Stagflation Fears Threaten Bullish Post-CPI Tendencies

👋Hello and Happy Monday! 🌅 

Here’s what’s on deck this week:

📈 Inflation data takes spotlight…

🗣 Fed officials hit the mic…

💻 Key earnings reports from Cisco, CoreWeave, Applied Materials, Deere, JD.com, and more…

🏦History suggests bulls may have CPI tailwind support, but will stagflation concerns ruin the party?

Let’s dive in.💦💦

🗓️ Fed’s Dovish Hints Meet Inflation Test

Last week’s weak jobs report had Fed officials singing a softer tune, hinting that rate cuts might be closer than anyone thought. Now, all eyes turn to this week’s inflation data, which could either cement or derail that shift in tone.

On the corporate side, earnings from networking heavyweight Cisco Systems, Nvidia-backed CoreWeave, and stablecoin issuer Circle will hit the tape. The results could shed light on AI infrastructure spending and crypto’s latest momentum—fueled in part by fresh U.S. legislation giving the industry a clearer regulatory playbook.

💵What’s the Market Pricing In?

Despite everything that’s been thrown at the market in recent weeks, the S&P 500 has only closed outside of its implied weekly ranges (by a rather small measure) twice in the last 10 weeks.

This week, market makers are looking for the S&P 500 cash index (SPX) to trade between 6526 and 6253.

Click here 👈to learn more about our charts.

Last week, volatility, as measured by the CBOE Volatility Index (VIX), fell sharply from the prior week’s steep rebound. As a result, during it all, the S&P 500 reclaimed “strong uptrend” characteristics, after being downgraded to a simple “uptrend” the prior week.

A look back at the past 20 years of weekly S&P 500 price action shows that the cash market (SPX) has closed within its implied range 79% of the time while trading in a strong uptrend.

📊 The week ahead isn’t just about inflation—it’s also a busy one for big-name earnings that could drop fresh clues on two of Wall Street’s favorite obsessions: AI and crypto.

Circle takes the stage Tuesday, fresh off a 400% rally since its June IPO. The stablecoin issuer has been riding a legislative tailwind after the U.S. passed the GENIUS Act in July, giving the crypto industry its clearest rulebook yet.

On Wednesday, Cisco will open its books after a blowout last quarter fueled by surging AI infrastructure demand. CoreWeave, the Nvidia-backed cloud computing player, is also set to report, hot on the heels of announcing a $6 billion data center investment in Pennsylvania.

The earnings parade doesn’t stop there—Applied Materials, Oklo, Deere, and Cava are all on deck, making it a week where tech, energy, manufacturing, and your lunch salad could all move the markets.

👇 Below, we’ve got a cheat sheet of this week’s biggest names reporting, sorted by market cap (source: Unusual Whales).

For active traders looking for actionable insights, the highlighted columns on the table above show the implied (expected) post-earnings move for each company, along with the Average 1-Day Realized Volatility Post Earnings Ratio (1D RV).

📈Implied Move: The market’s best guess at how much a stock will swing after earnings.

📊1D RV: A powerful tool that represents the post-earnings price move divided by the expected price move over the past 12 quarters. In other words, it measures how good (or bad) the market is at pricing each company’s earnings.

💵When you see a ratio >1.0, indicates that, historically, the earnings are mispriced and the stock moves MORE than the market anticipates, favoring straddle buyers.

🪝A ratio <1.0 tells the opposite story, meaning the stock historically moves LESS than the market anticipates, which favors straddle sellers.

Happy hunting.

Is Stagflation Here? We’re About to Find Out

Wall Street’s eyes are locked on Tuesday’s July CPI report, and the buzzword making the rounds isn’t just “inflation”—it’s “stagflation.”

After last week’s soft jobs report fueled speculation the Fed might cut rates sooner than expected, economists are cautioning that sticky price pressures could complicate the central bank’s playbook. Consensus forecasts call for headline CPI to rise 0.3% month-over-month, keeping the annual rate above the Fed’s 2% target. Core inflation—which strips out food and energy—is also expected to remain firm.

The worry? If economic growth continues to cool while inflation stays stubbornly high, we could be looking at stagflation—a toxic mix of slow growth, high unemployment, and persistent price increases. That scenario would put the Fed in a bind: cut rates to support the economy and risk reigniting inflation, or keep them high and risk deepening the slowdown.

Investors will be parsing the report line by line, especially with wholesale inflation and consumer sentiment data arriving later this week. The stakes are high: a hotter-than-expected CPI print could slam the brakes on rate-cut hopes, while a softer reading might open the door for the Fed to ease policy as early as September.

Stocks Have Mostly Rallied Following the Past 12 CPI Reports

We took a look at how the S&P 500 has performed in the 5 days after the release of the monthly CPI data.

As this chart shows, when measured from the close preceding each monthly CPI report (this equates to Monday’s close), the S&P 500 has, on average, risen steadily in the four sessions that followed.

More specifically, the S&P 500 has risen by an average of 1.37% from the close preceding the monthly CPI report to the intra-day high four trading days later (this equates to this Thursday’s session), and an average of +1.1% on a closing basis.

The worst drawdowns in the 5 trading days following the monthly CPI report occur on the first full trading session (this equates to this Tuesday’s session), with an average intra-day drawdown of -0.84%.

It’s worth highlighting that neither the 1.37% average rally or the -0.84% average sell-off would be enough to surpass this week’s implied range of ±2.15%.

With the CBOE Volatility Index (VIX) crashing back down to a near test of multi-month lows last week, look for the S&P 500 to remain true to its typical daily and weekly price swings until we see a reversal of this trend.

Click here 👈to learn more about our charts.

📈 This week’s data drop could be a make-or-break moment for the Fed’s September game plan.

On Tuesday, July’s Consumer Price Index hits, giving us the latest read on how hot inflation’s running after June’s upside surprise—and the added bump from Trump’s new tariffs. Wholesale inflation lands Thursday, and Friday wraps with fresh consumer sentiment numbers that could reveal whether Americans are feeling the pinch.

Monday

• Key Earnings: Monday.com and Oklo

Tuesday

• Consumer Price Index (July)

• Federal Reserve Officials Speaking: Richmond Fed President Barkin

• More Data to Watch: Monthly U.S. federal budget (July), NFIB small business optimism (July)

• Key Earnings: CoreWeave, Circle Internet Group, Cava Group, Smithfield Foods

Wednesday

• Federal Reserve Officials Speaking: Chicago Fed President Goolsbee, Atlanta Fed President Bostic

• Key Earnings: Cisco Systems

Thursday

• Producer Price Index (July)

• Federal Reserve Officials Speaking: Richmond Fed President Barkin

• More Data to Watch: Initial jobless claims (Week ending Aug. 9)

• Key Earnings: Applied Materials, Deere, JD.com

Friday

• U.S. retail sales (July)

• More Data to Watch: Consumer sentiment - preliminary (August), Import/export price index (July), Industrial production (July), Capacity utilization (July), Empire State manufacturing survey (August)