Jan CPI (Wed) likely "calibrates" inflation views back to "falling towards 2%" = positive equity catalyst. Despite chop, we are buying the dip.

So far in 2025, equity markets have proven to be resilient, affirming that "buy the dip" remains the regime. There have been many "tape bombs" so far in 2024 (DeepSeek R1 and tariff headlines) but the resulting selling has been shallow. To us, this indicates that investors have already substantially de-risked, best evidenced by the collapse of AAII "net bulls" during that mid-Dec to mid-Jan chop.

We view Jan Core CPI release (Wed am) as an important "re-calibration" or course correction for inflation. - Street looking for +0.29% Core CPI MoM- Dec Core CPI MoM +0.23% In our view, a reading of +0.33% (high) or less is a positive. The reason is the YoY would still be 3.2% or so and this is a better reading than suggested by the U Mich survey showing consumers see +4.3% inflation. That was released last Friday and one of the reasons stocks weakened that Friday. The CPI and Fed Chair Powell testimony to Congress are the key events this week:- 2/10 Mon 11:00 AM ET: Jan NYFed 1yr Inf Exp    3.00% vs 3.10%e- 2/11 Tue 6:00 AM ET: Jan Small Business Optimism Survey    102.8 vs 104.7e- 2/11 Tue 10:00 AM ET: Powell Testifies to Senate Banking- 2/12 Wed 8:30 AM ET: Annual CPI Revision & Jan Core CPI MoM    0.29%e- 2/13 Wed 10:00 AM ET: Pow...
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