KG on Data Backing Inflation Uptrend, WMT Bull Run & Bullish Hope for Equities

macro this week. That's expected to be the driver into year end. So that's how we're looking half an hour into thisa. Off the back of what has been a very busy week. Obviously with a triple dose of inflation. So let's get out to Kevin Green joe something that caught my eye this morning. KG with those import prices obviously coming in hotter to the upside 1.1%. As I said, that's the third inflation print we've g this week. A bit of a triple whammy here. Just walk us h how icant this is. Yeah. And you know what Sam import and export pricest include tariffs as well. So we are seeing that rise to the upside. And that continues to be the trend with this data set. As you talked about import prices up 1.1% month over month. Street was looking for 0.9%. We did a little bit of a revision to the downside for last month'snt, but if you're looking at it from a year over year basis, import prices have increy%. Now export prices are also seeing the same trend. They wereually up about 2.2% on a month over month basis. She was looking for a 1% increase in year over year. Export prices increased by 11.6%, so the inflation narrative is still intact. Given what we saw for CPIPPI and now this data set here, it does make it a little bit more difficult for the fed in their meeting that they're going to have inbout a week and a half. And I think the market is still recognizing that, especially ire looking at the ten year Treasury rates on the back of that, there are certainrs that arelly outperforming, maybe because of those higher prices and leading up to the holiday season, like conmer staples, that's one of them to keep you on your radar here over tt couple of as we start preparing for the announcements around Black Friday as well as, you know, Christmas and the end of the season here. So an interesting dynamic when it comes to the economic data and it really doesn't support the Fed's, you know, notion that they should hold rates where they're at, or at least that's what the market perceive it for right now. Yeah, absolutely. It's been interesting actually looking at, you tech versus consumer staples over the last month. I mean, you take a look at a chart. They had been obviously going in opposite directions re d kind of crossing over in recent weeks. Talk us about a chart for Walmart, for instance, because obviously we've seen a bid some of these stocks, certainly in the last couple of sessions. Yeah. So Walmart and Costco are really going to lead the consumer staples just because of their market cap weight. Now if you're looking at the three year weekly chart, this is actually very interesting here. You are seeing a potential breakout tote 50 week moving average, which has acted as an area of resistance for thise, but really gets you excited that this move can continue over the next couple of weeks is that RSI is actually broken. Its end. As well as that, MacD is just starting to actually cross in a bullish chart in the past, when we see that 12 EMA cross above the 26 EMA, that h also led to further price gains for Walmart he this is actually an interesting setup that yes it had a great week this week. It had a great week last week. We not we may not be done when it comes to this name. And Costco probably actually has a little bit of a better chart, a little bit more of a ceiling that it could actually go back towards when it comes to its all time highs. And that's really what's leading the way when it comes to consumer staples, just those two names. You also could look at a name like Dollar Tree and ao trying to base and break out of some really key areas of consion, as well as momentum starting to heat up to the upside. It's good when we can fiething excit about people liking boring again, but as Kenny Polcari would say,oring is beautiful sometimes. So getting back to the data, I just want tod of tie it all together because we've had a lot of information this week. KG I mean, obviously, as I said, that triple whammy on inflation. Obviously the sales at the headline did mask some weakness beneath the surface. When you take a look at the core and the control group, we then of course had some industrial production thisng that came in higher lifting output to the highest I saw since 2018. I mean, it feels like somewhat of an uncomfort combination of data prints right now. No doubt for the fed.on't know much some of that output that industrial production could actually mit some of the inflation concerns. But, you know, how would you tie it all together ice little bow for us this week? KG well, obviously, inflation continues to remain relatively high. A lot of that's being driven by energy. I think the concern that you have, if you're looking at some of the internals of data sets like CPI, you are starting to see some of the e prices transmit over into the services economy, wareho andportation services. Those prices continue to ramp to the upsnd actually accelerate. We saw that within the PPI number. And unately, within PPI, the intermediate demand for not only finished and unprocessed goods, but for services did outstrip the street's expectations. That's you get concerned that the stickiness of services inflation actually could become a problem over the next couple of months. And then today the export and import prices, that's been a trend for a fairly long timemarkethas been t I think the Treasury market has been trying to front run a lot of the hotter data this week, which is why we kind of saw a We did see some buyers stepping in not only on the day of CPI, which ca hot, but also for PPI. And I think we are probably closer to getting towards that 5% or even that 4.8% level for the ten yearfore. I think that's kind of the the trajectory that you're seeing on the technical standpo And once again, we all are kind of bracing for hotterces, hotter inflation over the next couple of months that might already be baked in in some respects in the Treasury market. Yeah, we just had those rate hiking probabili up on thereen , October's gone back down to 15%d gone from 20% to then 50% basically a coin flip post that like the yesterday off thet of back of PPI. I mean, it's interesting because obviously this has been to some degree a function of not getting any forward guidance. I mean, you know,raders investors are kind of just trying to digest the data day by day. Bu then Kevin Warsh, seemingly trying to take cues from th markets as well. And as you say, obviously the Treasury market has been interesting this week as far as that bond buying is concerned. What about a line on the dollar. I mean that's obviously weakened since we got these comments or no comments last night out in Thailand giving a bit of relief as I said to the euro. Buthat's the significance of the fact that we've actually seen that come off this morning? I think the dollar moving to the downside actually does give that broadening trade for equities ae bit moreeam, becausI mean the purchasing power does e day you also are seeing maybe some of the pressures on the internl front for a lot of these companies, like Walmart or Costco, also kind of moving to the de as well. Technically speaking, we are hitting the 20 day moving average. If you're looking at the one year daily chart for the dollar index sitting at around 101 spot right now. But what you are seeing is also a rollover when it comes to RSI, which is making higher lows. But we are kind of testing that trend line and t MacD is actually crossing in a bearish formation. Once again go back and look at the chart. When we do have those crosses on the MacD we usually do see prices continuing to move in the direction of that MacD or basically moving t downside. And I think that gives, you know small caps some opportunities. Oth underloved sectors outside of technology a little bit more opportu as well. think if you're looking at Kevin Warsh, I want to comment on what ytnd of saidk he's letting the market try to normalize itself after 20 t years of policy. That might have been, let's say, two accommodative. And I think that works up until a point. And I think we're probably getting closer to that, that point where he probably will have to talk a little bit more here in in the last thing, usually leading to the fed meeting 30 days out. Ife're not above 60% for a rate hike, usually the fed does not tat action.ally the probability has to be above 60% in order for them to tak a It would be a shock to the market right now if they did rates in October. Yeah, absolutely. Got to take those cues from the markets, as you say. But I think theculty that so many people are having right now, the challenge is that this thinking that kind of outsourced some of the commentary, at least to, you Williams, like you and I were talking about earlier this week on MOCR, who seemingly took some heat out of the 2027 rate hiking expectations. And, you know, certainly move the markets.ut, you know, now obviously, we're back to sort of guessing and going day by day based on the data. You know, it's certainly interesting. But yeah, I hear what you're saying. And as far as what to watch in the coming weeks, I mean, what are you keeping an eye on? What are the levels that you're going to be watching? Yeah, I mean, from an economic standpoint, we don't have much for next week. We have some unemployment claim data c out on Thurs And then we have flash manufacturing PMI coming out and the revision for the University of Michigan consumer sentiment. Outside of that, we have some housing data as well. But we know that the trend in housing has been kind of more to the downside. And then we have some economic or some earnings reports like Tesla out next week. We have some of the industrial companies that are going to be reporting as I think the steel companies reporting is actually going to be probably one of the ones that does see some fireworks that might be not talked about as much on the media front, but fromels standpoint here, you really want to be able to just kind of ho to thweek moving average or let's say the 50 day moving average f S&P 500. That's going to be critical. And that's sitting, you know, around 7600 or so. If we're able to reclaim 7800, that's great. But if we stall out here too, too long, that's where yo get a little bit concerned that maybe we don't have enough momentum to kind of break us out to the upside. And volume does kind of confirm that if you're looking at some of the ETF flows for the SPI, which has been at record lows over the last week, week and a half or so. So we're holding upor now. I think the broadening trade is probably the one that provides you a little be alpha right now than being concentrated in the market weighted index or being concentrated in techhank