Markets started off the week mixed after the long, Labor Day weekend. The tech-heavy NASDAQ led the major indices with a 0.21% rise on Tuesday.
This week is pretty light on new economic data with new inflation numbers in the form of the Producer Price Index (PPI) for August scheduled for Friday. Otherwise, the only remaining significant data set to release are the weekly unemployment claims data and and update on the number of job openings at the end of July from the JOLTS report.
Quarterly performance reports are also very light this week with Kroger (KR) being the headliner of the list. Lastly, Bitcoin is having a rough day dropping roughly $6,000 following El Salvador’s adoption of the currency and a brief Coinbase (COIN) outage.
Inflation DataWith a light week of economic and earnings data, traders will be paying extra close attention to PPI numbers on Friday for signs of inflation trends. Currently, core PPI is expected to rise 0.6% in August following a 1.0% increase in July. The results should give a good indication of what to expect from next week’s Consumer Price Index (CPI).
Recent monthly increases have remained far above average as the economy recovers from the pandemic and loose monetary policies remaining largely unchanged from their initial post-crisis roll out.
Many investors have grown concerned over the effects these aggressive policies will have on inflation but the Fed recently said that it expects to taper asset purchases by the end of the year. Stimulus efforts are certainly having a large impact on rising prices but short term pressures from supply and shipping constraints are also playing a big role.
Global shortages have resulted in price spikes in car prices, commodities, chlorine, and many other items as demand grew far faster than most expected. These shortages should be resolved near the end of the year, which combined with tighter monetary policy, should lead to an easing in the rate of inflation.
EarningsA light earnings week is led by the United States’ largest supermarket by revenue, Kroger (KR). Kroger is currently expected to report quarterly revenue of $30.7 billion and earnings per share (EPS) of $0.64. EPS estimates are down from the year-ago quarter's results of $0.73 while revenue estimates are slightly higher than the previous year’s $30.5 billion.
Crypto UpdateWhat should have been a great start to the week for crypto turned sour as Bitcoin briefly fell to $43,000 a coin during a Coinbase outage, so far, it has only managed to get back to around $46,000. This drop from roughly $52,000 earlier in the day comes after El Salvador adopted the coin as legal tender. El Salvador has now purchased 400 Bitcoins and offered $30 in Bitcoin to all its citizens that sign up with the country’s official crypto wallet, Chivo.
Many thought the adoption would push Bitcoin prices higher but the news has been known for a while and the crash of Coinbase may have been the main culprit for the drob in price Tuesday.
Economic Events this WeekWednesday - 10:00 a.m. - JOLTS
Thursday - 8:30 a.m. - Initial & Continuing Claims - 11:00 a.m. - EIA Crude Oil Inventories
Friday - 8:30 a.m. - PPI - 8:30 a.m. - Core PPI