Good morning, traders. 

The market’s walking into this week like it’s sitting on a powder keg.

Three major economic reports are set to drop — CPI on Tuesday and PPI and retail sales on Thursday — each with the potential to rattle the market. 

And if that weren’t enough, Trump threw a curveball Friday, suggesting there might be room for compromise ahead of weekend tariff negotiations with China.

Depending on what shakes out, we could see a sharp knee-jerk reaction across risk assets.

Let’s break down what’s coming.

Consumer Price Index (CPI)

The CPI report is the heavyweight event this week. 

Last month’s numbers showed core inflation remaining sticky, which raised doubts about just how soon the Fed might start cutting rates.

This week, economists are expecting a slight cooling in headline and core numbers. 

If that actually happens, rate-cut bets could surge, and so could stocks. 

But if inflation surprises to the upside again, the Fed will be in a tight spot. 

Expect tech, small caps, and anything growth-y to take the hit if the print is hot.

Watch the core month-over-month number closely. 

Anything north of 0.3%? 

That’s trouble.

Producer Price Index (PPI)

PPI isn’t usually the market-mover that CPI is, but in this environment, traders are looking for any clue they can get about pricing pressures in the pipeline.

A cool PPI number, especially when paired with a soft CPI, would be read as confirmation that inflation is finally losing steam across the board. 

That could give bonds room to rally and push rate-sensitive sectors like real estate and utilities higher.

But a hotter-than-expected PPI? 

That could throw a wrench into the disinflation narrative and spark a fresh wave of selling.

Friday: Retail Sales

Retail sales are the cleanest read we get on the U.S. consumer, and they really matter right now. 

If consumer spending is holding up, it gives the Fed less reason to ease policy.

Consensus is calling for modest growth. 

But any weakness — especially in core retail sales, which strips out volatile components — could suggest the economy is starting to bend under the weight of high rates.

Bottom line: If we get a weak retail number and soft inflation, the market will go full Goldilocks. 

But if the consumer looks strong while inflation stays hot? 

Get ready for the Fed hawks to start chirping again.

Trump’s Tariff Dance with China

As of Friday, Trump had signaled a softening of his stance ahead of weekend tariff negotiations with China. 

If some kind of progress is announced early this week (or over the weekend), expect a risk-on rally. 

Think semiconductors, industrials, and anything tied to global trade.

But if the opposite happens — if talks break down and Trump starts tweeting threats Sunday night or this morning — watch out. 

Stocks could gap down hard, led by trade-sensitive names.

And don’t forget: A tariff blow-up on top of hot inflation data? 

That could spook the market into full-blown risk-off mode.

So, don’t get caught flat-footed. 

Keep your positions tight, your eyes on the tape, and remember: When the market gets emotional, that’s where the real opportunity lies.

Let’s figure this out together,
— Jeff Zananiri

Want to know how I’m trading all of this? Join Aaron Hunziker Tuesday at 7 p.m. ET. to get a handle on exactly what’s happening and how to stay ahead.

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*Past performance does not indicate future results.