Tag: Jeff Cox

CNBC Daily Open: With an unchanged PPI, the Fed’s near the finish line

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A television station broadcasts the Federal Reserve’s interest-rate cut on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, Sept. 18, 2024.

Michael Nagle | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Winning week for markets
All major U.S. indexes rose Friday on the back of encouraging inflation data and positive earnings from big banks. That gave them a winning week. Asia-Pacific markets mostly traded higher Monday. China’s Shanghai Composite rose around 2% in choppy trading. Over the weekend, Beijing reported a lower-than-expected consumer inflation rate and producer prices falling for September.

Tesla’s Cybercab and Robovan
Tesla shares slumped 8.8% after the company’s “We, Robot” event disappointed investors. At the Thursday night event, CEO Elon Musk unveiled the Cybercab, a two-seater with no steering wheels or pedals, and the Robovan, an autonomous vehicle that has a big capacity. But Musk offered little other details, causing analysts to cast doubt on the company.

More assurances from China
In a press briefing held Saturday, Chinese Minister of Finance Lan Fo’an told reporters the space for Beijing to increase its budget deficit is “rather large,” but the government is still discussing stimulus plans, according to a CNBC translation of the Chinese. Lan also announced measures to support employment and the real estate industry.

Banks’ earnings in good shape
JPMorgan Chase, the biggest bank in the U.S., reported third-quarter earnings and revenue that beat estimates. Net interest income grew 3% from a year ago and helped revenue to increase 6%. Wells Fargo had a decent third quarter. The bank beat estimates for earnings, but unlike JPMorgan, revenue was below expectations and NII decreased.

[PRO] Earnings will show market direction
After the deluge of data such as September’s jobs reports and consumer price index report, earnings will determine the path of markets for the near term. Big banks dominate third-quarter reports this week. It’s Bank of America and Goldman Sachs’ turn on Tuesday, while Morgan Stanley announces its earnings on Wednesday.

The bottom line

It seems like September’s hotter-than-expected inflation reading was indeed a blip.

With a snap of its fingers, the producer price index assuaged worries over inflation remaining stubborn. The index, which measures wholesale prices – and thus generally prefigures changes in the CPI – was unchanged in September from August, defying expectations from a Dow Jones survey of a 0.1% increase.

In fact, last week’s inflation figures looked so promising that Goldman Sachs think the Federal Reserve has just about brought inflation down to its 2% target without crashing the economy, as CNBC’s Jeff Cox reports.

While consumer sentiment dipped slightly in October, according to the University of Michigan’s Survey of Consumers, “long run business conditions lifted to its highest reading in six months,” wrote Joanne Hsu, the survey’s director.

JPMorgan Chase’s third-quarter earnings may be the first taste of that. The biggest bank in America beat estimates on both revenue and earnings. As banks generally reflect the health of the broader economy, it’s a signal things aren’t all bad despite dipping consumer confidence.

Admittedly, earnings reflect what has already happened. Investors care more about what’s going to happen. But consumers are “fine and on strong footing,” as JPMorgan’s CFO Jeremy Barnum told reporters.

Markets cheered the string of positive news.

On Friday, the S&P 500 added 0.61%, the Dow Jones Industrial Average rose 0.97% and the Nasdaq Composite was up 0.33%.

That capped off a winning week for Wall Street – their fifth in a row. The S&P and Nasdaq climbed 1.1%, while the Dow did a bit better with its 1.2% increase for the week.

“What we’re seeing … is a broadening of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.

It’s a reminder that subduing inflation is just a stop toward investors’ real endgame of a healthy stock market.

– CNBC’s Jeff Cox, Samantha Subin and Brian Evans contributed to this story.

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October 13, 2024
CNBC Daily Open: With a stagnant PPI, the Fed’s nearly at the finish line

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Jerome Powell, chairman of the US Federal Reserve, during the National Association of Business Economics (NABE) annual meeting in Nashville, Tennessee, US, on Monday, Sept. 30, 2024.

Seth Herald | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Winning week for markets
All major U.S. indexes rose Friday on the back of encouraging inflation data and positive earnings from big banks. That gave them a winning week. Europe’s Stoxx 600 index climbed 0.55% to end the week higher. Separately, in August, the U.K. economy expanded 0.2% on a monthly basis after stagnating in June and July, according to flash data from U.K. officials.

Tesla’s Cybercab and Robovan
Tesla shares slumped 8.8% after the company’s “We, Robot” event disappointed investors. At the Thursday night event, CEO Elon Musk unveiled the Cybercab, a two-seater with no steering wheels or pedals, and the Robovan, an autonomous vehicle that has a big capacity. But Musk offered little other details, causing analysts to cast doubt on the company.

More assurances from China
In a press briefing held Saturday, Chinese Minister of Finance Lan Fo’an told reporters the space for Beijing to increase its budget deficit is “rather large,” but the government is still discussing stimulus plans, according to a CNBC translation of the Chinese. Lan also announced measures to support employment and the real estate industry.

Banks’ earnings in good shape
JPMorgan Chase, the biggest bank in the U.S., reported third-quarter earnings and revenue that beat estimates. Net interest income grew 3% from a year ago and helped revenue to increase 6%. Wells Fargo had a decent third quarter. The bank beat estimates for earnings, but unlike JPMorgan, revenue was below expectations and NII decreased.

[PRO] Earnings will show market direction
After the deluge of data such as September’s jobs reports and consumer price index report, earnings will determine the path of markets for the near term. Big banks dominate third-quarter reports this week. It’s Bank of America and Goldman Sachs’ turn on Tuesday, while Morgan Stanley announces its earnings on Wednesday.

The bottom line

It seems like September’s hotter-than-expected inflation reading was indeed a blip.

With a snap of its fingers, the producer price index assuaged worries over inflation remaining stubborn. The index, which measures wholesale prices – and thus generally prefigures changes in the CPI – was unchanged in September from August, defying expectations from a Dow Jones survey of a 0.1% increase.

In fact, last week’s inflation figures looked so promising that Goldman Sachs think the Federal Reserve has just about brought inflation down to its 2% target without crashing the economy, as CNBC’s Jeff Cox reports.

While consumer sentiment dipped slightly in October, according to the University of Michigan’s Survey of Consumers, “long run business conditions lifted to its highest reading in six months,” wrote Joanne Hsu, the survey’s director.

JPMorgan Chase’s third-quarter earnings may be the first taste of that. The biggest bank in America beat estimates on both revenue and earnings. As banks generally reflect the health of the broader economy, it’s a signal things aren’t all bad despite dipping consumer confidence.

Admittedly, earnings reflect what has already happened. Investors care more about what’s going to happen. But consumers are “fine and on strong footing,” as JPMorgan’s CFO Jeremy Barnum told reporters.

Markets cheered the string of positive news.

On Friday, the S&P 500 added 0.61%, the Dow Jones Industrial Average rose 0.97% and the Nasdaq Composite was up 0.33%.

That capped off a winning week for Wall Street – their fifth in a row. The S&P and Nasdaq climbed 1.1%, while the Dow did a bit better with its 1.2% increase for the week.

“What we’re seeing … is a broadening of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.

It’s a reminder that subduing inflation is just a stop toward investors’ real endgame of a healthy stock market.

– CNBC’s Jeff Cox, Samantha Subin and Brian Evans contributed to this story.

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October 13, 2024
5 things to know before the stock market opens Thursday

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Here are the most important news items that investors need to start their trading day:

1. Rocky month

Stocks fell Wednesday for the second consecutive day as investors digested news from the Federal Reserve. The Nasdaq Composite fell more than 1.15%, while the S&P 500 dropped 0.76%. The Dow Jones Industrial Average slipped by 180.65 points, or 0.52%. August has been a rocky month for stocks, and the major averages are well in negative territory. Valuations have also been falling from their lofty heights. Follow live market updates.

2. Decisions, decisions

Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting, at the Federal Reserve in Washington, DC, on July 26, 2023.

Saul Loeb | AFP | Getty Images

The Federal Reserve released minutes from its latest meeting in July that showed officials are still concerned about the pace of inflation. Fed members also noted that more rate hikes could be coming unless conditions change. The Fed raised rates by a quarter percentage point at its July meeting, bringing the federal funds rate to the highest level in more than 22 years. The minutes also showed uncertainty among members, however, with some saying they thought the committee could skip a hike and see how previous efforts were affecting the economy.

3. Walmart earnings

Customers shop at a Walmart store on May 18, 2023 in Chicago, Illinois.

Scott Olson | Getty Images

Walmart‘s discount reputation keeps drawing customers. The big-box retailer raised its full-year forecast when it released its second-quarter earnings Thursday morning before the bell — a notable contrast to Target, which cut its forecast the day before. Walmart also topped analysts’ expectations for sales and profits. Chief Financial Officer John David Rainey told CNBC’s Melissa Repko that seasonal moments, such as the Fourth of July holiday and back-to-school, have helped drive sales. He also said Walmart is starting to see “modest improvement” with big-ticket purchases, which have seen weaker sales as consumers have focused on necessities such as food.

4. Hawaii wildfires

A view of a home that was destroyed by a wildfire on August 16, 2023 in Lahaina, Hawaii.

Justin Sullivan | Getty Images

The wildfires in Hawaii have left the town of Lahaina devastated. More than 100 people are missing and thousands more are homeless after the deadliest wildfire in the U.S. in more than century. The town of Lahaina in Hawaii will have to be completely rebuilt, and residents are now worried that outside developers will swoop in to buy up valuable land on Maui once the reconstruction process starts. Hawaii Gov. Josh Green even warned mainlanders not to invest in property, saying the Hawaii state government is considering acquiring land in Lahaina to protect it. Meanwhile, Hawaiian Electric, the state’s biggest power utility, is being investigated for the role it might have played in the fire, with a lawsuit arguing years of inaction and negligence contributed to the spread.

5. Hi, Barbie!

HOLLYWOOD, CA – JULY 20: General views of the ‘Barbie’ skyscraper billboard campaign at Hollywood & Highland on July 20, 2023 in Hollywood, California. (Photo by AaronP/Bauer-Griffin/GC Images)

Aaronp/bauer-griffin | Gc Images | Getty Images

Pink is the new black. “Barbie” has breezed past Batman to become the highest-grossing domestic movie in Warner Bros. Discovery‘s 100-year history. With $537 million at the domestic box office, “Barbie” has topped the company’s previous domestic record set in 2008 with “The Dark Knight.” The bubblegum pink box office hit has earned more than $1.2 billion worldwide since it was released July 21 and is on track to be the highest-grossing film of the year.

— CNBC’s Hakyung Kim, Alex Harring, Pia Singh, Jeff Cox, Spencer Kimball, Sarah Whitten, Melissa Repko and NBC News contributed to this report.

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August 17, 2023
The Fed won’t be what drives markets in 2023, wealth manager says

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The Federal Reserve played a major role in moving markets in 2022, driving a campaign of monetary tightening as it tried to combat inflation that hit multi-decade highs.

Many who had money in stocks and even bonds suffered, as liquidity was sucked out of the market with every rate hike employed by the Fed — seven of them in the past year alone. In mid-December, the central bank rose its benchmark interest rate to the highest level in 15 years, taking it to a targeted range between 4.25% and 4.5%.

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Prior to that, the U.S. saw a four consecutive three-quarter point hikes — the most aggressive policy decisions since the early 1980s.

Fed officials and economists expect rates to stay high next year, with reductions unlikely until 2024. But that doesn’t mean the Fed will remain the primary driver of the markets. Patrick Armstrong, chief investment officer at Plurimi Wealth LLP, sees different financial drivers retaking the reins.

“Next year I think it’s not going to be the Fed determining the market. I think it’s going to be companies, fundamentals, companies that can grow earnings, defend their margins, probably move higher,” Armstrong told CNBC’s “Squawk Box Europe” on Friday.

“Bond yields are giving you a real return now, above inflation. So it’s a reasonable place to put capital now, whereas at the start of this year it didn’t make much sense. It was hard to expect a return above inflation where yields were.”

The yield on the U.S. 10-year Treasury was at 3.856% on Friday, a rapid climb from 1.628% at the start of 2022. The yield on the benchmark note hit an all-time low of 0.55% in July 2020. Bond yields move inversely to prices.

Screens on the trading floor at New York Stock Exchange (NYSE) display the Federal Reserve Chair Jerome Powell during a news conference after the Federal Reserve announced interest rates will raise half a percentage point, in New York City, December 14, 2022.

Andrew Kelly | Reuters

“What happened this year was driven by the Fed,” Armstrong said. “Quantitative tightening, higher interest rates, they were pushed by inflation, and anything that was liquidity driven sold off. If you were equities and bond investors, came into the year getting less than a percent on a 10-year Treasury which makes no sense. Liquidity was the driver of the market, [and] the liquidity, the carpet’s been pulled from underneath investors.”

Armstrong did suggest that the U.S. may be “flirting with recession probably by the end of the first half of next year,” but noted that “it’s a very strong job market there, wage growth and consumption is 70% of the U.S. economy, so it’s not even sure that the U.S. does fall into recession.”

Key for 2023, the CIO said, will be “to find companies that can defend their margins. Because that is the real risk for equities.”

He noted that analysts have a 13% profit margin expectation for the S&P 500 in 2023, which is a record high.

But inflation and Fed tightening can still present a challenge to that, Armstrong maintained.

“I don’t think you can achieve that with a consumer that’s having their purses pulled in so many directions, from energy costs, mortgage costs, food prices, and probably dealing with a little bit of unemployment starting to creep up as the Fed continues to hike, and it’s designed to destroy demand,” Armstrong said. “So I think that is going to be the key in equities.”

— CNBC’s Jeff Cox contributed to this report.

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December 30, 2022