Renaissance's Neil Dutta talks today's inflation data and why recession signals have not gone away
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How Traders Are Positioning Bitcoin for This Week's US Inflation Print
Bitcoin's surprise weekend rally hit a wall Monday with a move that undid more than half of the weekend's 5% rise, as Tuesday's upcoming CPI print continues to influence sentiment. Perpetual and spot data shows the recent dip is being driven primarily by profit-taking, with a sharp drop in open interest and cumulative volumes delta. A downtick in open interest signals traders are closing their positions. A drop in cumulative volume delta, meanwhile, indicates selling as traders take profit from long positions. According to on-chain options platform Derive's data, the $95,000 and $100,000 puts make up 10% of all Bitcoin options noted last week. 'Overall, puts on these strikes for this expiry make up almost 40% of all open interest for the end of August tenor,' Sean Dawson, the head of research at Derive, told Decrypt on Monday. Bitcoin ETFs Pull In $91.6M, Snapping Four-Day Outflow Streak Eyes are now glued to the upcoming U.S. Consumer Price Index report for July at 8:30 AM ET. A softer reading would support the case for the U.S. Federal Reserve to take a dovish stance on rate cuts, thereby easing the cost of borrowing for businesses to invest in the market. A hotter CPI print, however, could 'stall the rally,' according to Singapore trading firm QCP in an investor note on Monday. 'Right now, it's less about the CPI figure itself and more about how it reshapes expectations for Fed policy, and by extension, liquidity conditions for crypto, Daniel Liu, CEO of Republic Technologies, told Decrypt. Pressure from the Trump administration over Powell's tenure remains a going concern for investors, but with a rate cut all but certain among bond traders, the outlook is tepid. Still, experts who previously spoke to Decrypt believe that if the inflation rate sees a positive surprise by a significant margin, Powell could delay further cuts. In that regard, QCP wrote Monday that traders are 'hedging event risk' with put buying to protect their investments from a downward surprise in Bitcoin's price. 'With prices at critical resistance, some profit-taking is probable ahead of CPI,' QCP wrote. 'That said, the market's ability to absorb recent 'OG whale' sell-offs without losing momentum reinforces our structurally bullish outlook.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Less-Than-Expected Inflation in July: Growth ETFs to Gain?
The Consumer Price Index (CPI) increased 0.2% sequentially and 2.7% year over year, according to the Bureau of Labor Statistics (BLS). This compares with Dow Jones forecasts of 0.2% monthly and 2.8% annual growth, as quoted on CNBC. Core Inflation at Multi-Month Highs Excluding volatile food and energy prices, core CPI rose 0.3% in July and 3.1% annually, in line with monthly expectations but slightly above the 3% yearly forecast. The monthly core gain was the largest since January, while the annual pace was the highest since February. Federal Reserve officials typically view core inflation as a better indicator of long-term price trends. Market Reaction and Fed Rate Cut Speculation Following the CPI release, U.S. stock markets rallied, while Treasury yields were mixed. Investors boosted bets that the Federal Reserve could cut interest rates in September, with market pricing also indicating a possibility of another cut in rates in October. Fed officials are also concerned about labor market weakness, which could support the case for rate cuts. Analysts' Views Many economists believe tariff effects are likely to cause one-time price hikes rather than continued inflation, though the broad range of goods covered under Trump's tariffs has raised the chances of prolonged price pressures, as quoted on CNBC. Time for Growth Stocks? Growth stocks perform better in a low-rate environment. Low rates reduce the cost of borrowing, often needed to finance the expansion of companies. Lower rates reduce the attractiveness of fixed-income investments like bonds, leading investors to seek higher returns in the equity markets. Growth stocks, with their potential to offer high returns, become more appealing to investors in this environment, driving up their prices. ETFs to Buy Against this backdrop, below we highlight a few top-ranked growth-based exchange-traded funds (ETFs) that can be tapped if the Fed starts cutting rates soon. Vanguard Growth ETF VUG – Zacks Rank #1 (Strong Buy) Invesco S&P 500 Pure Growth ETF RPG – Zacks Rank #2 (Buy) Invesco Large Cap Growth ETF PWB – Zacks Rank #1 Vanguard S&P 500 Growth ETF VOOG – Zacks Rank #1 iShares S&P 500 Growth ETF IVW – Zacks Rank #1 Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P 500 Pure Growth ETF (RPG): ETF Research Reports Invesco Large Cap Growth ETF (PWB): ETF Research Reports Vanguard Growth ETF (VUG): ETF Research Reports iShares S&P 500 Growth ETF (IVW): ETF Research Reports Vanguard S&P 500 Growth ETF (VOOG): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
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Why this week's inflation report could be a hit to the economy no matter what the data says
The July inflation report could bring bad news for markets and the economy, no matter what the data shows. Investors are worried about too-hot inflation, which could take a rate cut off the table for September. On the other hand, a sharp drop in inflation could stoke concerns about an imminent slowdown. A key inflation report is looming, but it's possible that the July data paints a dismal picture of the economy whether it shows prices rose or fell. The July consumer price index report is expected to show that prices rose 0.2% last month and 2.8% year-over-year. The consensus expectations reflect a slightly hotter pace of inflation from the prior month, with consumer prices rising 2.7% year-over-year in June. Rising inflation is bad, but there's a chance that falling inflation is taken as a dire warning, as well, sources told Business Insider. Here's the logic: If inflation comes in too hot, that will undermine the possibility that the Fed could cut interest rates in September. The Fed resuming rate cuts is a major bullish catalyst that the market has been looking forward to for months. Hotter-than-expected inflation could also be construed as a sign that President Donald Trump's tariffs are finally starting to raise prices for consumers, which will stoke concerns about the health of the US economy. If inflation comes in too cold, that would compound some of the evidence that suggests the US economy is slowing, something that markets have been fretting over since the July nonfarm payrolls report showed weak job growth in the month, as well as sharp downward revisions for the prior two months. In either case, stocks could see a negative reaction following tomorrow's CPI print, Michael Brown, a senior research strategist at Pepperstone, told Business Insider. Brown said he believed the larger downside risk to equities was if inflation came in too hot. If inflation comes in colder-than-expected, any following sell-off could be short-lasting, he said, as investors will quickly pivot their attention to Fed rate cuts on the horizon. "If we get a hot number, all of a sudden there's a lot of doubts around that September meeting, and we're suddenly looking at probably some headwinds to equities as we price in a slowdown in the economy," he told BI. Investors began to price in a September Fed rate cut with more certainty after the job market proved to be much weaker than expected in July. Markets see an 86.5% chance the Fed could cut rates a quarter-point in September, according to the CME FedWatch tool, down slightly from 90.4% last week. Justin Weidner, an economist at Deutsche Bank, also sees a potential negative reaction in the market no matter what CPI does tomorrow. If inflation comes in higher than expected, that makes the calculus for a Fed rate cut in September "more tricky," he told BI. But if prices are cooler than expected, it be enough cause for concern about the economy to prompt the Fed to issue a jumbo-sized 50 basis-point rate cut in September. "On the flip side, if it's kind of weaker, weaker than expected, you have some pullback," Weidner added of the potential reaction in stocks. Natalie Gallagher, principal economist at Board, also saw the risks to tomorrow's CPI report cutting both ways. Gallagher said she expected inflation to be 2.9%, hotter than consensus estimates. That will likely "mark the beginning of a longer trend," she said in a note, pointing to concerns that inflation could begin to lift off as tariffs work their way through the economy. "The real surprise would be if these pressures don't show - that would suggest demand is softening to a point that businesses can't raise prices, which is a troubling signal for US growth," she said. The outlook for Fed rate cuts will largely depend on the trajectory of inflation in the coming months, Brown said. Markets will also be paying close attention to Fed Chair Powell's comments, particularly at Jackson Hole, where the central bank hosts its annual summer symposium. There's a chance investors could be getting too complacent about expecting Fed rate cuts, Brown said, pointing to high odds markets see for a September cut. "I'm sort of 50-50 as to whether they pull the trigger in September," Brown said. "You'd say maybe they should, but then this is a Fed that has been bitten already relatively recently by inflation that ran away from them, frankly unexpectedly, and I think that memory is still going to be quite fresh in the mind." Read the original article on Business Insider
