Inflation Roars Upward

Thursday morning, the U.S. released the Consumer Price Index. It indicated an 8.2% rise for the past 12 months. The core increase, which excludes food and energy prices, rose 6.6% from last September, the largest increase since August 1982. Shelter and groceries were among the hottest components, with a key measure of housing prices hitting a 40-year high. Rental rates and higher interest rates on mortgages contributed to that increase. Candy—which will see Halloween demand for the next couple of weeks—was one of the leading items on the up list, whereas gasoline was on the weaker side. Lumber futures made a two-week high that is in line with the housing sector. The rise in inflation will probably keep our Federal Reserve on track for raising interest rates.

Stocks Staged Major Reversal

Stock index futures were higher on Wednesday night’s trade due to better than expected corporate earnings reports,but they tumbled early Thursday to the lowest level since October 2020. Within an hour, however, stock indexes made a gigantic reversal to the upside, leaving speculators and investors scratching their heads. Analysts had no explanation for the 1600 points range in the S&P but noted the one-day upward reversal could suggest more upside to come. Friday afternoon brought a wave of selling, however.

Cotton Misses Out on Rally

With the apparel component of the CPI falling behind the sharp rise in groceries and housing, cotton traders had little optimism for demand for the white fiber. While drought has plagued production in Texas, it is fear of recession that seems to dominate that market. Most grains, beans, and soy products were down as well.

Weekly Futures Winners and Losers:

Compared to last week’s (October 7) closing, this Friday’s midday prices include March sugar, the star performer, which was up 20 cents per pound. December hogs, November lumber, and December oats were up. Losers included cotton, treasury bond futures, crude oil, gasoline, wheat, corn, beans, S&P, Dow jones, and Nasdaq futures.

Words of Wisdom

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” — Warren Buffett

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.