July's inflation reading is a critical moment for markets and the economy
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Max Adams
Aug 10, 2022, 19:34 IST
The drop in commodities has raised hopes that inflation will start to cool.SolStock/Getty Images
Good morning and happy CPI day, markets enthusiasts. Max Adams filling in for Phil Rosen today. July's inflation reading just hit and it was mercifully lighter than June's figure, though still uncomfortably elevated.
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Inflation is still top of mind for investors and while the latest release shows prices may be cooling, the economy and the market are not out of the woods yet.
Let's get right into it.
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1. Today's inflation reading was a critical moment for markets and the economy. Inflation in July clocked in at 8.5% year-over-year. That's lower than economists' expectations for 8.7% and lower than June's reading of 9.1%
Falling gas prices contributed most to the slowdown, but core CPI — which strips out food and energy prices — still matched June's figures at 5.9%.
Meanwhile, in an op-ed, Nouriel Roubini this week wrote that the era of stagflation is upon us and central banks have set a trap for themselves.
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"During the Great Stagflation, both components of any traditional asset portfolio — long-term bonds and US and global equities — will suffer, potentially incurring massive losses," Roubini said.
3. On the docket: Nio Inc., The Walt Disney Company, Bumble Inc., all reporting.
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4. Bank of America has a list of consumer discretionary stocks set to outperform before possible rate cuts by the Fed. The US central bank may not yet be done tightening, but that day will arrive in 2023. Here are seven stocks to own before that date.
5. Elon Musk sold almost $6.9 billion worth of Tesla shares ahead of a court fight with Twitter. Musk said he could need the funds if he loses the legal battle and is forced to buy the social media platform for $44 billion. Musk, who is now left with a 15% stake in the electric car maker, explained his action in a late tweet Tuesday.
6. Investors should pare stocks and buy commodities. JPMorgan's Marco Kolanovic wrote Tuesday that recent gains in the stock market and toned down recession expectations mean commodities are attractively valued — but the quant guru is still bullish on stocks long-term.
This post has been updated to include the latest inflation numbers.
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Curated by Max Adams in New York. (Feedback or tips? madams@insider.com)
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