Investors will laser in on next week's inflation data. That's the headline. Laser in. Like they've been doing what exactly for the past three years? Casually glancing? Skimming? Checking their phones during the CPI release and missing the number entirely?
The data just got even more important. More important than what? Last month when it was critically important? Or the month before that when it was unprecedentedly important? We've been escalating the importance of inflation data since 2021. At this rate next month's number will require a national moment of silence.
The backdrop here is a buoyant stock market. Buoyant. The S&P is ripping and the Fed might hike rates into it. This terrifies investors who laser in on things. They bought stocks at all-time highs assuming rates would only go down. Bold strategy. Like buying a house on a flood plain and assuming rain will be banned.
Here's what's ahead for the market. Nothing. The same thing that's always ahead for the market. Numbers on a screen going up or down based on information you don't have and wouldn't understand if you did. But next week the numbers might move because of other numbers. The inflation numbers. Which are more important now. Even more important than when they were already important.
Retail traders are refreshing their brokerage apps trying to front-run the CPI print. They're studying charts. Reading threads on Reddit about core PCE versus headline CPI. One guy in Michigan just learned what PCE stands for and immediately opened a leveraged position on it. He does not know which direction.
The central bank could hike. Or they could hold. Or they could cut. All three options remain on the table because nobody knows what the f*ck they're doing. Not the Fed. Not the investors who laser in. Not the analysts who write headlines about data getting even more important.
Next week's number will print and everyone will react like it means something and then we'll do this again in thirty days.
Photo by Markus Winkler on Unsplash
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