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Open Interest Changes

PREMIUM

Prepper

Responses are still coming in from the latest "Survey Monday" on Wall Street Breakfast, but there appear to be two big takeaways from the poll, with nearly 2,000 participants recorded so far. The first insight is that many subscribers are dealing with inflation just fine, whether it be through budget adjustments or income and asset gains. That sentiment has been reflected in the market's impressive advance (S&P 500 +20% over the past three months), with investors betting on the end of the Fed's rate hiking cycle and helping assure the central bank that it can start cutting rates later this year.

Bigger picture: The other takeaway from the WSB survey, and perhaps somewhat more of a surprise, is that nearly half of all respondents don't trust the figures published in the consumer price index. The headline number, set to be released today at 8:30 AM ET, is forecast to drop below 3% for the first time in three years, helping to confirm disinflation trends in the U.S. It might be a sign of the times, when trust in the government is hovering near all-time lows, but can something deeper be discerned and applied to investing strategies?

The easy answer is that consumers are likely to compare price tags to ones from their recent memory, and it wasn't long ago that things appeared to be way more manageable. Examples: Prior to the pandemic in 2020, the median price of a single-family home in the U.S. sold for $294K, according to Redfin, versus $404K in the current market. And that's only across a span of a few years. A box of cereal that also used to cost several dollars has nearly doubled, while the same thing has happened with ground meat, orange juice, and other common items found in grocery aisles.

A deeper approach centers on how and what inflation data is being measured. WSB subscribers were quick to flag adjustments and revisions, as well as categories where people are feeling inflation the most, such as food and housing. The consumer price index also has controversy surrounding its calculation method, while economists have questioned its use as an inflation indicator and even the Fed doesn't give it as much attention when determining policy.

CPE vs. CPI: The core personal consumption expenditures price index is the central bank's preferred inflation gauge as it has a broader scope than the traditional consumer price index. For example, CPI only covers out-of-pocket household expenditures instead of other expenses that are incurred in the broader cost ecosystem, and mostly factors in changes to consumer behavior, which can underestimate price increases (making it more of a cost of living index instead of one focused purely on goods). On the other hand, PCE reflects how consumers substitute their purchases and applies certain calculations to smooth out price swings, making it a better tool for the Fed to size up the macroeconomic environment. (2 comments)

No. 4 spot

Nvidia (NVDA) briefly overtook Amazon's (AMZN) market capitalization on Monday to become the fourth most valuable U.S. stock. The chipmaker's valuation now stands at $1.78T, with shares ending 0.2% higher, while Amazon closed 1.3% lower with a market cap of $1.81T. Nvidia has benefited from AI chip demand, with its stock surging about 230% in the past year alone, while Amazon has gained about 77% over the same period. Earlier in the day, BofA strategist Michael Hartnett pointed out that Nvidia's valuation had grown by $600B in the past two months, or the equivalent of "'1 Tesla (TSLA)' (by market cap, not one car)." Nvidia is also rated Hold by Seeking Alpha's Quant Ratings, which consistently beat the market. (23 comments)

Gig economy

Uber (UBER), Lyft (LYFT) and DoorDash (DASH) drivers are planning to go on strike across 20 major U.S. and Canadian cities on Valentine's Day to protest declining pay, driver safety, and deactivations. Advocacy group Rideshare Drivers United is also planning a gathering outside Uber’s Greenlight Hub to bring attention to declining fares that have made ride-hailing less profitable for drivers. The industry has recently come under regulatory scrutiny over allegations of low compensation, lack of job security, and opacity in how wages are calculated. The planned strike also comes only a week after Lyft offered more pay guarantees to drivers, while Uber announced improvements to its driver app to enhance safety and offer more incentives. (8 comments)

Breaking $50K

Bitcoin (BTC-USD) has topped the $50K level for the first time since late 2021 as spot BTC ETFs continue to attract investment after their historic approval. Spot BTC ETFs saw net inflows of $1.1B last week, bringing inflows since their Jan. 11 launch to $2.8B. Wall Street firms are now increasingly filing for spot ethereum (ETH-USD) ETFs, the latest being Franklin Templeton. "Bitcoin has upside potential due to the upcoming halving cycle and strong fundamentals," noted SA Investing Group Leader James Foord. While the top cryptocurrency has gained about 18% this year, it remains well below its $69,000 peak reached in November 2021. (2 comments)

Today's Markets

In Asia, Japan +2.9%. Hong Kong closed. China closed. India +0.7%.
In Europe, at midday, London -0.3%. Paris -0.5%. Frankfurt -0.6%.
Futures at 7:00, Dow -0.2%. S&P -0.4%. Nasdaq -0.7%. Crude +0.7% to $77.43. Gold +0.4% to $2,041.20. Bitcoin +4.4% to $49,992.
Ten-year Treasury Yield unchanged at 4.17%.

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:30 Consumer Price Index

Companies reporting earnings today »

What else is happening...

WSB survey results: Not a lot of trust in inflation numbers.

JetBlue (JBLU) takes off after Carl Icahn discloses stake.

Citigroup (C) gets new regulatory notices on counterparty risk.

Arm (ARM) surges as investors continue piling in after results.

More M&A: Gilead (GILD) to buy CymaBay (CBAYfor $4.3B.

Judge dismisses PhRMA challenge to Medicare price negotiations.

SunPower (SPWR) surges again after Enphase's (ENPHoutlook.

Martin Marietta (MLM) expands building material supply in $2B deal.

With Super Bowl over, here are the best-performing casino stocks.

More on today's WSB topics


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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