Morning Reads

Morning Reads

Open Interest Changes



The latest indicator on inflation will be published today at 8:30 AM as the Labor Department releases its report on the Consumer Price Index for October. Investors are hoping that there will be signs that inflation continues to dissipate, but if those signs aren't there or there are surprises, it could risk the chance of another interest rate hike in December. Another item to be aware of is new changes to the calculation methodology of health insurance costs. That could result in the category becoming a net contributor to inflation, and will be noted by market watchers and the Federal Reserve.

By the numbers: October's CPI is expected to rise only 0.1% M/M, compared with a 0.4% increase in September. On a Y/Y basis, it's expected to rise by 3.3%, down from 3.7% in the previous month. Core CPI, which excludes food and energy, is anticipated to increase by 0.3% M/M, the same rate of increase as in September. Y/Y, economists, on average, project a 4.1% rise in October, also unchanged from the September rate of inflation.

A downside surprise on CPI "could spark another drop in yields and boost risk asset prices in a way that reignites the year-end rally," according to SA Investing Group Leader Lawrence Fuller. Others, like Mott Capital Management, see a bigger chance that it will surprise to the upside, especially due to the rise in health insurance. "The data and forecasts seem to indicate that healthcare costs will be rising starting with this October report, and if that is the case, the case for inflation sticking around for some time only seems to strengthen."

Half full or half empty? There are many ways in which progress has been seen with regard to price pressures, while the economy and labor market remain on solid footing. Headline inflation is down significantly from the 7% seen at the beginning of the year, and it will take additional time to go from the current 3% clip to the Fed's desired 2% target. Others see things as more entrenched, especially when looking at core inflation. The elimination of the pandemic and supply chain disruptions were the low-hanging fruit, and underlying price pressures are proving stickier by showing some recent signs of stalling out.

Shutdown risk

U.S. House Speaker Mike Johnson’s two-part stopgap federal funding plan is set to face a vote in the House, with the plan widely expected to get blocked and raising the risks of a partial government shutdown. Some hardline House Republicans are already against the plan as it doesn't include spending cuts, while the White House also denounced the proposal, with President Biden likely to veto the measure. The burgeoning deficit and political polarization in the U.S. are the main reasons why Moody's recently cut its credit-rating outlook. SA analyst Damir Tokic expects Moody's to eventually downgrade U.S. debt too, as fiscal stability remains threatened by current political dynamics. (26 comments)

New sportsbook

Competing with FanDuel (OTCPK:PDYPY) and DraftKings (DKNG) for online sports betting market share, ESPN BET will go live today in 17 U.S. states ahead of the busy slate of college and pro games during Thanksgiving week. Significant integration is expected between ESPN BET, the rebranded version of Penn Entertainment's (PENN) sportsbook, and ESPN's media content. The launch comes at a time when Disney (DIS) is looking to sell a minority stake in ESPN, with companies like Amazon (AMZN) and Apple (AAPL) speculated as potential buyers. SA analyst Juxtaposed Ideas is now cautiously bullish on Penn, given the potential reversal in its prospects due to ESPN BET. (33 comments)

Turkey Day tickets

Thanksgiving air travel is expected to reach record levels this year as demand remains strong despite high inflation weighing on consumer confidence. Airlines for America - a trade group representing major passenger airlines like United (UAL) and Delta (DAL) - said U.S. carriers expect an all-time high of nearly 30M travelers during Nov. 17-27. It also anticipated Nov. 26 to be the busiest day of the holiday period, a forecast echoed by the TSA. Roads will be busy as well, with AAA expecting 55.4M travelers to head 50 miles or more from home over the Thanksgiving holiday period, up 2.3% Y/Y. (1 comment)

Today's Markets

In Asia, Japan +0.3%. Hong Kong -0.2%. China +0.3%. India closed.
In Europe, at midday, London -0.4%. Paris +0.1%. Frankfurt +0.4%.
Futures at 6:30, Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude +0.2% to $78.42. Gold flat at $1,950.50. Bitcoin -1.6% to $36,291.
Ten-year Treasury Yield unchanged at 4.62%.

Today's Economic Calendar

5:30 Fed’s Jefferson's Speech
6:00 NFIB Small Business Optimism Index
8:30 Consumer Price Index
10:00 Fed’s Barr: "Oversight of Financial Regulators"
11:00 Fed's Mester: "Conversations on Central Banking: The Unequal Burden of Inflation"
12:45 PM Fed's Goolsbee: U.S. Economy and Monetary Policy

Companies reporting earnings today »

What else is happening...

WSB survey results: U.S. should derisk and diversify in China relationship.

OPEC ups global oil demand forecast, says weak sentiment exaggerated.

Exxon (XOM) to drill first Arkansas lithium well, aims to be top EV supplier.

Fisker (FSR) slides as revenue misses expectations, 10-Q filing delayed.

Teck Resources (TECK) nears deal to sell coal business to Glencore.

McDonald's (MCD) leveraging Grimace popularity with Crocs shoe collab.

Anthem, Cigna's (CI) Express Scripts settle last claim in $14.8B lawsuit.

Alphabet (GOOGGOOGL) ditches Robinhood (HOOD) stake, filing shows.

Mega plane order and possible China thaw send Boeing's (BAstock flying.

Marc Lore's Wonder Group officially swallows up Blue Apron (APRN).

Bank of America lists top 10 most and least shorted stocks by hedge funds.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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