The overwhelming consensus seems to be that CPI will come in on target, or lower. And therefore markets will keep rallying.
It is possible, however, that the rally has been front run already. In which case we possibly peak sometime today and then glide down into Fri opex. Despite an ok CPI print.
What do folks think of the likelihood of this happening?
Tbh I think this is a very likely scenario. Although I would still bet on a green day overall tomorrow if cpi comes in at target. We are overextended on the shorter time frames so it would make to have a pullback. Also with opex coming up and markets selling off into opex recently, it does make a lot of sense for markets to sell off even with a good cpi reading
Seems like we’re all thinking similar here, either we get a correction to the downside based on a surprise “miss” (cpi comes in higher) or we hit cpi as expected then continue rally into a correct by eow or next. One other scenario that has been mentioned is if we do “beat” cpi expectations we could mini-squeeze all of the put hedging that has been ramping up in September which could then ultimately drag the downward correction into happening next week instead when SPY is really oversold at that point.
While everyone is expecting cpi to come in lower, it might take them by surprise. I think starting from tomorrow if not today, will start the downtrend til into Opex.
Copying and pasting my posts into tf below:
throwing this in here. Please take with a grain of salt cause I have 0 details on the railroad stuff. Got a text saying “My buddy (name) brother said they are going on strike friday. Sounds like a deals not getting done” Not sure what all it affects and is priced in etc. No idea if hes saying if a deal doesn’t get done strike on friday because we knew that. Or if its forsure not getting done and a strike on friday
adding to this. Just heard from someone separate that I actually know personally (unlike the last person) that works at arm & hammer dealing with shipping. They (arm & hammer) also said they were warned they (rr workers) will be planning to strike this weekend and that it will fuck the supply chain pretty bad. At least in this context their (a&h) since that is who they were dealing with and they do make a lot of stuff. If true thought I would assume much more is affected as well. Again not sure about any trades but if anything might not be a horrible idea to grab some basic shit at costco or sams just to avoid any potential covid like runs lol.
Ok so this could all amount to nothing. But figured it would be worth noting here as worst case scenario would be bad ppi tomorrow and a major strike over the weekend. Absent both those events/any bad news the thinking is market goes up correct? My only concern is that with the major drop today that some of this is priced in. Maybe it was just the odds of an actual 100bps hike idk. Would love some input from some people more versed on macro level stuff and potential effects for the schmedium term if they were to come to fruition (bad ppi + strike).
Perhaps calls on trucking companies if you were betting on the strike. I’m not a doom and gloomer but the only reason i’ve posted and given it any weight it that one person I know personally said shipping will be fucked and could cause a very annoying covid like run (where everyone bought the toilet paper and not tuna cans for no fucking reason lol). WIth that short term prices would go even higher than they are now. Second person was 2nd hand information from someone who works for the rr and said they are going on strike…take that for what you will lol.
White house did partially get ahead of the railroad stuff and brought up chlorine specifically for some reason. Lots of other shit that would be impacted (think of what arm & hammer makes since I brought them up). Will be interesting to see if anything plays out but wanted to get this out there in case someone had some safer or better ideas to swing from tomorrow to next weekish or longer.
If neither ppi or the railroad catalyst happens then I will simply delete this and deny ever having written it. Or blame whiplashes ford guy since i’ve reported “friend of a friend of a friend of a fri-…” information. Thank you!
Okay so here’s the thing with the brewing rail strike to know before doing anything based on this. Railway workers (and pilots) are governed by the RLA, or Railway Labor Act, that stipulates they must go through many phases before they can strike. We have gone through all of those phases and an agreement has not been reached. A strike is likely.
HOWEVER, the RLA contains provisions in which these workers can be forced back to work by Congress under threat of imprisonment. What historically happens is that if they are able to politically get away with it, they will force the rail workers back to work and the labor agreement will be decided by Congress through binding arbitration. Typically, the workers get the shaft in that deal. So it could be a nothingburger.
On the flipside of that, many rail workers have been putting up with lower pay and longer hours because of Covid and PSR shenanigans. So even if they’re not allowed to strike for any appreciable amount of time to cause a disruption, there’s a good chance that this time may be different and many will say “You know what? Forget about this.” and walk out the door… leaving in a much more dire situation.
Just some info to digest on both possible outcomes from this potential catalyst.
Thats interesting I wasn’t aware they could force them back with threat of imprisonment. So going off what you said them doing whatever they can get away with politically…wonder if we can get a better idea of where that might be. With a dem majority they are obviously pro union but this puts them in a difficult spot balancing the optics of “forcing the workers back” vs even higher prices for everyone if the strike happens for an extended period of time. But would this be a simple majority vote in the house and senate? President have any pull? Need a certain percentage? Or is there any automatic action taken regardless which political party is in power? If anyone knows the answer please chime in. I don’t know how many times this has happened in history and each outcome based on the circumstances.
The action by Congress would be taken under the Commerce Clause by Congress. So I would presume that it has to be voted upon just like any other resolution.
Read this article regarding the air traffic controller’s strike back in 1981. Reagan fires 11,000 striking air traffic controllers Aug. 5, 1981 - POLITICO
Interesting. Thanks for the article. My takeaway is that i need to do more research on who all is expected to strike and what job descriptions mainly. Air traffic control from what ive heard is super nuts, id assume still pre 9/11. Railroads dont seem like that buttttt sounds like its all freight whereas the article states for flying freight wasnt that affected. We also still have trucking and flying. Not downplaying the potential strike but now im wondering just how many and where plan to strike. Also if their jobs are easy to replace or not. Still not sure how much of an effect i think this strike could have. Lots of things to think about.
I don’t wholly feel like it’s an easy job to replace as a conductor or engineer of a rail car that should be slighted. Though I vastly agree that transportation devastation is unlikely. It would be a significant set back in supply chain issue which would lead to further back logs and long running inflation. Dependent upon how long it may last.
They don’t just take any Joe blow off the street that doesn’t have a job now and say take this train from Cali to Florida.
In regards to the federal government stepping in this is largely unlikely. 2 months before a mid term they aren’t going to force a union back to work. That would spell catastrophy for whatever party voted that way.
What it may do is put a halt on any kind of slowing of demand by essentially halting a lot of the supply chain. Which are strongly weighted together.
Without a doubt though I’d avoid the standpoint that the government would force them back to work with threat of imprisonment as they could essentially just quit their job to avoid this aspect.
Listening to the radio this morning they were discussing this the White House appointed arbitrator had negotiated an agreement that included a staggering 24 percent raise. That a majority of rail unions would ratify.
However the sticking point is with conductors and engineers work hours and being on call always etc
Stated it was unlikely those unions would accept if they were to strike the other unions would as well to back them.
I saw both UNP & CSX got downgrades this morning. lol
Those were couple they discussed regarding the conductors if the strike announced would be good put plays.
Right now the main gripe rail crews have is that they’re being treated like company property as you said. On call all the time, if you don’t show up you get your pay docked/you get fired, getting sent way out of your normal AO all the time so you’re never home, can’t even take a sick day if you’re violently ill without catching flak from management… and all of that on top of the whole ‘They’re trying to fire you from the day they hire you’ PSR railroad culture. Every accident/incident is first blamed on the train crew and they get raked over the coals even if it had nothing to do with how the train crew operated the train and everything to do with deferred maintenance or making trains far too long to run and underpowered to run effectively.
The mumblings from the guys on the railroad that I know are that they’ll vote down any agreement where at least some of this is not remedied, but then again the unions have pulled shady stuff in the past. Some consider not voting to be a ‘Yes’ vote, so if enough people forget to or cannot vote, the agreement will ‘pass.’
As rates rise, bond yields become a viable alternative source of returns again. At around 4%, it really starts to become real. We’re starting to see that confluence in real estate investments now (below); equities may soon follow.
The 6-Month US Treasury now yields basically the same as Buying & Renting Out a House in America (aka Cap Rate).
Translation: big Real Estate Investor selloff coming. Especially among Wall Street owners.
(Source)
Note that this doesn’t really apply to individual buyers, but much of the recent boom was from Wall Street fueling the price bubble of all kinds of homes, including single family. This applies to them greatly. May also apply to discerning folks who have investment properties and optimize based on cap rates.
Likely relevant to the Homebuilding stocks - for what is falling must rise again (XHB, ITB, NAIL) thread.
Not sure if relevant to the Housing Data think tank (previously HD DD) thread given HD’s target segment(s), but perhaps someone closer to the industry can comment.
Well this is interesting. I have 2 rentals maybe I should dump them for bonds. My grandpa tells me about bonds all the time but I just thought that was an old methodology of investing with little returns. Times have changed.
To sum up what Josh posted:
