Market Drama

Welcome to this week’s Market Drama.

• The S&P 500 was down 3.5% last week as a result of inflation. 
• The U.S. Producer Price Index came out for November with an increase of 0.3% month-over-month and 7.4% year-over-year. 
• The University of Michigan Consumer Sentiment came out with their December numbers and it was up to 59.1. The result was higher than expected (57) because of the question about inflation expectations. 
  • People are expecting inflation to be 4.6% a year out, versus just last month, they were expecting it to be 4.9%. Why? Because the national average retail price for gas has come down to $3.33 on average. That’s roughly down $1.69 from June. As gasoline prices come down, people feel a little bit better about what they should expect for inflation next year.

What to look forward to this week? 

• We get November CPI numbers on Tuesday. The expectations are 7.3% for the overall number and 6.1% for the core (that excludes food and energy prices since those tend to be the most volatile). 
• November retail sales came out on Thursday, which gives us a pulse on how the consumer’s doing. Since consumption accounts for 68% of GDP, this number will be very important. 
• The biggest event of the week is on Wednesday when the Federal Reserve will announce how much they are raising interest rates. The expectation right now is for 50 basis points.
• The Fed is also likely to update projections on how much they’re likely to hike next year.

– Andres