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Tag: Pricing/Prices

  • Tesla’s Price War Could Hit Its Profits

    Tesla’s Price War Could Hit Its Profits

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    Electric vehicle leader


    Tesla


    is expected to report lower earnings on higher sales Wednesday evening after the electric vehicle maker slashed prices to draw in buyers.

    The EV war, with traditional auto makers spending billions to catch


    Tesla


    (ticker: TSLA), has morphed into a price war. The car maker’s quarterly earnings will help investors figure out who is winning.

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  • The surprise OPEC+ oil production cuts will increase gas prices — here’s how much

    The surprise OPEC+ oil production cuts will increase gas prices — here’s how much

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    Surprise crude oil production cuts from Saudi Arabia and other oil-rich countries shouldn’t produce worries of skyrocketing gas costs for U.S. drivers still smarting from last year’s pump price shocks, according to fuel industry experts.

    At a time when gas prices are already increasing because of rising seasonal demand, the slashed crude oil output that Saudi Arabia announced Sunday will translate into higher prices, they say. But compared to last year — when energy markets were absorbing the initial impact of Russia’s invasion of Ukraine — the altitude on those gas price increases may not feel so steep.

    On Monday, the national average for a gallon of gas was $3.50, according to AAA. That’s around 10 cents more than a month ago, but almost 70 cents less than the $4.19 average cost one year ago.

    The effects of decreased oil production could translate into initial price increases of up to 15 cents per gallon, according to two different energy sector watchers.

    There’s Patrick De Haan, head of petroleum analysis at GasBuddy.

    At OPIS, an outlet focused on energy sector news and analytics, Chief Oil Analyst Denton Cinquegrana said he was previously expecting summer gas prices to average around $3.60.

    “This move probably boosts that by about 10 – 15 cents to about $3.70-3.75/gal.” Cinquegrana told MarketWatch.

    OPIS is owned by Dow Jones, which also owns MarketWatch.

    It’s possible for gas price averages to hit around $3.60 in the next week or so, he said. The other 10 to 15 cents might filter into retail pump prices later this month or in early May, according to Cinquegrana.

    The surprise move came from Saudi Arabia and other members of OPEC+, the Organization of the Petroleum Exporting Countries and allies, including Russia. In Saudi Arabia, officials were reportedly “irritated” by recent remarks from U.S. Energy Secretary Jennifer Granholm.

    After the Biden administration tapped the country’s strategic petroleum reserve to combat last year’s high gas costs, Granholm said it will difficult to restock the reserve.

    By May, more than 1 million barrels of oil a day will be slashed from output in the global energy markets. That’s in addition to OPEC+ production cuts announced last fall.

    In cost breakdowns for a gallon of gas, the price of crude oil is responsible for more than half the price tag, according to the U.S. Energy Information Administration.

    In Monday morning trading, the price of West Texas Intermediate crude for May delivery jumped 6% to just over $80 on the New York Mercantile Exchange.

    For context, when gas prices were breaking records last year, the costs of West Texas Intermediate crude were in the triple digits. While retail prices surged in early March 2022, West Texas Intermediate crude briefly traded for more than $130 during the trading day on March 7, 2022.

    The national average for a gallon of gas hit a record $5.01 in mid-June, according to AAA. In the current context, Cinquegrana doesn’t see a return to $5 gas averages, he said. Gas prices vary across the nation. California drivers are paying $4.80 on average while Mississippi drivers are paying $3.02 per gallon. 

    Even if price increases are not as sharp as last year, hot inflation is retreating slowly. So any extra costs are unwelcome to millions of American drivers who are living their lives and more frequently commuting to the office.

    Like last year, oil prices are poised to increase, said AAA spokesman Devin Gladden.

    But the economy’s background noise right now could dampen the impact as downturn worries keep sticking around, he added. Furthermore, there can be discrepancies in the announced production reductions and the amounts that are actually reduced, Gladden said.

    “If recessionary concerns persist in the market, oil price increases may be limited due to the market believing lower oil demand will lead to lower prices this year,” he said.

    On Monday, energy sector stocks and related exchange traded funds were climbing after the production cut news. In early afternoon trading, the Dow Jones Industrial Average
    DJIA,
    +0.81%
    was up more than 200 points, or 0.7%, while the S&P 500
    SPX,
    -0.03%
    is little changed and the Nasdaq Composite
    COMP,
    -0.98%
    dropped 100 points, or 0.8%.

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  • Inflation softens in February, PCE finds, and takes some pressure off Fed

    Inflation softens in February, PCE finds, and takes some pressure off Fed

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    The numbers: The cost of U.S. goods and services rose by a milder 0.3% in February, perhaps a sign the Federal Reserve’s fight against high inflation is showing grudging progress.

    Prices had risen by a sharp 0.6% in January, based on the so-called PCE index.

    The yearly increase in prices declined to 5% from 5.3% in the prior month, the government said Friday, marking the lowest level in more than a year and a half.

    That’s still about three times the rate of inflation before the pandemic, however.

    Senior Federal Reserve officials have signaled they plan to raise interest rates just once more before pausing to determine how much a sharp increase in borrowing costs brings down inflation. The Fed has jacked up its key short-term U.S. rate to a top end of 5%, a remarkably fast acceleration from nearly zero one year ago.

    Higher interest rates temper inflation by slowing the economy, but the effects can sometimes take up to a year or more to be fully felt. The Fed wants to avoid going too far or cause any more stress on the U.S. financial system after the failure of Silicon Valley Bank.

    After the PCE report, Boston Federal Reserve President Susan Collins said the central bank “has more work to do” to get inflation lower in an interview with Bloomberg.

    Key details: The more closely followed core index also increased 0.3% last month, matching Wall Street’s forecast.

    The core rate of inflation in the past 12 months slipped to 4.6% from 4.7%.

    The PCE is viewed by the Fed as the best predictor of future inflation trends. It is formally known as the personal consumption expenditures price index.

    The central bank pays especially close attention to the core gauge that strips out volatile food and energy costs.

    Unlike it’s better-known cousin, the consumer price index, the PCE gauge takes into account how consumers change their buying habits due to rising prices.

    They might substitute cheaper goods such as chicken thighs for more expensive ones like boneless breasts to keep costs down. Or buy generic medicines instead of brand names.

    The CPI showed inflation rising at a 6% yearly rate in February.

    Big picture: The Fed is trying to straddle a fine line: Bring inflation back down to its 2% target, but without causing a severe economic reaction.

    Whether the Fed will be able to hold the line on just one more rate hike is far from certain.

    If inflation stays high, the central bank would have to end its pause on rate hikes and risk a recession. A slim majority of economists, in fact, already believe a downturn is imminent.

    Steadily falling inflation, on the other hand, could allow the Fed to pull a rabbit out of the proverbial hat.

    Looking ahead: “For an economy looking to avoid recession, this was a good report,” said Robert Frick, corporate economist at Navy Federal Credit Union.

    “For the Fed, it could be one and done in May,” said senior economist Sal Guatieri of BMO Capital Markets.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.50%
    and S&P 500
    SPX,
    +0.57%
    rose in Friday trades. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.535%
    declined several basis points to 3.53%.

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  • U.S. economy speeds up in March, S&P finds, but so does inflation

    U.S. economy speeds up in March, S&P finds, but so does inflation

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    The numbers: The U.S. economy accelerated in March, S&P Global surveys showed, but so did inflation as companies raised selling prices.

    The S&P Global Flash U.S. services-sector index rose to an 11-month high of 53.8 from 50.5 in the prior month. Most Americans are employed on the service side of the economy.

    The S&P Global U.S. manufacturing sector index, meanwhile, increased to 49.3 from 47.3. That’s a five-month high.

    Any number above 50 points to expansion. Figures below that signal contraction.

    The S&P Global surveys are among the first indicators each month to assess the health of the economy.

    Key details: New orders, a sign of future sales, rose for the first time since last September at service-oriented companies.

    Booking at manufacturers fell again, but at the slowest pace in six months. More positively, production increased for the first time since last September.

    Employment rose across the economy as both service companies and manufacturers said they added new workers.

    On the downside, the increase in demand allowed companies to raise prices at the fastest pace in five months.

    Business leaders said rising costs, especially labor, contributed to their decision to raise prices.

    That’s not good news for Federal Reserve officials who worry that rising wages could make it harder to get high inflation under control.

    Big picture: The service and industrial sides of the economies are following different trajectories.

    Americans are spending relatively more money on services such as travel and eating out and spending less on goods. As a result, service companies are still hiring and growing at a faster clip.

    Manufacturers are basically treading water due to the shift in consumer spending patterns as well as the depressive effects of higher inflation and interest rates.

    Adding it all up, though, the S&P reports paint the picture of a expanding economy that is not on the doorstep of recession.

    What remains to be seen is how much the recent stress in the banking sector hurts lending and makes it harder for businesses to borrow and invest.

    Looking ahead: “March has so far witnessed an encouraging resurgence of economic growth,” said Chris Williamson, chief business economist at S&P Global.

    “There is also some concern regarding inflation,” he said. “The inflationary upturn is now being led by stronger service sector price increases, linked largely to faster wage growth.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -0.17%
    and S&P 500
    SPX,
    -0.13%
    fell in Friday trades.

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  • Chinese EV maker Xpeng cuts prices after Tesla move

    Chinese EV maker Xpeng cuts prices after Tesla move

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    Chinese electric car maker Xpeng Inc. has cut prices for most of its vehicles by around 10%, joining other auto makers in lowering prices as competition heats up in the country’s fast-expanding electric-vehicle market.

    The company said in a statement on Tuesday that it will slash prices for multiple versions of its P7, P5 and G3i models by 20,000 yuan (US$2,970) to CNY36,000 yuan, representing about a 10% drop from current prices. In particular, the starting price for Xpeng’s
    XPEV,
    -1.19%
    best-selling P7 sedan will be reduced by 12.5%.

    The price cuts will take effect from Tuesday afternoon, the company said. Xpeng has kept prices unchanged for its new G9 model.

    For car owners who purchased Xpeng automobiles before the price cut, Xpeng said it will extend maintenance services for free as compensation.

    Xpeng’s move came after Tesla Inc.
    TSLA,
    -0.94%
    lowered its China selling prices earlier this month. EV makers have been increasingly seeking to fend off rising competition from emerging rivals and traditional car makers’ stepped-up push into the EV industry, where previously soaring sales growth is expected to cool down amid higher market saturation.

    Write to Yifan Wang at yifan.wang@wsj.com

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  • U.S. home prices fall for fourth month in October as high mortgage rates bite

    U.S. home prices fall for fourth month in October as high mortgage rates bite

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    The numbers: The S&P CoreLogic Case-Shiller 20-city house price index fell 0.5% in October, its fourth monthly decline. 

    Year-over-year prices rose rose 8.6%, slowing from 10.4% in the previous month.

    A broader measure of home prices, the national index, fell a seasonally adjusted 0.3% in October from September.

    A separate report from the Federal Housing Finance Agency showed home prices remaining flat in October, down from a 0.1% gain the prior month. 

    And over the last year, the FHFA index was up 9.8%.

    Key details: Miami, Tampa, and Charlotte reported the highest year-over-year gains among the 20 cities in October. All 20 cities reported lower price increases.

    San Francisco and Seattle reported the lowest year-over-year gains, which have seen prices fall by more than 10% from a peak in May.

    Big picture: Housing is in a slowdown, but affordability hasn’t returned. Homes are still expensive, as mortgage rates remain above 6%, and inventory of homes available for sale remains low.

    What S&P said: “As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” Craig J. Lazzara, managing director at S&P DJI, said.

    “Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken,” he added.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -0.22%
    and the S&P 500
    SPX,
    -0.63%
    were up in early trading on Tuesday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.807%
    rose above 3.81%.

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  • Tesla Doubles Discounts on Model 3 and Model Y Vehicles

    Tesla Doubles Discounts on Model 3 and Model Y Vehicles

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    Tesla Doubles Discounts on Model 3 and Model Y Vehicles

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  • Canada Producer Prices Slip in November

    Canada Producer Prices Slip in November

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    By Robb M. Stewart

    OTTAWA–Producer prices in Canada eased in November, led by energy products, and Canadian companies paid slightly less for raw materials.
    

    Statistics Canada’s industrial product price index fell 0.4% in November from the month before, when the index advanced 2.4%. On a 12-month basis, the producer-price index increased 9.7%.
    

    

    Excluding energy products, producer prices were unchanged on-month in November, the data agency said.
    

    Energy and petroleum products prices fell 2.7% from the month before, with prices for finished motor gasoline and diesel fuel both lower. Market data show that the downward trend continued into the first half of December, Statistics Canada said.
    

    The price of softwood lumber was down for a fourth consecutive month in November, in part a reflection of a cooling housing market in Canada and the U.S., and prices for motorized and recreational vehicles also slipped from October, the agency said. Prices rose for primary non-ferrous metal products, in part due to the appreciation of the Canadian currency against the U.S. dollar.
    

    The industrial product price index measures the prices that manufacturers in Canada receive once their goods leave the plant. It doesn’t reflect the final prices consumers pay for goods on store shelves.
    

    The raw materials price index, which tracks prices paid by manufacturers, was down 0.8% from October, driven by a fall in crude energy products that more than offset the largest month-over-month increase in prices for natural gas since the agency began measuring the index in 1980. Compared with a year earlier, prices for raw materials were up 8.0% in November.
    

    Annual consumer inflation held steady in October after peaking in June, Statistics Canada said last month. The agency will release November’s consumer-price index on Wednesday.
    

    The Bank of Canada, like the Federal Reserve, has aggressively raised interest rates this year to tackle inflation but recently signaled the rate cycle may be coming to an end. The central bank this month again lifted its monetary policy rate, bringing the cumulative increase this year to 4 percentage points for a key rate of 4.25%, the highest level in almost 15 years.
    

    Write to Robb M. Stewart at robb.stewart@wsj.com
    

    

    

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  • 
		
		
    
			
    The PC boom has gone bust, and we are about to see the results ahead of Black Friday
    
			
    The PC boom has gone bust, and we are about to see the results ahead of Black Friday
    
			
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    The pandemic-fueled personal-computer boom has ended, so how will that affect demand and pricing for PCs and the retailers that sell them this holiday season?
    

    A sense of the fallout will be provided in the week ahead with results due from PC makers Dell Technologies Inc.
    
        DELL,
    
        +0.67%
    
      and HP Inc.
    
        HPQ,
    
        +0.17%    ,
    
       along with videoconferencing platform Zoom Video Communications Inc.
    
        ZM,
    
        -1.15%
    
      and electronics chain Best Buy Co Inc.
    
        BBY,
    
        +2.88%    
      
    

    

    All of those companies will report amid signs of deep holiday discounting for products such as clothing and electronics, after many customers — stuck at home in 2020 and 2021 — loaded up on laptops and other goods and turned Zoom into a digital conference room. But this year, decades-high inflation, and a return to prepandemic spending on travel and hanging out in person, have forced retailers and electronics makers to adjust to a world where more people are spending on essentials.
    

    PC shipments have fallen at rates not seen since at least the 1990s. Adobe
    
        ADBE,
    
        -2.06%
    
      has said online holiday discounts for electronics have been as steep as 17%. For computers, they’ve run for as much as 10% less. TVs are also being sold for cheaper. Holiday-season forecasts have generally called for sales increases, helped by price increases and enduring demand despite those price increases. 
    

    In-depth: The pandemic PC boom is over, but its legacy will live on
    

    However, results from Target
    
        TGT,
    
        +0.54%
    
       on Wednesday missed big on third-quarter earnings, and the big-box retailer said it was bracing for a possible decline in fourth-quarter same-store sales, citing “softening sales and profit trends that emerged late in the third quarter and persisted into November.” Results from Walmart
    
        WMT,
    
        +1.51%
    
       were almost the opposite, however, detailing earnings that beat by a wide margin and a raised full-year outlook. 
    

    Among smaller retailers, discounter Ross Stores Inc.
    
        ROST,
    
        +9.86%
    
       hiked its full-year profit forecast, citing sales momentum but easier year-over-year comparisons up ahead. But Williams-Sonoma Inc.
    
        WSM,
    
        -6.15%
    
       noted “macro uncertainty” and “increasingly inconsistent” demand. 
    

    This week in earnings
    

    The companies report during a shortened, quieter week — thanks to Thanksgiving — and after concerns about a recession have hung over much of the year. With 94% of S&P 500
    
        SPX,
    
        +0.48%
    
      companies having already reported third-quarter results, only a dozen are set to release earnings in the week ahead. 
    

    But among those 94%, there are signs that preoccupations with a downturn might be easing, after the economy grew during the third quarter and reversed after two quarters of declines. 
    

    FactSet senior analyst John Butters, in a report on Thursday, said 179 companies have mentioned the term “recession,” during earnings calls in the third quarter. That’s still above the average over 10 years, but it’s below the 242 companies that mentioned a recession in the second quarter. 
    

    Previously: Executives seem pretty convinced a recession is coming
    

    Elsewhere on Monday, J.M. Smucker Co.
    
        SJM,
    
        +1.11%
    
       — best known for Folgers and Jif — reports results, following concerns about higher food prices and how much higher they might go. Life-sciences electronics maker Agilent Tecnologies Inc.
    
        A,
    
        +1.21%
    
       report results on Monday as well. Fast-food chain Jack in the Box Inc.
    
        JACK,
    
        
    
       reports Tuesday. Tractor and construction-vehicle Deere & Co.
    
        DE,
    
        +0.31%
    
       reports Wednesday, following production and supply-chain snarls but steady demand. 
    

    The calls to put on your calendar
    

    Clothing demand, discount demand: Urban Outfitters Inc.
    
        URBN,
    
        +2.44%
    
       reports Monday, while Burlington Stores Inc.
    
        BURL,
    
        +4.63%    ,
    
       Nordstrom Inc.
    
        JWN,
    
        +1.71%
    
       and dollar-store chain Dollar Tree Inc.
    
        DLTR,
    
        -0.21%
    
       report on Tuesday. 
    

    The discounting wave across clothing retailers, an effort to clear inventories, might attract more consumers, but it’s worried Wall Street analysts focused on margins and the bottom line. Still, some analysts have said that more younger shoppers feel like their wardrobes are getting stale, and they say Nordstrom, whose customers tend to have more money, is best geared for “an upcoming wardrobe refresh.”
    

    Off-price clothing and home-goods retailer Burlington, meanwhile, will report after rival discounters Ross and TJX received a lift from investors this week. 
    

    See also: The holiday-shopping season has a different problem this year than last — and it could lead to some deals
    

    Ross’ chief executive, Barbara Rentler, noted that rising prices had hurt its lower-income consumers. But Jefferies analysts said that Burlington and other discounters, which often buy up goods that other retailers don’t want, stood to benefit from the inventory purge. 
    

    Dollar Tree, meanwhile, reports as more shoppers seek cheaper grocery options, but as food prices rise nonetheless. But Bank of America analysts, in a note last month, said traffic data implied a “slowdown” heading into the results. 
    

    The numbers to watch
    

    Demand trends for PCs, electronics: Dell and HP report in the wake of deeper job cuts across the tech industry, while Zoom tries to tack on more features — such as calendar and email functions — to appeal to small business and adapt to a hybrid-work world. 
    

    The PC boom’s demise hit home at Dell during its prior quarter, reported in August, after personal-computer sales at the company came in below estimates. Executives, at that time, said PC demand had fallen and that “customers are taking a more cautious view of their needs given the uncertainty.” 
    

    Opinion: Tech earnings are about to dive, and there’s no life preserver in sight
    

    Some analysts, however, signaled that some degree of investor pessimism was already baked into the stock prices.   
    

    “We recognize the deteriorating industry fundamentals in relation to PCs as well as incremental slowdown in IT Infrastructure. That said, we believe the magnitude of the cuts last quarter set up Dell to be less exposed to another round of material earnings revisions,” JPMorgan analysts said in a note. And even as HP feels similar pain, analysts there said share buybacks could be “a bright spot.”
    

    Results from HP and Dell could also have implications for Best Buy, which sells laptops, TVs, phones and other electronic devices. 
    

    “Recall that initial expectations for the year were that BBY would face pressure as it lapped stimulus-fueled spending and broad-based demand for technology products and services,” Wedbush analysts said in a note on Friday. 
    

    “However, the macro has been more volatile than expected with consumers facing significant inflationary pressures and lower-income households are making decisions to trade down in some categories such as televisions.”
    

    

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  • 
		
		
    
			
    Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.
    
			
    Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.
    
			
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    Billionaire Jeff Bezos, who founded the e-retail behemoth Amazon, has some spending tips as Americans gear up for a holiday shopping season — amid four-decade high inflation and recession worries.
    

    Here’s what he said:
    

    

    

    
        “‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table.’”
      
    

    

    

    Bezos made the comments in a CNN
    
        WBD,
    
        +0.46%
    
       interview that aired this week, the same interview where he pledged to give away most of his fortune in his lifetime.
    

    

    Why did Bezos offer the tip for consumers and small business to go easy on big-ticket items? He gave one big reason.
    

    “If we’re not in a recession right now, we’re likely to be in one very soon,” he said in the interview, picking up on his cautionary tweet last month that “the probabilities in this economy tell you to batten down the hatches.”
    

    Bezos is currently executive chair at Amazon
    
        AMZN,
    
        -2.34%    ,
    
       transitioning to the role last year as Andy Jassy took the reins as CEO. 
    

    Later this week, Amazon confirmed it was laying off some of its staff in its device and services business — joining a growing list of tech companies, including Facebook parent Meta
    
        META,
    
        -1.57%
    
       — that is laying people off. Amazon’s job cuts could number around 10,000, according to the Wall Street Journal. 
    

    

    

    
        “Critics have taken aim at these words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza.”
      
    

    

    

    To be sure, Bezos is not alone is his worries about a potential recession as the Federal Reserve and other central banks fight higher costs by hiking interest rates.
    

    But his advice prompted some guffaws on social media. In a nutshell, critics say these are words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza that lets consumers seamlessly spend money.
    

    As Joshua Becker, a proponent of minimalism wrote on Twitter: “I didn’t hear him mention refraining from Amazon’s Prime Day deals or Black Friday offers, but I recommend adding those items to your list as well.”
    

    Regardless of how anyone feels about hearing spending advice, particularly from one of the world’s richest people, there are some things to consider as events like Black Friday and Cyber Monday approach.
    

    For one thing, maybe there are discretionary expenses where people can cut back. Many Americans are still spending briskly, as Walmart
    
        WMT,
    
        -0.34%
    
       third-quarter earnings and October’s retail-sales numbers recently affirmed. Holiday-spending projections paint the same picture.
    

    Americans will spend between $942.6 billion and $960.4 billion on holiday-season sales this year, according to projections from the National Retail Federation. Last year’s holiday sales totaled $889.3 billion, the trade association said.
    

    

    

    
        “During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to the National Retail Federation.”
      
    

    

    

    But Americans are planning for the holidays while credit-card balances are increasing — likely because credit cards are helping them keep up with rising costs.
    

    During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to Federal Reserve Bank of New York data.
    

    While balances grow, so do credit-card interest rates. The annual percentage rate (APR) on new credit-card offers averaged 19.14% in mid-November, according to Bankrate.com. That beats the old record on APRs for new cards, set at 19% three decades ago.
    

    The holiday shopping season is typically when Americans accumulate credit-card debt, pay the debts in the early part of the coming year and repeat the holiday-season debt the following year.
    

    This year, the stakes could be higher if high credit-card bills arrive and a recession-induced job loss follows.
    

    “It’s not the time to overspend and have a problem with paying your bills later,” Michele Raneri, vice president of financial services research and consulting at TransUnion
    
        TRU,
    
        -4.94%    ,
    
       one of the country’s three major credit bureaus, previously told MarketWatch. “We know the economy is sending mixed messages.”
    

    

    

    

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  • 
		
		
    
			
    Oil Could Rise After Latest EU Sanctions on Russia. Why a Rally May Not Last.
    
			
    Oil Could Rise After Latest EU Sanctions on Russia. Why a Rally May Not Last.
    
			
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    The European Union’s ban on seaborne imports of Russian oil, along with the Group of Seven’s plan to cap prices of oil from Russia early next month won’t guarantee that prices for the commodity will see a lasting rally, or that supplies will tighten further in the days ahead.
    

    “In isolation, the sanctions on Russia should be bullish for prices,” says Matt Smith, lead oil analyst, Americas, at Kpler. However, they may have a limited effect, as Russian barrels get “rerouted and not taken off the market,” while a price cap still has so much uncertainty surrounding it that its impact may be “muted due to workarounds or may simply be ineffective.”
    

    

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  • 
		
		
    
			
    U.K. inflation hit fresh four-decade high of 11.1% in October
    
			
    U.K. inflation hit fresh four-decade high of 11.1% in October
    
			
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    U.K. inflation accelerated in October, reaching a fresh four-decade high, as higher wholesale energy prices fed through households’ utility bills.
    

    The U.K.’s Office for National Statistics said Wednesday that consumer prices were 11.1% higher in October than a year earlier, more than the 10.1% rise registered in September.
    

    

    This is the highest rate of inflation since February 1982, and beats the 10.9% consensus forecast from economists in a poll by The Wall Street Journal.
    

    The jump in inflation was mainly due to higher energy prices, which increased for most households even as the U.K. government implemented an energy price cap from Oct. 1. Electricity prices rose 65.7% on year, up from the 54% increase registered in September. Gas prices soared 128.9% compared to a year earlier, outstripping the 95.7% the prior month.
    

    The core price index–which excludes volatile categories such as food and energy–increased 6.5% in October on year, unchanged from September.
    

    The Bank of England expects inflation to remain around 11% in the fourth quarter, and to moderate slightly toward 10% in 2023’s first quarter.
    

    Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
    

    

    

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    France to Pay Part of Companies’ Electricity Bills
    
			
    France to Pay Part of Companies’ Electricity Bills
    
			
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    By Joshua Kirby
    

    The French government will cover a part of companies’ electricity bills, with big energy firms asked to contribute to the cost, a minister told TV station BFM Business late Sunday.
    

    An “electricity guarantee” for 2023 will be finalized soon, and will cover part of any amount paid above a reference price fixed by the government, according to Energy Transition Minister Agnes Pannier-Runacher.
    

    

    Energy companies making large profits will be asked to provide a contribution in relation to the reference price, the minister said, adding that the relevant legal proposition will be made very soon.
    

    The move comes amid surging energy prices across Europe following a stoppage of natural-gas flows from Russia. In France, supply has also been threatened by strikes at nuclear reactors owned by national utility Electricite de France SA.
    

    Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
    

    

    

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    Mortgage industry group predicts recession next year, expects mortgage rates to come back down from 7%
    
			
    Mortgage industry group predicts recession next year, expects mortgage rates to come back down from 7%
    
			
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    NASHVILLE, Tenn. — A mortgage industry group is expecting a recession to hit the U.S. economy.
    

    “We’re forecasting a recession for next year,” Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, said Sunday during the industry group’s annual conference in Nashville, Tenn. 
    

    

    “The upside of that potentially for the industry is, that’s the thing that’s likely going to bring rates down a little bit,” he added.
    

    Also see: Mortgage bankers forecast rates to drop to 5.4% in 2023. Here’s what that means for home prices.
    

    In a statement, Fratantoni said the MBA’s forecast calls for a recession in the first half of 2023, and predicts the unemployment rate will rise from 3.5% to 5.5% by the end of next year.
    

    “We’re beginning to see some significant signs of softening in the labor market,” Frantantoni said. 
    

    He expects companies to no longer be scrambling to fill job openings, and that hiring will eventually cool off.
    

    On average in 2023, expect the economy to lose 25,000 jobs per month, he said, and end the year with employment at 5.5%. 
    

    That’s in stark contrast to the latest unemployment rate in September, which was 3.5%, according to the Bureau of Labor Statistics.
    

    “So a very, very different job market to today,” Frantantoni said. “I do expect the next couple of months are gonna be a pretty abrupt transition.”
    

    With a recession on the horizon, expect mortgage rates to come down to close to 5.4% at the end of next year, he said, versus the 7%-plus rates that the market is seeing today. 
    

    “We are holding to our view that this is a spike right now, driven by financial-market dislocation, heightened level of volatility in the market and this global slowdown we’re about to experience, the likelihood of recession in the U.S. will begin to pull this number,” Fratantoni said.
    

    

    

    

    Mike Fratantoni, senior vice president and chief economist for the MBA, speaks in Nashville on Sunday.
    

          
    
            AARTHI SWAMINATHAN
    
          
    
  
    

    

    Given the massive rise in rates this year, with the 30-year fixed rate averaging 6.94% last week as compared to 3.85% a year ago, many potential home buyers have decided to wait as their projected monthly mortgage payments have become unaffordable.
    

    Home sales have plunged, and are dragging down home prices. Sellers are also making more concessions in their attempts to woo buyers.
    

    As a result of the slowdown, the MBA is expecting total mortgage origination volume to fall to $2.05 trillion in 2023 from the $2.26 trillion expected in 2022. 
    

    They’re also expecting purchase originations to drop 3%, and refinances by 24%.
    

    Fratantoni also expects delinquencies to rise from 40-year lows.
    

    

    

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    Kroger and Albertsons Say Their Merger Will Cut Prices. Their Shares Are Tumbling.
    
			
    Kroger and Albertsons Say Their Merger Will Cut Prices. Their Shares Are Tumbling.
    
			
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    With inflation still an untamed threat, Friday’s announced merger of the grocers
    
        
    
          
    
            Kroger
    
          
    
        
    
       and
    
        
    
          
    
            Albertsons
    
          
    
        
    
       will spur debate about whether the consolidation will raise food prices, or lower them.
    

    The Biden administration’s antitrust regulators are scrutinizing mergers more closely than did predecessors, and an old argument against combinations is that they lead to price-gouging.
    

    

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    OPEC+ supply cut threatens to tip global economy into recession, IEA says
    
			
    OPEC+ supply cut threatens to tip global economy into recession, IEA says
    
			
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    An oil supply cut from the Organization of the Petroleum Exporting Countries threatens to deepen a global energy crisis by sending oil prices higher at a time of already elevated inflation and weak economic growth, the International Energy Agency said.
    

    Last week’s two million barrel-a-day reduction in the group’s output targets, which incurred sharp criticism from the U.S. and its partners, will tighten the oil market further at a moment of extreme vulnerability with few additional sources of supply available to compensate, the Paris-based agency said Thursday.
    

    

    The cut’s impact will be to exacerbate a mix of high oil prices and weakening global growth, both of which would undermine longer-term demand for oil, the IEA said, as it slashed its oil-demand forecasts.
    

    “With unrelenting inflationary pressures and interest rate hikes taking their toll, higher oil prices may prove the tipping point for a global economy already on the brink of recession,” the IEA said in its monthly market report.
    

    The IEA cut its oil-demand growth forecasts by 470,000 barrels a day for 2023, to 1.7 million barrels a day. It also lowered its 2022 oil-demand growth forecast by 60,000 barrels a day, to 1.9 million barrels a day. Oil demand growth has steadily fallen throughout the year and is forecast to contract in the fourth quarter by 340,000 barrels a day, the IEA said.
    

    OPEC has said higher oil prices are necessary to spur fresh investments in oil production but the IEA said constraints among oil producers meant additional supplies would be scant. U.S. shale oil producers facing higher costs are withholding investment, while most Western nations are consciously moving away from fossil fuels. OPEC’s own members are struggling with a lack of spare capacity.
    

    The cut has undone a trend of steadily recovering oil supply following the Covid-19 pandemic “with the resulting higher price levels exacerbating market volatility and heightening energy security concerns,” the IEA said.
    

    The IEA’s report characterizes the supply cut as a lose-lose situation for both oil producers and consumers, as buyers of oil suffer from higher prices in the short term, while oil producers stand to see weaker demand as a result.
    

    The cut also comes ahead of an EU embargo on Russian oil and a plan by the Group of Seven wealthy nations to cap oil prices, both of which analysts warn could further undermine global energy supplies.
    

    Russia has said it would cut production and withhold supplies from nations participating in the price cap mechanism. Meanwhile, time was running out for EU states to find alternative sources of energy to compensate for the still-high levels of oil currently imported from Russia, the IEA said.
    

    Russia’s oil exports to the EU fell by 390,000 barrels a day in September, to 2.6 million barrels a day, the IEA said. The EU has just two months until the embargo on Russian crude imports comes into force, but still needs to find an alternative source for 1.3 million barrels a day of Russian oil, it warned.
    

    OPEC has said its production cut is aimed at stabilizing oil markets and countering declining oil-demand growth. On Wednesday, in its own report, the group sharply slashed its forecasts for global economic growth and oil demand.
    

    For 2022, the IEA now expects total oil demand of 99.6 million barrels a day and 101.3 million barrels a day in 2023.
    

    The agency cuts its forecast for global oil supply next year by 1.2 million barrels a day to 100.6 million barrels a day and by 200,000 barrels a day to 99.9 million barrels a day for 2022.
    

    Write to Will Horner at william.horner@wsj.com
    

    

    

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