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US Inflation, Gamestop Earnings, and ECB Decision In Focus

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US headline consumer prices jumped even more than expected in May (5.0% vs street 4.7% and previous 4.2%). Excluding the usually more volatile food and energy components (core inflation), prices popped more than expected (3.8% vs street 3.4% and previous 3.0%) indicating rising and widespread inflation pressures. For headline inflation, this was this highest level since the summer of 2008, while for core inflation this was the highest level since at least 2007.

On this news, the US 10-year treasury note yield has peeked back up above 1.50%. US index futures had been flat ahead of the announcement, teetered for the first five minutes afterward, and have since started to climb with Dow Futures now up over 100 points, a sign of investor confidence and resilience. This market action suggests that investors were expecting high inflation and do not appear to think this is enough of a spike to change the Fed’s mind on stimulus at next week’s FOMC meeting, particularly since the European Central Bank maintained its asset purchase program this morning even with inflation rising across the pond as well.  

Gamestop is down 7.1% in premarket trading but had been down even more overnight despite announcing stronger revenues ($1.28B vs street $1.16B and year ago $1.02B) and a smaller loss per share (-$0.45 vs street $0.85). The company also appointed two former executives from Amazon to be its new CEO and CFO.  It’s unclear if this is investors taking profits against the news or if traders have been rattled by the company’s intent to issue more shares or the SEC asking the company for documents as it looks into GME share trading.

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Colin Cieszynski, Chief Market Strategist
Market Commentary:

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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