The week ahead: Primaries, price data, and preseason football

Good morning traders,

Whether you stayed inside to beat the heat or enjoyed the warm weather across most of the country, we hope that your weekend was great.

This week will see some major news regarding economic events, namely the July Consumer Price Index report, along with more preseason football. Not to mention various primary elections taking place in Wisconsin, Minnesota, and several other states.

We'll also be peering into next month regarding Kalshi's Fed Decision market where traders are trying to figure out if rates will be cut, maintained, or hiked. So without further ado, let's get into the newsletter.

^{For informational purposes only. Not trading advice. See full disclaimer below. Kalshi is not affiliated with the NFL.}

Elon will be happy about this one.

The Consumer Price Index (CPI) is the main indicator of inflation in the U.S. economy. Each month, the U.S. Bureau of Labor Statistics (BLS) publishes the number that measures the average change in prices paid by consumers for about 80,000 goods and services including housing, medical care, and groceries.

The headline CPI is the overall figure that covers the various goods and services included in the basket. The core CPI however takes out food and energy prices that are generally more prone to volatility compared to things like a phone plan.

The CPI is important because it is informative to consumers, investors, and policymakers, particularly the Federal Reserve. Because the metric gauges inflation, a major metric driving economic decisions, financial markets can experience large swings depending on what the data says.

But it’s also important because it helps determine what course of action the Fed will take in regard to interest rates.

The Fed has two main jobs:

While these might seem like two simple tasks, it's actually a pretty complicated balancing act. If CPI numbers show that prices are skyrocketing fast, the Fed steps in to raise interest rates with the idea that if borrowing money is more expensive, people and businesses spend a little less, dropping demand and inflation.

^{(Hopefully this econ talk isn’t boring you, but if it is and you still want something to trade about concerning the Fed, there’s a market for “What will Kevin Warsh say during his September press conference?”)}

However, what the Fed decides to do isn't just influenced by the CPI. Since the jobs report released August 7 showed 23,000 jobs lost in the U.S. during July, the Fed may no longer want to focus all of its energy on simply fighting inflation. Keeping rates high also risks stunting economic growth and can cost even more people their jobs. As you can see the market adjusted to this news rather quickly.

While Kevin Warsh, who took over Jerome Powell's position as Chair of the Fed earlier this year, signaled that he would focus on price stability and discipline regarding inflation, a poor jobs report means he has to focus on the other side of his job a bit more. If the CPI numbers come in cool for inflation, a Fed cut is more likely to be considered in September, but if the opposite happens Warsh faces a hard decision between whether to keep interest rates elevated to control prices, or lower them to support employment.

But that's enough talk regarding economics, let's move on to something a lot more people are passionate about:

Preseason football kicked off August 6 with the Hall of Fame game where Carolina beat Arizona 33-30 in a surprisingly high-scoring game. In addition, Drew Brees, Larry Fitzgerald, Luke Kuechly, Adam Vinatieri and Roger Craig were all enshrined into the Pro Football Hall of Fame.

The preseason will continue through August 29th, and the regular season begins September 9th with New England facing Seattle.

Preseason Week 1 officially starts this Thursday and will show some high-profile competition between those trying to maintain their roster spots, and rookies looking to fulfill their dreams of being on the roster. Notably, one game in particular is expected to see a much older than average player logging reps: Aaron Rodgers and Pittsburgh vs. Green Bay.

Despite being 42 years old, the oldest player in the league, Aaron Rodgers is expected to play a few snaps in the preseason, with Pittsburgh head coach Mike McCarthy saying he'd like to see Rodgers play. Though his age makes the preseason appearances noteworthy, the 42-year-old is likely to see much less time than Mason Rudolph and Will Howard, who will both be competing for the backup QB spot.

In another QB competition, Cleveland will play Chicago on Saturday at Soldier Field. Cleveland head coach Todd Monken announced that Deshaun Watson and Shedeur Sanders will each start one of the two preseason games in order to decide who the starter will be during the regular season.

Regardless of whether economic metrics and decisions or preseason football is more of your vibe, there's plenty of events happening this week that you can trade on Kalshi. We hope it's a good one.

Five states will host primaries on August 11 including a special primary in South Carolina as the GOP selects who will replace the late Lindsey Graham on the ballot in November.

In Wisconsin, progressive Francesca Hong will look to lock up her spot in November's governor election. To the west, Minnesota Democrats will select their candidate to vie for Amy Klobuchar's Senate seat in November.

The frontrunners to take the reins from Klobuchar, who is running for governor, are Peggy Flanagan and Angie Craig. Additionally, in the northeast, Connecticut and Vermont will host primary contests on Tuesday.

Meanwhile, over the past week, Kalshi's American Power Index (KPOW) has moved 0.5 points towards the Democrats. KPOW still leans slightly towards the GOP, but the Democrats' odds of retaking the House continue to grow. Democrats now have an 85% chance to win the House along with a 45% chance of controlling the Senate.

Follow Jack Kuveke at Jabroni Capital
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