shelter, apparel were two hot inflation areas
While headline and core CPI readings for December showed monthly moves of -0.1% and 0.3%, respectively, there was wide divergence in some internal components.
Here’s a look at the month-on-month changes in the major categories:
- Food: +0.3%
- Energy: -4.5%
- New vehicles: -0.1%
- Used Cars and Trucks: -2.5%
- Apparel: +0.5%
- Shelter: +0.8%
- Medical care services: +0.1%
Shelter inflation is a major area of debate, as investors and analysts believe the Fed is being too aggressive, arguing that shelter data is out of date.
See how major futures indices reacted to the latest inflation data
Major futures indices were in jitters as investors reacted to December CPI data, which was in line with economists’ expectations. See how each of the three futures indexes moved in the 30 minutes before and after the data release at 8:30 AM ET:
Fed to be unaffected by CPI report
A modest decline in consumer prices in December won’t sway the way the Federal Reserve is set to raise rates on Jan. 31 and Feb. 1.
CPI fell 0.01%, as economists had forecast, and was up 6.5% from a year earlier. Core CPI also rose 0.03% as expected.
KPMG chief economist Diane Swonk said, “The Fed has been clear that even though markets are retreating on a Goldilocks scenario in the jobs report, the Fed was doubling down on its pledge to derail inflation as they see it as a marathon.” see as.” ,
Stock futures were higher after the report while Treasury yields fell. Yield moves opposite price.
Peter Bockover, chief investment officer at Bleakley Financial, said, “It was exactly in line. They drove the S&P 500 up 50 points yesterday with expectations of weak numbers. It was as expected. It doesn’t change anything.” “Raising rates is almost done. People should pay more attention for more time.”
Swonk and other economists expect the Fed to raise rates by half a percentage point on February 1. However, there has been a quarter point increase in the futures market.
The consumer price index for December matched expectations
The Consumer Price Index fell 0.1% in December, matching the Dow Jones estimate. This was the biggest monthly decline since April 2020. The so-called core CPI, which strips out volatile food and energy prices, also met expectations, up 0.3%. Get.
The index rose 6.5% on a year-to-date basis, still well above the Fed’s 2% inflation target.
— Fred Imbert
Disney, American Airlines stocks making biggest moves premarket
S3 Partners says short-squeeze can be seen at Bed Bath & Beyond
big move in bed Bath and Beyond According to Ihor Dusanivsky of S3 Partners, Wednesday may not have been short yet, but it could be coming soon.
The stock rose more than 68% to $3.49 per share on Wednesday. It continued to climb higher in extended trading, pushing it above $4 per share.
“We may see some near-term short sellers exit their positions and begin to realize the profits they earned in 2022,” Dusanivsky said.
Bed Bath & Beyond was threatening to move higher again on Thursday.
Bed Bath & Beyond has low interest of about 52%, according to S3. While those who initiated this trade last month may have been sitting on a loss, the stock traded as high as $30 per share in August — which means it could ease the process that ended in another bankruptcy. May be able to ride from.
“The key difference between BBBY and other crowded shorts is that there is a certain risk of bankruptcy, which may encourage shorts to hold their positions, take some temporary losses, and anticipate a $0.00 stock price in bankruptcy.” I can’t wait for this rally,” Dusaniewski said.
Netflix rises after Jefferies upgrade
Jefferies Upgraded netflix From hold to buy, the streaming giant cracks down on password sharing, citing a potential increase in revenue. The stock was up 1.3% in premarket trading.
“We are upgrading Netflix to a Buy based on our belief that a well-executed strategy of launching [advertising-based video on demand] Revenue will increase with the password sharing changes and adjusted EBITDA will be well above Street estimates, resulting in margin upside and valuations moving back toward historical averages,” Jefferies said.
American Airlines raises guidance, shares gain
American Airlines Shares rose 3% in the premarket after the airline increased its fourth-quarter earnings guidance. The company now expects earnings for the quarter to come in between $1.12 and $1.17 per share, up from a previous range of 50 cents to 70 cents.
— Fred Imbert
Morgan Stanley Upgrades Cleveland-Cliffs
cleveland-cliffs Shares in the premarket rose more than 2% after Morgan Stanley upgraded the steelmaker to overweight from equal weight, boosted by higher fixed annual steel price contracts.
“We believe that the recently announced increase in fixed annual steel price contracts (see here) should allow CLF to cope with lower forecasted spot steel prices and generate strong FCF yields in the coming years as the company has no There is no major planned capital expenditure,” analyst Carlos de Alba wrote in a note.
European markets up
European markets were higher on Thursday as global investors prepared for the December reading of US consumer prices.
pan european Stoxx 600 The index was up 0.5% in early trade, led by a 0.9% gain in telecom across all sectors and major bourses entered positive territory.
Disney up 1.5% after naming Nike’s Mark Parker chairman
shares of disney The stock rose 1.5% in after-hours trading after the media giant announced it has named Nike executive chairman Mark Parker as its next chairman of the board.
Disney also said it is resisting an attempt to have activist investor Nelson Peltz join the board. About two months ago, Peltz’s Trian Fund Management took an approximately $800 million stake in the company and began seeking board seats.
Too early to celebrate falling inflation?
According to Andrew Patterson, senior economist at Vanguard, it may be too soon to cheer the early signs of easing inflation as services inflation could be exerting price pressures.
“The main upside risk to core inflation comes from components of ex-shelter services,” Patterson said in a note. “Sustained wage growth could keep services inflation hot in 2023. The recent slowing in wages, while welcome, does not yet suggest a broader labor market slowdown.”
While goods deflation is a welcome sign, Patterson said, we would still need two more ingredients to call extreme inflation—a slowing labor market and persistently cooling shelter inflation.