Coffee With Greta: Inflation is Still Boiling Over
DJIA Futures: -418 (-1.4%)
SPX Futures: -71 (-1.9%)
NASDAQ Futures: -293 (-2.5%)
Good morning friends!
Futures are tumbling after the latest inflation data came in HOT.
Let’s get right to it!
Inflation Surges Above 9%
The Bureau of Labor Statistics consumer price index shows inflation pressures soared in June.
The CPI shows prices rose 9.1% year-over-year last month, higher than expectations for 8.8% and up from 8.6% in May.
That’s a fresh 41-year high as gas prices surged 11.2% in June compared to May.
Grocery prices were up 10.4% annually, gas prices soared 59.9% year-over-year, and oil prices skyrocketed 98.5% compared to a year ago.
On a monthly basis, the CPI rose 1.3% vs 1.1% expected.
The core CPI, which excludes food and energy prices, also came in hotter than expected at 0.7% monthly and 5.9% annually vs estimates for 0.5% and 5.7%.
Treasury Yields Pop on Hot Inflation
Treasury yields popped higher after the CPI release.
The 2-year yield is up 15 basis points to 3.20% while the 10-year yield is up 8 basis points to 3.06%.
The curve between the 2-year and 10-year yields remains inverted, signaling a recession is likely to happen soon.
Oil Prices Slip After Hot Inflation Report
Oil prices turned lower after the release of hot inflation data today.
West Texas Intermediate crude futures are down 1% to under $95 bbl while Brent crude futures are down 1% to about $98 bbl.
The market is also still worried about lower demand that could be a results of new Covid restrictions in China.
The American Petroleum Institute reported Tuesday that U.S. crude inventories rose by 4.8 million barrels last week, beating expectations for a decline.
The Energy Information Administration reports official numbers today.
Gas Prices Extend Decline
U.S. gas prices fell for the 28th day in a row today.
AAA shows the national average for regular gas fell more than 2 cents overnight to $4.631/gal today.
Diesel also fell to $5.611/gal.
Although gas prices have pulled back sharply in recent weeks, the average regular price is just 36 cents lower than the record-high set in June.
The average price is nearly $1.50 higher than a year ago.
Dollar Surges, Euro Hits Lowest Level Since 2002
The euro fell even with the U.S. dollar for the first time in two decades on Tuesday.
The euro hit a low of $0.9998 against the dollar, marking its lowest level since December 2002.
The U.S. dollar index jumped to $108.56, its highest level since October 2002.
That index shot higher today after the CPI, jumping to $108.58.
The falling value of the euro comes amid growing recession fears in Europe due to uncertainty over the energy supply.
Twitter Sues Musk for Attempting to Ditch Takeover
Twitter (TWTR) shares are up 1.5% ahead of the open after suing Elon Musk over his request to terminate his takeover deal.
The social media company officially filed suit against the Tesla (TSLA) CEO in the Delaware Court of Chancery after-hours on Tuesday.
Twitter alleges Musk now “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”
The company said the Tesla boss, “apparently believes that he— unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
Twitter is seeking to enforce the original merger agreement “upon satisfaction of the few outstanding conditions.”
Delta Posts Q2 Profit
Delta Airlines (DAL) shares are down 4.8% in premarket trade after reporting a smaller Q2 profit than analysts were expecting.
The airline reported adjusted earnings of $1.44 per share vs $1.73 expected.
Delta’s $13.82 billion in revenue topped expectations for $13.57 billion.
Costs for each seat it flew a mile rose 22% compared to 2019 while fuel expenses jumped 41%.
Delta said domestic corporate travel sales are 80% recovered from the pandemic and rose 25% from Q1.
The airline flew 18% less capacity last quarter than Q2 2019 but revenue was 10% higher than the same period three years ago, as customers paid higher fares.
In Case You Missed It
- The NFIB small business index dropped 3.6 points in June to 89.5. That was the lowest reading since the start of the pandemic and lower than expectations for 93. Business owners cited inflation as their number one problem. 50% of those with job openings said they could not fill the positions while 94% said they cannot find qualified workers.
- A recent Magnify Money survey found 68% of Americans don’t feel financially prepared for a recession. 70% said they believe a recession is coming, with 59% expecting one in the next 6 months. 68% of six-figure earnings predict a recession in the next 6 months.