Monday was another session that moved from indifference to urgency by the closing bell.

No Nvidia (NVDA), no problem (all the Magnificent Seven stocks finished lower). Half the top ten movers were in the chip sector. The chip industry got a boost, as cash was distributed from the $52.7 billion “Chips in America Act.”

Semiconductors Rock

The old-timers never bought chip makers for their long-term portfolios when I entered the business. They said the chips were commodities, and the more that came onto the market, the cheaper they would become. The supply and demand aspect never considered the capabilities of chips. Even this year, the industry suffered from a glut.

As for the U.S. usurping Asian nations, that won’t happen anytime soon. But the industry welcomes ‘found’ money.

Drum Roll, Please

It is about the Consumer Price Index (CPI) scheduled to be released this morning:

• (CON) Continental AG: 3.1%
• (JPM) JPMorgan Chase& Co: 3.0%
• (MS) Morgan Stanley: 3.0%
• (WFC) Wells Fargo: 3.0%
• (V) Visa: 3.0%
• (GS) Goldman Sachs: 3.1%(
• (BAC) Bank of America: 3.1%
• (C) Citigroup: 3.1%
• (BCS) Barclays: 3.1%
• (UBS) UBS Group AG: 3.2%
• (CM) Canadian Imperial Bank of Commerce (aka CIBC): 3.2%

A major focus is on housing, along with food and beverages. 

Additional Economic Releases

Then there's bond auctions.

The government is raising over $300 billion this week in auctions that include 10-year-and 30-year bonds. The record for Treasury issuances will be shattered.

Today’s Session

The CPI report is out, and it offered few surprises; however, the headline line number was slightly higher than consensus.It was odd that the stock market initially popped on the news, but then moved lower.

Initial Observations

• Food prices are still increasing, albeit at a slower pace.
• Used cars prices jumped, but that might be the result of the auto strike.
• Transportation is a glaring red flag.

Federal Rate Cut Watch

The street sees the first rate cut in May, but what stands out is the 28% chance of 50 bps cut.

The market has been gutting out recent sessions, starting slow and even under pressure, only to find buyers by midday.  That’s admirable.  Let’s see if that could happen again.

Comments

It's said the 'smart' money moves later in the day after digesting any news or data release vs the 'dumb' money. I prefer to think in terms of strong hands vs weak hands which is a little less pejorative. Ric Walter on 12/12/2023 10:07:30 AM

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