Coffee With Greta: Another Hot Inflation Report
DJIA Futures: -372 (-1.1%)
SPX Futures: -53 (-1.3%)
NASDAQ Futures: -215 (-1.8%)
Good morning friends!
Futures are tumbling after the release of more hotter-than-expected inflation data.
Let’s get right to it!
Another Hot Inflation Reading
The Fed’s preferred inflation gauge rose more than expected in January.
The Bureau of Economic Analysis’ personal consumption expenditures (PCE) price index rose 0.6% monthly and 5.4% year over year.
The core PCE price index, which excludes food and energy, jumped 0.6% monthly and 4.7% annually.
That was hotter than economists’ expectations for the index to rise 0.5% monthly and 4.4% annually.
The data showed inflation heating up at the start of the year.
Consumer spending also jumped 1.8% as prices rose vs 1.4% expected.
Personal income rose 1.4% vs the 1.2% estimate.
And the personal saving rate increased to 4.7%.
More traders are starting to believe the Fed will vote for a 50 basis point rate hike at the next meeting.
CME Group’s FedWatch Tool now shows 67% expecting another 25 basis point move and 33% expecting a 50bp hike.
Block Rallies On Strong Outlook
Block (SQ) shares are up 5.5% ahead of the open after topping Q4 revenue expectations and issuing strong guidance.
Here’s how the payments company’s results compared to analysts’ expectations:
- Adjusted EPS: $0.22 vs $0.30 expected
- Revenue: $4.65 billion vs $4.61 billion expected
The company posted $1.66 billion in gross profit, up 40% year over year and better than $1.53 billion expected.
Block’s Cash App business had 51 million monthly active transacting users in the quarter and generated $848 million in gross profit, up 64% year over year.
For 2023, executives expect $1.3 billion in Ebitda which was in line with estimates.
Block is also targeting a gross profit of 25%, up from 22% in Q4.
Nikola Drops After Reporting Weak Q4 Sales
Nikola (NKLA) shares are falling 2.3% in premarket trade after sharply missing Q4 sales expectations.
Here’s how the electric truck maker’s results compared to analysts’ expectations:
- Adjusted loss per share: $0.37 vs $0.43 expected
- Revenue: $6.6 million vs $32.1 million expected
The revenue miss came as Nikola delivered just 20 of the 133 battery-electric trucks it produced in the quarter.
The company said it made a series of changes to the truck in response to early customer feedback.
Nikola built 258 trucks in 2022, hitting its previous guidance of 255 to 305.
In 2023, the company expects to deliver between 250 and 350 battery-electric trucks this year and 125 to 150 of its upcoming fuel-cell trucks.
Nikola confirmed it is still on track to begin production of the fuel-cell version in the second half of the year.
Coming Up: New Home Sales, Consumer Sentiment
The Census Bureau releases its January new home sales report at 10:00 a.m. ET.
That data is expected to show the pace of new sales rose to a seasonally adjusted annual rate of 620,000 units last month from 616,000 in December.
The University of Michigan also releases its final February consumer sentiment index at 10:00 a.m.
That index is expected to be unchanged from the preliminary reading of 66.4 earlier this month.
In Case You Missed It
- JPMorgan Chase (JPM) CEO Jamie Dimon said Thursday that the Fed has lost control of inflation and it remains a work in progress. Dimon told CNBC Thursday, “the fact is we lost a little bit of control of inflation.” He said it may take “a while” for the Fed to get inflation down to its goal of 2% and he expects interest rates to remain higher for longer. He remained positive about the strength of the economy currently but uncertain about the future. Dimon said, “The U.S. economy right now is doing quite well. Consumers have a lot of money. They’re spending it. Jobs are plentiful. That’s today. Out in front of us, there’s some scary stuff.”