CPI Hot, PPI Not, Bitcoin ETFs Finally Approved -Jan 12 Market Recap
Indices
- Dow 37,592, +126 or +0.34%.
- Nasdaq 14,972, +448 or +3.08%.
- MSCI EAFE 2226.88, +19.14 or +0.87%.
- S&P 4,783, +86 or +1.83%.
- USD10Y 3.95%, -9.2bp or -2.28%.
- WTI Crude $72.76/bbl, -$1.05 or -1.42%.
CPI Hot, PPI Not, Bitcoin ETFs Finally Approved.
The Consumer Price Index (CPI) was hotter than anticipated when the Bureau of Labor Statistics (BLS) released its report on Thursday. The December CPI was +0.3% vs +0.2% expected and vs +0.1% last month. Year-over-year CPI rose to +3.4% vs +3.1% last month. Shelter continued to be a major factor, contributing half of the +0.3% rise. However, on Friday, BLS released the December Producer Price Index (PPI) which indicated that wholesale prices did not rise but fell for the second consecutive month by -0.1%. Year-over-year PPI is a mere +0.98%. This begs the question: why are companies continuing to raise prices (CMG, MCD, GIS, KO, PEP to name just a few) when their input prices are stagnant or in some months even declining? Can the prices hikes be explained by rising wages or are companies merely increasing their margins and using inflation as a rationale to do so?
After a decade of failed attempts, the SEC approved eleven Bitcoin ETFs for trading starting Thursday morning. $655 million dollars flowed into the approved ETFs on their first day of trading.
Next Week
It’s a short week as markets are closed on Monday in observance of Martin Luther King Jr Day. Economic data includes January manufacturing data from New York and Philadelphia and December Retail Sales. Even though earnings kicked off on Friday, the first full week of earnings is light on market moving reports; Goldman Sachs (GS) reports on Tuesday and trucking/logistics company JB Hunt reports on Thursday.
Economic Calendar
- Monday – Markets are closed in observance of Martin Luther King Jr’s birthday.
- Tuesday – January Empire State Manufacturing Survey. Earnings: Goldman Sachs (GS).
- Wednesday – December U.S. Retail Sales. Earnings: N/A.
- Thursday – Initial Jobless Claims, January Philadelphia Federal Manufacturing Survey Earnings: JB Hunt (JBHT).
- Friday – N/A. Earnings: N/A.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Jan 12 Daily Trading Recap…
Monday – Dow +216 to 37,683, Nasdaq +319 to 14,843, S&P +66 to 4,763, USD10Y -4.0bp to 4.002%.
- Ten of eleven S&P sectors traded higher today, led by Technology, Consumer Discretionary, and Communication Services.
Tuesday – Dow +26 to 37,714, Nasdaq -247 to 14,765, S&P -28 to 4,742, USD10Y +4.1bp to 3.922%.
- Seven of eleven S&P sectors traded down today, led lower by Energy, Materials, and Utilities.
- Hewlett Packard Enterprises (HPE) announced they would acquire Juniper Networks (JNPR) for $14 billion ($40/share) in an all-cash deal.
- Earnings: Albertson’s (ACI) beat top and bottom-line estimates.
Wednesday – Dow +170 to 37,695, Nasdaq +111 to 14,969, S&P +26 to 4,783, USD10Y +1.1bp to 4.030%.
- Seven of eleven S&P sectors traded up today, led by Communication Services, Technology, and Consumer Discretionary.
- The SEC, in a long-anticipated move, gave their approval to eleven spot Bitcoin Exchange Traded Funds (ETFs) to begin trading tomorrow.
- Earnings: KB Homes (KBH) beat top and bottom-line estimates and noted improving demand.
Thursday – Dow +15 to 37,440, Nasdaq +1 to 14,970, S&P -3 to 4,780, USD10Y -5.3bp to 3.977%.
- Nine of eleven S&P sectors traded down today, led lower by Utilities, Real Estate, and Financials.
- Jobless claims were 202,000, vs 210,000 forecast and vs. last week’s slightly revised higher print of 203,000 (originally 202,000).
- December Consumer Price Index (CPI) was hotter than expected at +0.3% vs +0.2% expected and vs +0.1% last month. Year-over-year CPI rose to +3.4% vs +3.1% last month.
- December Core CPI was in line with expectations at +0.3% vs last month’s +0.3% print. Year-over-year Core CPI fell to +3.9% vs +4.0% last month.
Friday – Dow -118 to 37,592, Nasdaq +2 to 14,972, S&P +3 to 4,783, USD10Y -2.7bp to 3.95%.
- Seven of eleven S&P sectors traded higher, led by Energy, Real Estate, and Communication Services.
- December Producer Price Index (PPI) was negative for the second consecutive month at -0.1% vs +0.1% expected. This is further and continuing evidence that CPI inflation the economy is still experiencing is a result of companies continuing to raise prices to increase their margins and not due to increasing input prices. Year-over-year PPI is now +0.98%.
- December Core PPI was +0.2%, in line with expectations. Year-over-year PPI is +2.5% vs +2.4% last month.
- Earnings: Delta Air Lines (DAL) easily beat their numbers on continued strong international demand but cut their 2024 earnings forecast; DAL traded down -8.97%. Wells Fargo (WFC) beat their estimates but warned that net interest income could be significantly lower year-over-year; WFC traded down –3.34%. Bank America (BAC) beat their earnings numbers but missed their revenue estimates due to several one-time large charges; BAC traded down -1.06%. Blackrock (BRK) beat earnings estimates, reported inline revenues and announced a $12.5 billion purchase of Global Infrastructure Partners; BLK traded down -0.20%. Citigroup (C) announced a nearly $2 billion quarterly loss due to overseas risks, last year’s banking crisis, and corporate restructuring; C traded up +1.04%. JP Morgan Chase (JPM) beat revenue expectations but missed earnings due to charges related to last year’s banking crisis; JPM traded down -0.73%.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, GM, RIVN, TOST, and TSLA.