Watch This Before Tomorrow's Inflation Report Hits
In a Nutshell
Markets recovered 1% on optimism for a US-Iran nuclear deal, with Trump pushing for a 20-year pause despite Iran's 5-year offer, positioning stocks as a leading indicator ahead of potential corrections if talks fail. Tomorrow's PPI report is expected to show overall inflation jumping from 3.4% to 4.6% (core to 4.2%), signaling rising producer costs that will pass to consumers, reduce Fed rate-cut odds, and risk a short-term sell-off despite bullish sentiment. Higher inflation mimics post-pandemic trends that forced aggressive rate hikes, making cuts impossible without fueling the fire further.
These notes were generated by AI and may contain inaccuracies.
Markets recovered and closed up 1% due to positive developments. Markets were down during overnight trading session starting around 5:00 p.m. Arizona time on Sunday but quickly recovered, following a common trend for the past six to seven weeks. Trump tweeted signaling a possible deal. Iranian president stated Iran is prepared to continue talks with the United States and offered to pause nuclear activity for up to 5 years, but Trump wants 20. Markets expect a US-Iran deal soon, with other countries pushing for it. Stock market is optimistic about closing deals until confirmation otherwise. Stock market is a leading indicator that gets ahead of itself. If attacks begin, markets will correct.
Tomorrow is the Producer Price Index (PPI) report, an inflation report on the producing side, viewed as a forecast for consumer prices. Overall PPI expected to rise from 3.4% to 4.6%, core PPI from 3.9% to 4.2%. Report releases 1 hour before markets open. Current level is 3.4%, expected to jump a full percent.
Market may claim it's factored in due to irrational bullishness and eagerness to recover. A 1.2% month-over-month jump in inflation rate is significant, similar to when inflation hit 40-year highs post-pandemic, prompting Federal Reserve to raise rates to slow economy and bring down inflation. Levels traded in low twos afterward. Now at 3.4%, tomorrow's report could put it on a continuous climb back to post-pandemic highs.
Markets might sell off briefly before open if report is worse than expected, then recover. Iran deal news could overshadow it. Will follow up in weeks as markets feel pressure and uncertainty.
Producers won't absorb higher prices; they pass them to consumers. Consumer inflation is a lagging indicator but will eventually hurt Americans paying more for the same goods. Higher inflation reduces likelihood of Federal Reserve cutting interest rates, which markets and Trump want. Cutting rates is inflationary; can't justify when inflation is rising—equivalent to throwing gas on a fire, exacerbating it.
Live trading sessions break down concepts for beginners in digestible snippets, with access to daily live trading. Check second link in description for LPP team. End the year on a green note.
Keep Ricky Gutierrez in your library
Save the videos and channels worth coming back to, and find them again in one place.
