SWAV - Weekly Points – 5 Things To Know In Investing This Week | Benzinga
The Opposite Day Issue
This week, economic data decided to pull a George Costanza and do the opposite of everything it has been doing. DKI has highlighted the trend of inconsistent data in recent months, and this week, many of those inconsistent trends reversed. Confusing? Don’t worry, we’ll explain.
We also have some excellent fundamental news from Shockwave Medical (), rising visitation in Macau (great for ), and Japan enters recession. Plus, we highlight detailed comments on oil price projections from Tracy Shuchart (@chigrl) who did a fantastic webinar with DKI this week.
This week’s 5 Things contains 7 Things. Are we delivering extra value or just have difficulty counting. You decide.
This week, we’ll address the following topics:
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The CPI comes in hot. Does this mean "higher for longer”?
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The PPI comes in hot. Does this also mean "higher for longer”?
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Retail sales came in weak while manufacturing exceeds expectations. This reverses our prior trend of weak manufacturing and strong consumer sales.
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Shockwave Medical (NASDAQ: SWAV) beats earnings expectations. The company isn’t just taking share. It’s growing the market.
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Macau visitation for Chinese New Year well above expectations and rivaling the pre-pandemic 2019 numbers. Great news for Las Vegas Sands ().
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Japan officially enters recession. The currency isn’t doing so great either. DKI has been highlighting problems with the Japanese central bank for well over a year.
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Tracy Shuchart thinks oil remains range-bound this year. Does that mean there’s no opportunity? Of course not!
Ready for a new week of reversals? Let’s dive in:
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January CPI is Above Expectations:
The January Consumer Price Index was up by 3.1% which was above the 2.9% expected. The Core CPI, which excludes food and energy, was up 3.9% for the year and up .4% from last month. That was above the 3.7% and .2% analysts had projected. Real interest rates remain around 2% which isn’t out of line from historical readings. Services prices up another 5.4% has been an ongoing (sticky) problem for the Fed. I continue to be skeptical at the food inflation numbers. The government is telling us that food at home is up 1.2%. Does that match your grocery bill?
CPI still above the 3% mark. Core CPI still about double the target. Both higher than expected.
Asset gatherers keep saying the Fed has overtightened. 2% Real rates seem ok to me.
DKI Takeaway: Asset gatherers, who get paid based on assets under management, have been begging the Federal Reserve to lower the fed funds rate and get the zero-interest rate/quantitative easing free-money party started again. The market had been expecting a rate reduction in January or March which then got pushed out to May. The hot CPI print is pushing first rate-cut expectations out to June. DKI has been saying all along that those who have been expecting 6 rate cuts (1.5%) this year will be disappointed. Say it with me: "higher for longer”.
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The PPI Agrees with the CPI:
The Producer Price Index (PPI) is like the wholesale version of the CPI. In general, a higher PPI means higher consumer prices are on the way. This week, the PPI was up .3% from last month vs expectations of .1%. This was a reversal from last month’s negative reading so we’ve gone from deflation back to inflation. Core PPI, which excludes food and energy, was an even bigger surprise. Core rose by .5% vs last month which was far above expectations for a .1% gain. To put this in perspective, a .1% gain annualizes to just 1.2%. A .5% monthly gain annualizes to 6.2%. One is well below the 2% annual target. The other is a disaster.
PPI up ...