Fed’s Favorite Inflation Gauge Disappoints Both Stock Market Bulls And Bears

To gain an edge, this is what you need to know today.

PCE

Please click here for a chart of SPDR S&P 500 ETF Trust (ARCA:SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

The chart shows that the stock market is consolidating right below the mini resistance zone.
The RSI pattern on the chart shows that the stock market can go either way.
The stock market is up this morning due to positive earnings from Salesforce Inc (NYSE: CRM). Salesforce is in the Global X Dow 30 Covered Call ETF (ARCA: DJIA). Buying is also coming in due to strong earnings from Snowflake Inc (NYSE: SNOW) and Synopsys Inc (NASDAQ: SNPS). All three companies are benefiting from AI. 
The just released economic data shows that consumer spending is finally beginning to taper from excessive levels relative to incomes. Here are the details:

Personal spending came at 0.2% vs. 0.2% consensus.
Personal income came at 0.2% vs. 0.2% consensus.

The latest data on the Fed’s favorite inflation gauge PCE has disappointed both bulls and bears. Bears were pinning their hopes that PCE would be worse than expected and thereby cause a big drop in the stock market. Bulls were pinning their hopes on PCE triggering another leg of the stock market rally. PCE came inline with expectations, a scenario that neither bulls nor bears had expected. Here are the details:

Headline PCE came at 0.0% vs. 0.1% consensus.
Core PCE came at 0.2% vs. 0.2% consensus.

Weekly Initial Claims came at 218K vs. 215K consensus. This indicates that the jobs picture is staying very strong.
As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.

Europe

Eurozone inflation has fallen more than expected. Flash CPI came at 2.4% year-over-year vs. 2.7% consensus. Flash Core CPI came at 3.6% year-over-year vs. 3.9% consensus.

China

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