The Trouble With Inflation Data
New inflation data dropped today, and at first blush, it befuddled the markets.
The S&P 500 struggled for direction, even though the figures met expectations and showed that price growth continued to slow in December. The overall consumer price index fell 0.1% from the month before.
The market response was strikingly different from the past few months. With consumers, investors and policymakers all razor-focused on the direction of inflation, the release of new data on price growth has previously sent stocks and bonds into a frenzy, good news or bad. The S&P 500 swung an average of almost 2% in the first-day reaction to such data releases in 2022 — almost three times as big as the move in the prior five years, data compiled by Bloomberg show.
Today’s mixed signals show how difficult it is to divine the direction of markets — and of the Federal Reserve, which has been hiking rates to tame inflation. Today’s data was in line with expectations. But last week, a Labor Department report showed stronger-than-expected job growth. Meanwhile, one of the world’s most important short-term lending benchmarks climbed back to a level last seen before the onset of the global financial crisis in 2008. And gold prices have been on a tear lately.
The somewhat conflicting evidence has made room for a few analysts to stick their necks out and make optimistic predictions for the year ahead. They argue inflation is likely to ease in 2023, helping the US narrowly escape a recession.
“Optimists and pessimists agree that 2022 was a terrible year for stocks and bonds but it doesn’t go on forever,” Ed Yardeni, a longtime stock strategist and founder of his namesake research firm, told my colleague. He sees investment opportunities in financial, industrial, energy and technology stocks that look much cheaper than they did last year.
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UAW - FORD
1 年No Such Thing or Term known as "Price Growth" Cost (DOWN) and Wages (FAIR) correct Term. Who got perks coming up with that one.
Perpetual Inventory Clerk at Macy's
1 年I wonder ??
Healthcare opportunities for change in America
1 年One of the core problems is that inflation is used without regard to consistency. It looks like we are ridding the country of some of the worse measures ,such as the Fed definitions, and using CPI without CPI less food, energy, or shelter.
A1A Franchise Corp Founder, Treasurer at National Limousine Association -Founder A1A Global Ground, Versace Investment Group, Sustainability Champion.
1 年I'm in the transportation business and When we move, the markets move, and we're moving faster than ever.
Following trends in Autonomous Connected Electric (ACE) Mobility
1 年Markets tend to look 6-12 months ahead and even if there will be a recession it will probably be a short one with a growth in the second half of the year and also as a total on yearly basis. So that kind of explains that a bad 2022 and good start in 2023.