As we get ready for another busy week of reports and inflation data, we’re going to first look at some data points showing we could see some positive inflationary news this week.
We’re finally seeing ocean shipping rates on major trade routes fall, showing a potential sign that the supply chain issues may be coming back under control as demand for products is slowing. Assuming companies pass the savings back to customers, we could start to see the price of goods drop in retail locations.
You can also see that the demand for dry bulk vessels – those carrying raw materials and bulk goods – peaked in Q2 of 2022. The Baltic Exchange Dry Index has been declining for months since its peak in May. While that is good news for the inflation story, that may not be a good sign of what’s to come if demand dries up too much. It could be an early warning of a recession, but I’m of the belief that this is more of a post-pandemic reset than impending doom.
Alright, let’s get you ready for the week ahead by looking at the major announcements and reports coming out.
Tuesday – 8:30 am EST – Core CPI – The Consumer Price Index will report month-over-month and year-over-year data for the month of August. The MoM data is expected to stay the same as last month with a 0.3% increase. The YoY report is expected to show an 8.1% increase from the previous year, but that is less than last month’s 8.5% reading.
Wednesday – 8:30 am EST – Core PPI – The Producer Price Index measures a change in the input prices of raw or semi-finished goods and services. The MoM forecast is showing a 0.3% increase vs the 0.2% increase last month.
Thursday – 8:30 am EST – Core Retail Sales – Retail sales are supposed to drop MoM to 0.2% compared to last month’s 0.4%. This signifies that customers continue to cut back on spending and could hurt sectors like Consumer Discretionary. We saw a lot of stories about parents cutting back on the spending on back-to-school supplies. We’re getting to that point of the year where we will see a decline leading into the big shopping season in a couple of months.
Thursday – 8:30 am EST – Jobless Claims – the current forecast is to see an increase in jobless claims, but still low at 225k even if higher than last week’s 222k. To me, anything under 300k is weekly noise, but investors do follow this report each week and the Fed doesn’t want to admit it, but they are hoping that jobless claims will increase and show a slowdown in the job market to help inflationary pressures.
Thursday – 8:30 am EST – Manufacturing Index – The initial forecast is that the index will drop down to 3.5 compared to the previous 6.2 reading. A level above zero indicates improving conditions.
Friday – 10:00 am EST – Michigan Consumer Sentiment (Sept) – The forecast is for an improvement from last month’s 58.2 reading, climbing up to 60.
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