Stock markets opened with a large gap of between 1.5% and 2% on November 15, 2022. The reason is that the October PPI number was released today.
The Producer Price Index (PPI) is a measure of how prices for products made in the United States change over time. The first commercial transaction for many products and services is what the prices include in the PPI.
October Inflation Lower Than Expected
The PPI for October 2022 fell to 8% growth YoY which is down from the 8.5% reading in September 2022. Institutional investors had forecasted the PPI to come in at 8.3% in October. Annual core PPI also surprised at 6.7% YoY, compared to a consensus estimate of 7.2%. The PPI report comes after other key inflation data came in lower than expected on November 10, 2022, which led to a huge market rally.
Federal Reserve Rate Hike Expectations
There is optimism that the Fed will slow the pace of interest-rate increases because inflation data is coming in lower than forecasts.
Warren Buffett Buying When Blood Is In the Streets
New positions were announced in Taiwan Semiconductor and Louisiana-Pacific by Warren Buffett.
On November 14, 2022, Berkshire Hathaway said in an SEC filing what it owned as of September 30, 2022. Berkshire had three new buys during the third quarter, which were TSMC, Louisiana-Pacific, and Jefferies Financial. During the quarter, the fund exited STORE Capital. Berkshire increased its stake in five companies, including Occidental, Chevron, RH, Paramount Global Class B, and Celanese. The fund decreased its stake in five holdings: US Bancorp, Activision Blizzard, BNY Mellon, Kroger, and General Motors.
Taiwan Semiconductor $TSM Stock
Taiwan Seminconductor $TSM stock is in a technical weak downtrend rating but that could be upgraded soon. The gap up open on November 15, 2022, could result in a short term gap fill and then a test of resistance near $88.10.
Louisiana-Pacific $LPX Stock
Louisiana-Pacific $LPX stock is in a technical weak uptrend rating. The stock is approaching overbought territory so profit taking, a gap fill, or trend reversal is possible.