December CPI at 0.4%, 2.9% Rise Year-over-Year is Cause for Celebration on Wall Street; Futures Soar; Oil at 4-Month High

With the inauguration of President Trump less than a week away, there was no lack of gamesmanship and late-day tape-painting in financial markets Tuesday.

The repetitive bearish chart pattern of the major indices opening higher and stumbling lower throughout the session prevailed again on Tuesday. The Dow was the lone survivor, ending the day with gains beyond the gap-up open. Though the S&P posted an insignificant gain, it spent much of the session in negative territory. The NASDAQ was bruised, the 41-point gain overshadowed by new intra-day lows at 18,926.60. It was off more than 150 points just 45 minutes prior to the closing bell. Market riggers furiously bought shares and covered shorts in the final minutes anticipating another boost to the futures when December CPI figures are released Wendesday morning.

Those who bought up NASDAQ and Dow shares into Tuesday's close were on the right track. Just after 8:00 am ET, NASDAQ futures were up more than 80 points, but the Dow was flying higher, adding more than 200 (+0.48%).

Following the PPI figures on Tuesday which beat expectations (lower than forecast), there seemed ot be little in the way of anxiety over the CPI. Fuel prices were sure to cause a bump, but investors appeared confident that the numbers would not upset the status quo, in the belief that the Fed had done enough to quell the inflation beast and might possibly continue lowering rates later in the year. Hopes for a fourth straight rate cut have been dashed due to last week's December Non-farm Payroll data, which came in stronger than anticipated, with 256,000 new jobs minted in the final month of 2024.

Despite the knowledge that the BLS numbers are almost always wrong and subject to revisions, Wall Street gamblers rely upon them nonetheless in making trades, just another example of mal-investment and wild speculation based on faulty assumptions. Wall Street continues to trend overwhelmingly bullish, despite recent losses on all of the major indices. Since early December, stocks have been under pressure. The vaunted Santa Claus rally never materialized, yet the lower Manhattan crowd still buys into myths like Santa, the Tooth Fairy, Easter Bunny, unicorns, non-farm payrolls, and retail sales, which will be released Thursday morning.

Wednesday's enthusiasm prior to the CPI release had much to do with bank earnings reported by BlackRock, Bank of New York Mellon (BK), JPMorgan Chase (JPM), Citigroup (C), and Goldman Sachs (GS), all of which topped estimates for the fourth quarter. Banks are just raking in profits thanks to consumers who see nothing wrong with borrowing on credit cards with interest rates as high as 24-30% in some instances. The average credit card user is paying through the nose, around 20.15% according to the latest data from bankrate.

So, at 8:30 am ET, did the BLS throw a fly into the ointment?

CONSUMER PRICE INDEX - DECEMBER 2024

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in December, after rising 0.3 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.

The index for energy rose 2.6 percent in December, accounting for over forty percent of the monthly all items increase. The gasoline index increased 4.4 percent over the month. The index for food also increased in December, rising 0.3 percent as both the index for food at home and the index for food away from home increased 0.3 percent each.

The index for all items less food and energy rose 0.2 percent in December, after increasing 0.3 percent in each of the previous 4 months. Indexes that increased in December include shelter, airline fares, used cars and trucks, new vehicles, motor vehicle insurance, and medical care. The indexes for personal care, communication, and alcoholic beverages were among the few major indexes that decreased over the month.

The all items index rose 2.9 percent for the 12 months ending December, after rising 2.7 percent over the 12 months ending November. The all items less food and energy index rose 3.2 percent over the last 12 months. The energy index decreased 0.5 percent for the 12 months ending December. The food index increased 2.5 percent over the last year.

Nope. Futures shot straight up, because, even though inflation is still very much untamed, the monthly figure of +0.4% was spot on Wall Street's expected number even though it was the highest monthly figure since March. Never mind that the year-over-year number of 2.9% was the highest since July.

Right after the release, Dow futures ballooned to +640, NASDAQ was giddy, up 390, and S&P futures were up 92 points, all heading higher, defying all logic. Bankers are getting fat and people are going into debt buying food. Rate cuts? Who needs them?

Gold even got a boost, up over $2,700, though that's surely going to be short-lived. WTI crude shot up to $77.16 a four-month high. Thanks, Joe, Kamala, and all you lefty lovers of wind, solar, subsidies, electric cars, alien probes.

Well, at least booze is cheaper.

Ironically, President Joe Biden will deliver a farewell speech from the Oval Office tonight that's expected to focus on key achievements of his administration. Unmentioned will be the 4-8 million illegals that crossed into the U.S. 2021-2024, the highest inflation rate in more than 50 years, millions of $$$$ sent to Ukraine in a winless war, or the promotion of drag queen story hour, LGBTQ++ immorality, high crime rates, FEMA failures, devastating fires in Los Angeles, or record homelessness.

It's all good. We got DEI!

At the Close, Tuesday, January 14, 2025:
Dow: 42,518.28, +221.16 (+0.52%)
NASDAQ: 19,044.39, -43.71 (-0.23%)
S&P 500: 5,842.91, +6.69 (+0.11%)
NYSE Composite: 19,176.65, +129.33 (+0.68%)