Good morning, team. I'm senior reporter Phil Rosen.
This Friday at 11:30 a.m. ET, I'll be hosting a live Q&A session on Reddit about the ongoing FTX saga — I'll tweet out the link to join that morning.
As for today, the December Consumer Price Index data is due at 8:30 a.m. ET. Whether it clocks in above or below estimates, analysts say traders should brace for whiplash.
Economists are expecting the report to show the rate of price rises dropped by 0.1% last month. Sans food and energy, the rate is expected to tick higher, to 0.3%
Should those forecasts hold true, it'll be a sign that the policymaker's inflation battle is chugging along in the right direction.
Fair warning: There's precedent for a surprise reading. Inflation cooled last July, but optimism was short-lived by subsequent hotter-than-expected readings after that.
Remember, the Fed's been aiming to cool down the economy by lifting its benchmark interest rate, which influences borrowing costs for everything from credit cards to mortgage payments.
As the flow of cheap debt to both consumers and companies is cut off, the thinking goes, prices will fall because Americans will be spending less on discretionary goods and other purchases, while corporations cut costs via layoffs.
Sound good?
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1. Whatever happens today, expect a big market reaction. Economists expect inflation to clock in at 6.5% year-over-year for December. According to JPMorgan, there's a 65% chance of a headline reading between 6.4% and 6.6%, which will be a bullish catalyst for the S&P 500 and could spur a 2% rally.
The next most likely scenario, the firm's strategists said, is a headline print below 6.4%. That would be an even stronger signal to investors that prices are cooling and could spark as much as a 3.5% bounce in the S&P 500.
Robert Conzo, chief executive and managing director of The Wealth Alliance, told me he's anticipating a 6.5% headline and a Core CPI of 5.8%, year-over-year.
"Like we saw following November's CPI report, markets rallied and then pulled back," Conzo explained. "This short-term effect may play out again. However, identifying longer term trends is nearly impossible as the Fed's next moves are data dependent — that is, they are relying on new rollouts of economic data and adjusting plans as needed."
But even if investors cheer today's print, he said, uncertainties like a recession, China's reopening, and unemployment could stifle any lasting rebound.
Nonetheless, markets could see more choppiness down the line depending on policy adjustments.
"The Fed is closer to the end of its monetary tightening cycle than it is to the beginning," added Conzo, who's firm has $1.5 billion assets under management. "Once the tightening cycle is finished, the Fed's next decision is to determine how long to hold the current interest rate levels."
Meanwhile, earlier this week Bank of America economists maintained that whether inflation has peaked is less pressing a variable than the trajectory of the still-tight jobs sector. The central bank remains "worried about the overheating labor market," and the CPI report is "unlikely to quell those concerns."
If the inflation data shows further cooling today, how does that impact your economic outlook for the year? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.
2. US stock futures edge lower early Thursday. Along with CPI data, investors are also bracing for the release of the number of US jobless claims. Here are the latest market moves.
3. On the docket: Fast Retailing, HCL Technologies, and Shaw Communications, all reporting.
4. Goldman Sachs recommends this batch of stocks right now. Analysts said earnings revisions are set to fall in 2023 as spending slows, but these names can beat out estimates by at least 10%. Here is the list of 27 companies.
5. FTX creditor claims are being offered at 13 cents on the dollar. Investors are willing to take dramatic losses to recoup some funds as the company faces an uncertain outlook and potentially lengthy legal process. One exchange has listed over $91 million worth of FTX customer claims.
6. Copper, the third most widely used metal in the world, has climbed for five consecutive sessions. The commodity is a key economic bellwether — and it just topped $9,000 to kick off a new bull market.
7. The Kremlin is losing $170 million a day thanks to the EU ban on Russian oil and the $60 per barrel price cap. That's according to a Finland-based think tank, which estimated that Russia's crude oil exports dropped 12% in December. By next month, the group estimated that Moscow's losses could mount to $300 million a day.
8. This broker said the next six months bring massive opportunities for real estate investors. Even as similarities start to emerge with the 2008 financial crash, there are still deals to find. Here's his technique for nailing down properties at up to 30% discounts.
9. Hedge fund Coast Capital returned 46% in 2022, beating giants like Citadel and Point72. Its founder shared their strategy for finding "really neglected opportunities" — and explained two trades he's bullish on for 2023.
10. Coinbase stock could drop another 18%. The company announced cost-cutting measures on Tuesday, and plans to cut 20% of its staff this week. But in Bank of America's view, the outlook for crypto this year remains "murky at best" and the publicly-traded crypto exchange could see more pain to come.
Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.com
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.