Here's Everything You Need To Know Today

A spicier Consumer Price Index (CPI) than expected caused one of the worst sell sprees the market has seen since the banking system edged a collapse last year.

In response—this market has gone fully manic with a lot of volatile overreactions to earnings data.

In particular—Lyft had a typo in their 2024 guidance yesterday that effectively predicted profit growth 10x higher than reality. Their stock experienced one of the wildest aftermarket swings in history and the memes were pretty great too.

But the real news here lines up with what we’ve been seeing for the past few days. The market ran way too hot after AI mania reignited this bull run in mid-January. Now we’re just watching valuations cool to a more realistic level while bond yields briefly assert their dominance over equities. Inflation is still trending in the right direction—The Street just drank a little too much of the Kool Aide here and priced in far more and far steeper rate cuts than our economy ever could have afforded.

The real danger here will come next month if we’re staring down the barrel of a CPI print that’s even higher than this one. If inflation finally hits 2.9% in February—the market will jump right back to euphoria. Anything north of 3.2% will intensify the bear action we’re currently experiencing.

Since the most infuriating possible outcome is also the likeliest—gear up for inflation to stall out at exactly 3.0% when February data prints next month.

For now—there’s still plenty of wild action driving the markets today. With major indexes surging this morning in response to getting oversold yesterday, there’s still enough volatility left for everyone.