Our Outlook For 2023Dec 12, 2022
Every Friday we host a live discussion at 12:00pm EST.
This gives you the opportunity to personally ask us any questions you have on the markets, the economy, crypto, and more!
Here are the 4 key things we went over for this week:
What our 2023 outlook is and why it may surprise you
Where all this new volatility in oil prices is coming from
How the market will take this week's CPI print
Which retailers can win in this environment
If you'd like to listen live and ask us questions throughout the next live session, just join the weekly Friday afternoon session at 12:00pm EST.
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Meanwhile, instead of a full transcript, here's a more compact summary of what went down last week and what we're looking forward to in the week ahead.
If you want the full version, just listen to the audio recording!
This week is all about the market's reaction to the CPI print and the subsequent FOMC meeting that hits midweek.
We've been watching the market slowly react to mixed inflation signals for the past two weeks, but we'll finally get real data on Tuesday.
However, other job metrics gave us more mixed signals, leading to more of a selloff in broader markets while we wait for the CPI to drop this week.
There's a lot more detail to comb through, so let's dive into what you need to know for the week ahead 👇
All Eyes on the CPI:
Wholesale inflation gave us a whole lot to worry about going into this week.
The Street anticipated a 0.2% rise in producer prices, and we got 0.3%. This feels like a really small difference, but after months offed-induced pain, markets really should be seeing a lighter load from inflation by now.
The main culprit? Food prices. Vegetable prices rose an astonishing 38% in the last month, contributing to a 3.3% rise in overall food prices.
This completely erased a downward trend in energy prices across the board.
This is the problem with inflation that starts out on the supply-side of the equation.
The Fed is finally getting some traction in killing off demand with higher interest rates -- but as the initial energy price inflation got under control, all those costs were still being passed down the supply chain.
It takes energy and products made from energy to make foo -- so it makes sense that food prices are now driving the bus of inflation.
While inflation very well may be peaking, this period of high costs will still reverberate for a while before we achieve pre-covid levels.
Energy Prices Keep Baffling the Market:
With supply still being limited by OPEC, it is genuinely wild to see oil prices still hovering in the $70/barrel range.
The US has managed to increase storage capacity for the strategic oil reserve, and refinery capacity is finally picking back up.
There are a lot of smaller factors at play here, but the short of it is we should see energy prices rise a bit more, but not as drastically as the market initially expected.
Check out the audio recording to get our full outlook!
Wrapping this Up:
Again, this week is all about the market holding its breath until we get real news.
Retailers are still bifurcating on lines of who can handle excess inventory and who can't (Best Buy can, Lululemon surely can't).
We are still reeling from mixed signals given to us by labor--but those mixed signals will become completely irrelevant once the CPI and FOMC meeting clarify how much progress we've made on inflation and whether or not we'll start taking our macroeconomic foot off the gas re: interest rates.
Meanwhile, crypto is still languishing as SBF takes his apology tour to capitol hill this week. We can't wait to see how testifying to congress goes for him this time around.
This downturn has had some wild twists, but retail is showing us that we may just have a path out of this where we quickly adapted to supply chain inflation and kept the market from sinking into a full-blown recession.
We'll keep a close eye on retail, labor, and tech this week as these threads develop.