American consumers have made it so clear for the first time that rising prices are not very welcome. Today's retail sales, industrial production and consumer sentiment data showed that inflation can bring negative effects to the economy. US retail sales slid 1.9% m/m in November. Of course, the data for November was not bad, but we have the biggest drop in 10 months. Industrial production fell just 0.1% m/m for December, although growth was expected. In addition, consumer sentiment data from the University of Michigan showed a fall, precisely because of inflationary concerns. Expectations of inflation dynamics from an annual perspective showed the level of 4.9%! In theory, we could still have very negative real interest rates next year.
Volatility in the markets may not be high, but the whole week for Wall Street could end negatively. The indices mostly suffered losses, although at the same time they rose from their daily lows. The Nasdaq is giving a signal of a rebound, just as it was at the beginning of this week.
Today we had the start of the earnings season on Wall Street. Banks delivered solid results, but they nonetheless brought market disappointment, particularly in relation to earnings. The retail divisions in the main investment banks were disappointing. On the other hand, the bank that deals primarily with retail, Wells Fargo, reported the best surprise compared to JP Morgan or Citi.
The US dollar is trying to regain its position, after losing ground following the publication of inflation on Wednesday, which was the highest in 40 years. Fed bankers continue to hint at big pending monetary policy changes, but despite this, the dollar behaved mixed this week. Ultimately, it is clear that Americans have a problem with rising prices, which could further force the Fed to act. Gold lost value in response to today's stronger dollar. Oil, on the other hand, gained and was at its highest since the first half of November.
The cryptocurrency DOGECOIN, popular among speculators, jumped nearly 15% today (at one point over 20%) after Elon Musk's Tweet that Tesla (TSLA.US) will allow cryptocurrency payments for some of the electric carmaker's merchandise. This is therefore a confirmation of what Musk had already announced in December 2021. The major cryptocurrency, on the other hand, is trying to recover further, but after yesterday's strong pullback it is still below $43,000.