 Hey everyone, this is Mike Kramer of Mock Capital with your weekly check-in today is Tuesday, September 12th around 7 o'clock New York time US markets are closed So today we're gonna take a look at the CPI Expectations for tomorrow or for headline CPI to rise by 0.6 percent month over month versus last month's reading of 0.2 Exfood and energy expected to rise by 0.2 percent in line with last month CPI headlining over a year Expected to rise by 3.6 percent versus 3.2 last month and CPI ex food and energy year over year Expected to rise by 4.3 percent versus last month's 4.7 and so obviously this is going to be you know an important data point just because this Potentially marks the second month in a row where the inflation rate has re-accelerated to the upside and It's also worth noting the print comes in as expected on the zero point six percent for the month over month headline It would be the the highest print since June of 22 So certainly this would I mean this could potentially sort of put a little bit of a of a monkey wrench into the disinflationary camp and certainly cause some alarm Especially if we continue to see you know prices of oil and gasoline here in the US Continue higher Just very quickly when we take a look at the inflation swap market It gives us a pretty good idea in terms of what the market's thinking about at this point so When we look at the most recent pricing data from today What we'll see is that? Inflation swap so we look at the 11-1. There's a three-month lag on these so this represents the August month 3.649 percent basically 3.65 percent So the inflation swap market is sort of implying that there's a potential for a higher than expected Inflation number when we see it tomorrow and just to show you again that this is the number at three point 3.649 76 then of course for September we're looking at 3.44 and for October right now we're looking for three point one for November three point one and December looking for three point two six and This is important because basically since the last CPI report These numbers have now risen Rather dramatically over the last couple of weeks You know October went from basically two point nine percent And November went from two point nine percent So these are meaningful moves up and you know certainly We can expect to probably see We can probably expect to see these numbers move higher if we continue to see oil prices rise and And you know we have seen oil prices continue to rise And it looks like you know again oil at this moment in time looks to be on a path that potentially heads towards 93 another piece here that's also responsible for You know the rise in inflation Expectations here is that gasoline prices here in the US have been rising they rose by about six point six percent last month and at least as of More recently we can see that you know the price of gasoline after coming down some is starting to rise again and You know, this is another another important point To watch and to keep an eye on because certainly higher gasoline prices higher oil prices will contribute to higher inflation rates and again And again, we're looking and seeing you know break even inflation expectations Moving up as well to two point two four percent on the two-year which takes us back to levels not seen since April and Certainly the biggest outcome we're likely to see tomorrow is going to be a move on the front of the curve Certainly, you know numbers that come in lower than expected Or weaker than expected could certainly result in the two-year trading back down Perhaps towards the lower end of the range to around 485 to 490 While a surprise to the upside certainly could result in the two-year Breaking out and and moving into a new range potentially to as high as five and a quarter In the coming days and weeks the 10-year also has been moving up again right now. It's around 435 certainly Within the range obviously a lighter than expected number could result in the 10-year dropping back to 410 While a hotter than expected number could result in the 10-year breaking out to the upside and potentially sets up a move to around 470 over the longer term and you know, this is interesting because of how the market is sort of set up at this point and Depending upon how this goes tomorrow You could see a significant move in In the 10 to curve Just because we can clearly see that the curve has sort of stabilized and negative one point one zero region And you can see it starting to move up. It's consolidating some and so You know, the interesting thing here is is which way does this curve want to break? You know clearly if we were to get a big move down in the 10-year That could certainly result in this curve moving lower Likewise, if we were to get a big move up in the two-year that's bigger than the 10-year that could also result in the curve moving Down Likewise, if we were to get a big move down in the two-year or a big move up in the 10-year It could result in the yield curve really beginning to move sharply higher And that would affect different parts of the markets in different ways certainly a re-steepening of the yield curve would Probably be better for financial stocks Certainly higher oil prices would be beneficial to the energy sector And in the meantime the dollar is obviously also going to be heavily impacted By this news tomorrow as well. I mean the dollar right now has moved up towards This 104 and a half area certainly getting close to and getting very close to breaking above 105 60 Certainly hot data could result in a breakout and a move as we and a potential for the move up towards around 107 80 And more importantly when we start looking at currency pairs Again, the euro is not it just continues to flounder Not that far off from this significant level of Support around 106 and a half call it a breakdown a hotter number is certainly going to result in a move lower towards 105 If the number comes in hotter, I think you see the euro break Probably this support level at 106 and a half Likewise, you have, you know, the British pound which again continues to just hover right below this 125 region I think ultimately this results in a move down towards 123 on the pound if we get a stronger dollar tomorrow Additionally, this could feed into the Aussie dollar US dollar clearly Australia's currency has weakened Pretty significantly over the last several weeks Certainly a hotter than expected CPI sets a potential move to around 63 cents Likewise a move up, you know, you probably pretty strong resistance here around 65 cents So again, this is sort of where we are and if we just take a look at the European indices, you know again, we have a DAX that's really sort just Consolidating sideways at this point not entirely clear really where the DAX wants to go You can see that maybe there's a trend line forming here. This is really your big support level 156 50 Clearly if we get a move up in rates in the US if we get a move up in the dollar in the US I think ultimately this probably results in Markets in the US moving down and that probably feeding over to the European market It's the DAX is sitting, you know above support around 15,000 650 currently around 15,700 So but it doesn't take much of a move at this point to get the DAX, you know, moving lower and Really once it starts breaking this range, you can see that there's just not much underneath it And there's still this gap that's here that needs to be filled So at some point one would expect that if this trend line persists if this bearish diverge it if this bearish trend in the RSI persists that the DAX is going to break this support level and Begin to move down towards this 15,300 region Likewise on the footsie the footsie did move up a little bit today, but it was unable to hold the gains and ultimately you can see that it closed below 7,530 which continues to be a support resistance zone Again when we look at the the footsie it looks like there's a downtrend to it. It looks like More likely than not the footsie is going to be heading lower also towards 74 7470 with the potential to start heading back down towards 7,300 and You know just to finish off with the NASDAQ The NASDAQ continues to just hover around this trend line can't really make A meaningful move above this support level at around 15,400 It looks almost as if you know the NASDAQ is just Consolidating here at this point. There is certainly the potential for a head and shoulders pattern forming in the NASDAQ Again a break below this 15,175 area, you know sets us back up to start retesting these lower levels Likewise if the index is able to Gap higher tomorrow Take out this high it sets up for retracement and a refill of this gap at 15,400 Otherwise it's gonna I think gonna be a tough go for the NASDAQ in the coming days especially if the dollar Rates and oil keep going higher The Dow Jones just continues to flirt with this 34,600 level it seems to have a very strong affinity to holding that area and Again, we can see the trend line is really creeping up now on the Dow Again very similar sort of head and shoulders looking pattern here At this point, it's not going to take much of a break below 34,600 to potentially break this Trendline which ultimately sets up for a move lowered to around 34,200 or so and potentially Further from there and then finally on the SPX clearly I have marked a head and shoulders pattern Again the the SMP just was very has been very weak today had a big reversal day There's a gap down here to be filled at 4450, which is just about filled and Again, the SMP takes out this higher around forty four eighty five forty four ninety It can maybe move up and fill the gap at around forty five hundred or so but remember this is also an option expiration week Friday is quadruple witching and right now the big gamma level right now is at forty five hundred and the Put wall right now is at forty four hundred and so That sort of suggests that if you get above forty five hundred The index may be capped in this forty five hundred to forty five and a quarter range which may limit the move higher Likewise the put walls down at forty four hundred So certainly if you were to get a number that were to surprise the market to the upside and you were to get a drop They're certainly much further for the index to fall than it is to rise Anyway, good luck, and we'll talk to you soon. Bye