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Things to know this week



This week has been a relatively quiet week for investors in terms of economic releases and earnings reports. Federal Reserve officials will enter a “blackout period” ahead of the June policy-making meeting.

Still, new data on consumer price inflation will be of interest. As market participants look for signs that a post-pandemic recovery is driving prices higher amid supply chains and labor shortages. and booming demand

The Labor Department’s Consumer Price Index (CPI) on Thursday shows the latest price trends for the average American. Consensus economists are looking for the index to list up 0.4% month-on-month. after an increase of 0.8% in April And last year, the general CPI is expected to jump 4.7%, the highest since 2008.

The main CPI, or more closely watched measure Excluding fluctuating food and energy prices. It is expected to increase 0.4% month-on-month and 3.4% year-on-year. The latter will be the biggest jump in nearly three decades.

“Thursday̵

7;s CPI data will be reviewed after last month’s report impacted higher inflation,” David Donabedian, chief investment officer at CIBC Private Wealth, wrote in an email on Friday. “While the consensus will increase by 0.4% per month, the risk may be upside. due to bottlenecks and other supply constraints pushing up costs.”

An unexpected surge in April’s consumer price index last month contributed to a 2 percent sell-off in the S&P 500, with concerns about a sharp and steady spike in inflation. which specifically threatens the long-term growth potential of stocks. Market participants also monitor inflation data taking into account the implications of monetary policy. The Federal Reserve is looking for average inflation above 2% for some time before it reverses some of its crisis support.

WASHINGTON, DC - SEPTEMBER 24: Federal Reserve Board Chairman Jerome Powell testifies during a Senate Banking Committee hearing on Capitol Hill on September 24, 2020 in Washington, D.C. Vowell and US Treasury Secretary Steven Mnuchin  Testifying on the CARES Act and the economic impact of the coronavirus pandemic (Photo by Drew Angerer/Getty Images)

WASHINGTON, DC – SEPTEMBER 24: Federal Reserve Board Chairman Jerome Powell testifies during a Senate Banking Committee hearing on Capitol Hill on September 24, 2020 in Washington, D.C. Vowell and US Treasury Secretary Steven Mnuchin Testifying on the CARES Act and the economic impact of the coronavirus pandemic (Photo by Drew Angerer/Getty Images)

Most Fed officials and outside economists have suggested that the rise in inflation reflected in the data for this spring will be temporary. This largely reflects the outcome of the fundamental impact of last year’s low levels of the epidemic. However, consumers are also starting to expect higher inflation in the future. This change in psychology also plays a part in the Fed’s decisions. in one example The University of Michigan’s last May Consumer Confidence Index fell compared to April. This was partly due to concerns that higher inflation would weaken purchasing power.

Richard Curtin, chief economist at the University of Michigan Consumer Survey, said: “Changing the language of policy and raising rates slightly could reduce the psychological level of inflation. Consumers will not be surprised. because two-thirds expect interest rates to rise next year,” it said in a press release at the time.

Still, inflation and price stability are just one part of the Federal Reserve’s (Fed) dual mandate, and the other is achieving peak employment, thus Friday’s May employment report points out. that the economy is still far from the Fed’s goals by employers in the US It added salaries to just 559,000, compared with an expected 675,000, and kept the economy under 7.6 million jobs from pre-epidemic levels.

Bank of America US economist Michelle Meyer wrote in a note Friday: “The inflation narrative is secondary to the slender debate. but still need to consider due to rising inflationary pressures Therefore, the risk assessment tends to change slightly. “Concerns for Fed officials are less about strong core CPI printing and more about higher inflation expectations coupled with signs of a push up wages. This can allow temporary increases in inflation to persist.”

GameStop Earnings

Some basic news will be released this week for investors in GameStop (GME), one of the original titles to collect in the frenzied “meme stock” earlier this year.

GameStop is set to report financial first-quarter results on Wednesday following the market close. It offers updates on the company’s business as retail investor interest in the stock continues to grow.

Consensus analysts expect GameStop to post adjusted loss of 59 cents per share in the three months ending April. This loss is down from $1.61 per share reported in the same three months of last year. Revenue is expected to grow 14% to $1.17 billion.

Investors in Reddit forums r/wallstreetbets It initially pushed back on GameStop’s stock in January. By flocking to heavily shorted stocks to force sellers to close positions and push their share prices higher, GameStop shares have risen more than 1200% for the year to date through Friday’s close.

Ukraine - 021/05/2020: In this illustration, the GameStop logo appears on a mobile phone screen in front of the Reddit logo. (Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

Ukraine – 021/05/2020: In this illustration, the GameStop logo appears on a mobile phone screen in front of the Reddit logo. (Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

According to data from S3 Partners’ Ihor Dusaniwsky, short-term interest on GameStop totaled $2.99 ​​billion at Friday’s close, with 11.58 million shares being shorted, accounting for 20.3% of the float. down $294 million last week. he added

But in recent weeks, AMC Entertainment (AMC), another heavily shorted stock, has overshadowed GameStop in terms of online interest and stock appreciation. AMC’s shares are up more than 400%. in the past one month That compares to a 56 percent gain in GameStop shares, and AMC’s market capitalization overshadowed GameStop last week. The former’s market capitalization has risen above $30 billion.

Most of the movement in meme stocks has been driven by the popularity of social media. This contrasts with traditional stock valuations, such as earnings and expected future cash flows. However, some argue that there are fundamental arguments for investing in AMC and GameStop stocks, given that consumer-facing businesses are facing higher prices. Brick and mortar businesses benefit from turnover The same “open trade” that has elevated airlines, cruise lines, leisure stocks and retailers.

Still, most Wall Street analysts remain indifferent. Three analysts have advised GameStop’s share sale, and two have proposed suspension, according to Bloomberg data last week. Similarly, AMC received four sales ratings and five suspensions. Neither analysts rate any stock as a “buy,” with most analysts suggesting that the stock’s price exceeds its underlying business value. And last week, major banks, including Bank of America, Citigroup and Jefferies, tightened rules on how customers can participate in meme sales. In an effort to limit the extreme volatility risks these securities have seen recently, Bloomberg reported.

But because of the meme stock exploded for a long time this year. Many agree that social media-driven trading is a paradigm shift in the market.

“This is no longer our grandparents’ market. Or, for that matter, our parents’ stock market,” Zephyr market strategist Ryan Nauman told Yahoo Finance. “Now investment professionals need to start focusing more on looking at alternative datasets. by rethinking their investment thesis to take into account this growing group of retail investors.”

Others pointed out that increased arbitrage trading among retail investors may begin to dwindle as investors are drawn back into self-employed and home time for trading becomes harder to find.

“Involvement of retail investors in US stocks It follows the COVID timeline very closely. So one of my favorite charts is to look at the Apple Mobility Index for the US. You’re inverted, and you overlap what you like to measure retail. The involvement is … and there is an amazing relationship,” Binky Chadha, Deustche Bank’s chief global strategist, told Yahoo Finance on Thursday. “So I assure you that the engagement goes like this … and the thesis is when the market opens again. Retailer participation will be reduced.”

“We always thought it was sparkling in the tray. This is the opposite of a trend change,” he concluded.

economic calendar

  • Monday: Consumer credit (estimated $20 billion, estimated $25.841 million in March)

  • Tuesday: NFIB Small Business Optimism May (100.5, 99.8 expected in April); trade balance in April (expected at $69.0 billion or $74.4 billion in March) JOLTS April vacancies (8.123 million in March)

  • Wednesday: MBA Mortgage Application Week Ended June 4 (-4.0% during the previous week); Wholesale inventories month by month Late April (expect 0.8%, print before 0.8%)

  • Thursday: consumer price index month-to-month May (expected 0.4%, 0.8% in April); consumer price index Excluding food and energy Month-to-month May (expected 0.4%, 0.9% in April) Consumer Price Index Year-on-year May (4.7% expected, 4.2% in April); The consumer price index excludes food and energy. Year-on-year in May (3.4% forecast, 3.0% in April) First unemployment claims The week ended June 5 (372,000 expected, 385,000 in the previous week). Claims continued. the week ended May 29 (3.771 million during the previous week); Household Net Worth Changes Q1 ($6.93 trillion in Q4) Monthly Budget Statement May ($-225.6 billion in April)

  • Friday: University of Michigan Confidence Preliminary in June (expected 84.0, 82.9 in May)

income calendar

  • Monday: Coupa Software (COUP), StitchFix (SFIX) After Market Close

  • Tuesday: without

  • Wednesday: RH (RH), GameStop (GME) after market close

  • Thursday: FuelCell Energy (FCEL) before the market opens; Chewy (CHWY), Dave & Buster’s Entertainment (PLAY) after the market closed.

  • Friday: without

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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