Markets are at an inflection point. This path collides with a busy economic calendar. U.S. benchmarks gave back the bulk of their post-election relief rally but the S&P 500 (SPX) did finish the week above the 200-DMA since the October fallout, writes Bill Baruch Sunday.

The U.S. dollar (USD) gained broadly against currencies around the world; the Dollar Index (DXY) finished 1.3% from its election night low and the Dollar strengthened by 0.95% on the week against the Chinese yuan (CNY).

This ties together two predominant themes through Friday; a blowout PPI number and a bloodbath in emerging markets. Friday’s Producer Price Index came in very hot and the international trade conflict is officially poking its head into the inflation data.

The headline MoM read rose 0.6% and the YoY was +2.9%. However, the core number that excludes food, energy and trade was at a modest +0.2% and it is important to note there have been bursts of strength in PPI due to trade all year. This added a further tailwind to the dollar which has pressured commodities and emerging markets all year.

From Wednesday’s close, the MSCI Emerging Markets Index lost 4.5%. Copper shed 5% on the week and Friday marked the tenth losing session in a row for Crude Oil.

The collision course boasts a deluge of Fed speak, the more closely watched CPI inflation read, retail data and economic indicators from around the world. Fed Chair Powell headlines the list with speeches on Wednesday and Thursday.

Fed Governor Quarles gives his two-day semi-annual Congressional testimony on banking also Wednesday and Thursday.

Newly appointed San Francisco Fed President Daly who votes in December but not next year speaks Monday at 1:30 pm CT. On Tuesday, Fed Governor Brainard speaks and Daly takes the podium again.

The data heats up Tuesday with employment from the U.K and the closely watched ZEW Sentiment from Germany and the Eurozone. Also, on the heels of a Joint Ministerial Monitoring Committee meeting over the weekend where Saudi Arabia said it will reduce exports by 500,000 bpd in December, OPEC releases their Monthly Report.

In the evening, we look to GDP data from Japan and our favorite trio of Industrial Production, Fixed-Asset Investment and Retail Sales from China.

On Wednesday, the expectations for Core CPI are nothing out of the ordinary; +0.2% MoM and +2.2% YoY. If this number is anywhere in the ballpark of what PPI was, the Dollar will rip higher along with Treasury yields (prices lower) and we are sure to hear Fed Char Powell address such in the afternoon.

Retail Sales is due on Thursday, but retail earnings will trickle out all week. Home Depot (HD) headlines Tuesday, Walmart (WMT) Wednesday and Macy’s (M) Thursday. Earnings are the lifeblood of stocks but a hawkish Federal Reserve and a murky picture around much of the world will certainly weigh on sentiment.

What does this week’s calendar confirm or deny?

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View a short videoBill Baruch: Trading Futures. Gold, USD, yuan.
Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.