The July CPI report came in on target. Economists predicted a number. The number appeared. Thousands of retail traders immediately checked their portfolios to see if this changed anything.
It did not.
Here's what happened: inflation data printed at consensus estimates, meaning the hundred analysts paid six figures to guess at publicly available information successfully guessed at publicly available information. The market moved seventy basis points in one direction, then seventy basis points in the other direction, then closed exactly where it opened. Some guy in Michigan with a Robinhood account and four grand in SPY calls spent three hours reading conflicting interpretations of what "on target" means for Fed policy.
The five key takeaways were presumably five different ways to say the same thing. Takeaway one: inflation met expectations. Takeaway two: prices came in as predicted. Takeaway three: the data aligned with forecasts. Takeaway four: economists were correct. Takeaway five: please keep reading our website.
Financial media cranked out two hundred articles explaining why a report that contained zero surprises was actually the most important economic data point since the last economic data point they said was the most important. CNBC brought on eight guests to debate whether meeting expectations was bullish or bearish. All eight agreed it could go either way depending on how you looked at it. None of them looked at a price chart.
The technical setup didn't care about core CPI. It didn't care about shelter costs or used car prices or whatever the f*ck "owners' equivalent rent" is supposed to measure. Price was sitting at resistance before the report. Price is sitting at resistance after the report. Retail spent the day trading news. Smart money spent the day trading price.
Imagine thinking five takeaways from consensus data would change your position size.
Photo by Markus Winkler on Unsplash
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