Why Wall Street Is Rooting for Inflation Tomorrow

Plus: Tech’s War Profits, and Why Apartments Are the Next Goldmine. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more [Why Wall Street Is Rooting for Inflation Tomorrow]( Plus: Tech’s War Profits, and Why Apartments Are the Next Goldmine. [Josh Belanger](joshbelanger) Aug 14 joshbelanger   [READ IN APP](   US stocks jumped today after a key inflation report came in cooler than expected for July. The Producer Price Index (PPI) only rose 0.1% last month, setting the stage for tomorrow's big Consumer Price Index (CPI) report. Wall Street is nervous—not about rising prices but about deflation, which could point to a recession. Here's the deal: Wall Street & government likes slow, steady inflation, like slowly stirring Thanksgiving gravy to keep it smooth. If prices start falling too much (deflation), that’s a bad sign. The Fed is already planning a rate cut in September, but the real worry is if they’re behind the curve and if the economy is headed for trouble. Slowing Inflation: A Warning Sign for the Economy? Generated by AI. Why it matters: The rate of inflation may be slowing, but it’s masking deeper economic risks, including the potential threat of deflation. Rising costs for essentials like rent, electricity, and insurance are still squeezing household budgets, keeping many Americans on edge. The Details: Essentials like rent and electricity continue to climb sharply, with rent up over 13% in two years and car insurance soaring nearly 40%. This is happening even as [gasoline prices decline]( offering only partial relief . Zoom In: [Falling gas prices]( might sound like good news, but they reflect fears of a global slowdown, particularly in the U.S. and China. This drop in demand could signal deflation, a far more dangerous economic condition than inflation . Big Picture: The economic cooling is visible in how Americans are choosing to spend—or not spend—their money. [Theme parks]( are seeing fewer visitors as more people opt for cheaper alternatives or save their cash. This trend mirrors what’s happening across other sectors, with companies like McDonald’s and Airbnb reporting softer demand . Mixed Signals: The labor market is sending [conflicting messages](. While some sectors are still hiring, others are pulling back, hinting at broader economic struggles. Companies like John Deere and Spirit Airlines are cutting jobs, reflecting a shift towards caution . Bottom Line: The slowing inflation rate isn’t all good news. Rising essential costs and a cooling labor market suggest that the economy is far from stable, with deflation now a lurking threat. The Fed has a tough job ahead to keep the economy on track. Tech Companies Bet Big on War Generated by AI. Why it matters: Tech startups like Anduril are pouring billions into weapons to take on defense giants like Lockheed Martin, as the U.S. prepares for a possible showdown with China. The Details: [Billions of dollars]( are being invested in defense tech. Anduril, founded by Palmer Luckey, has raised $3.7 billion to build high-tech weapons like drones. These new tools are being rushed to be ready by 2027, when China could invade Taiwan . Zoom In: While venture capital in defense tech has jumped 70% recently, these startups need to prove they can make weapons as well as the big guys. Right now, they still only get a small slice of Pentagon money . Big Picture: The defense industry is changing fast, with private money leading the charge. But the real winners might still be the old defense giants like Lockheed Martin, who are set to profit from endless wars . Bottom Line: Billions are being spent on new tech for war, but it’s the traditional defense contractors who could cash in the most. Investors Bet Big on Apartments Amid Housing Crunch Generated by AI. Why it matters: As high interest rates make buying homes harder, smart investors are turning to apartments. With fewer people able to buy, renting is the next best thing. The Details: Mortgage rates may have dropped recently, but they’re still too high for many buyers. This has [investors]( focusing on apartments, especially in growing cities like Atlanta and Dallas. They’re betting that as home buying stays tough, more people will need to rent . Zoom In: Big apartment owners like Equity Residential are spending billions to buy more properties. They expect rents to rise as fewer new apartments are built . Big Picture: While parts of the real estate market are struggling, apartments are seen as a safe bet. Even though some apartment loans are shaky, the hope for higher rents keeps investors interested . Bottom Line: With homebuyers priced out and mortgage rates still high, the smart money is flowing into apartments. Investors are betting that rental demand will only increase, making multifamily housing the bright spot in an otherwise shaky real estate market. The best way to ride this wave is with publicly traded apartment REITs like Camden Properties, AvalonBay Communities, or Mid-America Apartment Communities, Inc. As more people rent, these companies are in a good position to profit. Options Sizzle Today’s Action: Options volume totaled 45.7 million contracts, which is 13% below recent averages, indicating lighter-than-usual market activity. Here are stocks with notable unusual options activity: - Liquidia Technologies (LQDA): - What happened: 15,000 call options traded—9 times the 22-day average. - Why it matters: With 59% of today’s call premium trading on the offer, new bullish positions are being established. Traders are likely betting on a significant upside in LQDA, anticipating potential catalysts or positive news ahead. - Clean Energy (CLNE): - What happened: 8,400 call options traded—15 times the 22-day average. - Why it matters: A strong bullish sentiment is evident, with 81% of the call premium trading on the offer, suggesting new buying. This indicates that traders are expecting a potential rise in CLNE’s stock price, possibly due to favorable developments in the clean energy sector. - Syros Pharmaceuticals (SYRS): - What happened: 5,700 put options traded—31 times the 22-day average. - Why it matters: Bearish activity is spiking, with 96% of today’s put premium trading on the offer side, pointing to new positions. Traders may be anticipating downside risks or negative news, and are hedging against a potential drop in SYRS’s stock. You’re currently a free subscriber. 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