegally and "taking our jobs before our eyes", while he added the economy is terrible economy because of inflation which is devastating to the middle American class. Trump also commented that the Biden administration only gained "bounce back" jobs, as well as stated that Harris doesn't have an economic plan and copied Biden's plan.

Continues at bottom

Equity Recap:

US equities mostly advanced on Tuesday ahead of August's consumer price index report out tomorrow. Large caps bested small caps: S&P 500 (+0.45%) vs. Russell 2000 (-0.02%). MSCI Emerging Markets (EEM) and MSCI EAFE (EFA) fell 0.38% and 0.50% respectively.

Market News:

"The Federal Reserve gets its last look this week at inflation readings before it will determine the size of a widely expected interest rate cut soon. CNBC

"US regulators will make extensive changes to their bank-capital rules proposal, cutting the expected impact to the largest banks by half and exempting smaller lenders from large portions of the measure, a top Federal Reserve official said. : Bloomberg

"Apple has suffered a significant defeat after the EU’s top court ruled that the iPhone maker must pay €13bn in back taxes, overturning an earlier decision in the Big Tech group’s favour. FT

"Behind Goldman Sachs’s messy departure from credit-card lending: lax underwriting standards. WSJ

"JPMorgan Chase shares fell 5% on Tuesday after the bank’s president told analysts that expectations for net interest income and expenses in 2025 were too optimistic. CNBC

"Volkswagen has informed workers it is ripping up a three-decade job security deal, seFT

"Investors in hedge funds often pay high fees for mediocre returns. Now, many are demanding that fund managers not take a cut of any investment gains unless they are better than the returns available on cash.WSJ

Politics/Geopolitics:

Ukraine Foreign Ministry spokesman said Kyiv will consider its options and could even cut ties with Tehran if Russia uses Iranian missiles in the Ukraine war.
US President Biden said they are working that out now when asked about potentially lifting the Ukraine long-range weapons ban, according to Reuters.
Russia's Chairman of the State Duma, on the potential supplies of western long-range weapons to Ukraine, said Russia will have to respond by using more powerful and destructive weapons.

Some headlines via NewSquawk or DataTrek