Coffee With Greta: Wholesale Inflation Surges 10%


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DJIA Futures: +172 (+0.5%)

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NASDAQ Futures: +130 (+1%)

Good morning friends!

Futures are higher on day one of the Fed’s two-day policy meeting. 

Let’s get right to it!

Wholesale Inflation Hits Double Digits

The Bureau of Labor Statistics Producer Price Index shows prices surged 10% year-over-year in February. 

That was in line with expectations and is the second straight month of double digit wholesale inflation after January was revised higher.

On a monthly basis, prices rose 0.8% vs 0.9% expected.

Nearly 40% of that gain was due to the gasoline index, which jumped 14.8% year-over-year.

The Core PPI, which excludes food, energy, and trade services, jumped 0.2% monthly and 6.6% annually.

PPI is a forward indicator for consumer prices as manufacturers and service providers pass-down higher costs.

This new inflation data comes on day one of the Fed’s two-day policy meeting. 

The central bank is expected to announce its first rate hike since 2018 on Wednesday and provide more clarity on its plans to reduce the size of its balance sheet.

Oil Prices Slide to 2-Week Low 

Oil prices are continuing to tumble, hitting a new two-week low.

West Texas Intermediate crude futures are down more than 8% to just under $95 per barrel with Brent crude futures falling nearly 8% to under $99 per barrel. 

The two-day drop in prices comes amid continued talks between Russia and Ukraine and as new Covid lockdowns in China threaten to weaken global demand. 

China is the largest importer of crude oil in the world.

Russia, Ukraine Continue Ceasefire Negotiations

Ukraine’s capital city of Kyiv announced a 35-hour curfew will begin tonight after several missile strikes on residential buildings in the city. 

A fifth round of talks between Ukrainian and Russian officials is set to take place today after the fourth round failed on Monday. 

Several NATO prime ministers are now heading to Ukraine to meet with the president and prime minister. 

The PMs of Poland, Slovenia, and the Czech Republic will visit Kyiv today. 

The group said, “The purpose of the visit is to confirm the unequivocal support of the entire European Union for the sovereignty and independence of Ukraine.”

The EU and U.K. both rejected Russia’s “most favored nation” trading status today, allowing harsh tariffs to be imposed on Russian goods. 

Britain is also set to ban exports of high-end luxury goods to Russia.

The EU approved new sanctions today banning transactions with state-owned businesses, a ban of Russian steel imports, a ban on new investments in Russia’s energy security, and a ban on luxury goods exports to Russia.

Traders Sell Risk, Treasury Yields Spike

Tech stocks sold off sharply on Monday as traders reevaluate their risk positions with the impending Fed rate hike. 

The Nasdaq was the largest loser of the session, closing 2% lower on Monday. 

High-growth tech stocks took the brunt of that drop. 

Cathie Wood’s Ark Innovation ETF (ARKK) plunged 6% and is now down nearly 45% YTD.

ARKK shares are up 1.3% ahead of the open. 

Netflix (NFLX) shares have officially given up all of their pandemic gains.

The streaming giant closed 2.7% lower Monday at $331.01 after notching out a new 52-week low at $329.82 earlier in the session.

But NFLX shares are rebounding in premarket trade, up 1.7%.

On the other side of that tech sell-off, Treasury yields popped.

The 10-year yield hit a high of 2.145% Monday, its highest since July 2019. 

Currently the yield on the 10-year note is down 3 basis points to 2.11%.

Airlines Raise Outlook

Shares of the major airlines are rallying ahead of the open after hiking their revenue outlooks.

Delta (DAL) shares are up 5.9%, United (UAL) is rallying 4.9%, and Southwest (LUV) shares are rising 4%.

All three companies said air travel is rebounding from the Omicron slump and they expect travel demand to be stronger than previously forecast this year.  

Tesla Hikes Car Prices

Tesla (TSLA) shares are flat in premarket trade after the electric automaker announced a price hike for its cars. 

The company raised prices on all models in the U.S. and the Model 3 and Model Y in China. 

This is the second increase in just a week. 

Tesla did not give a reason for the price hike but the decision comes after CEO Elon Musk warned about inflation pressures over the weekend. 

In a tweet Sunday he said, “Tesla & SPaceX are seeing significant recent inflation pressure in raw materials & logistics”.

In Case You Missed It

  • Lyft (LYFT) followed Uber’s (UBER) lead in adding a fuel surcharge for riders as gas prices remain at record highs. Lyft did not disclose how much that temporary charge will be but Uber’s fee will range between $0.45 to $0.55 per ride. The companies say that extra charge will go directly to drivers. 
  • Shares of the major vaccine makers popped on news of renewed Covid lockdowns in China Monday. Pfizer (PFE) shares jumped 3.9%, while BioNTech (BNTX) surged 12%, and Moderna (MRNA) rallied 8.6%. Shenzhen became the first city in China to be placed under a full lockdown with only essential businesses able to be open. That closure is prompting fears of more supply chain issues and worsening inflation as the city is a global tech hub and the fourth largest port in the world.


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