Coffee With Greta: Fed Decision Day
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DJIA Futures: +340 (+1%)
SPX Futures: +45 (+1.1%)
NASDAQ Futures: +203 (+1.5%)
Good morning friends!
Futures are higher as the market gears up for today's Fed decision.
Let’s get right to it!
Fed Decision Day
The market is laser focused on the Fed as the Central Bank is set to announce its rate hike decision at 2:00 p.m. ET.
This will be the bank’s first rate hike since 2018 after lowering rates to near zero in March 2020.
CME Group’s FedWatch Tool shows more than 98% of traders believe this will be a 0.25% rate hike.
The market is also hoping for more clarity on the bank’s plans to reduce the size of its balance sheet.
Chairman Jerome Powell told Congress in early March that process will start after rate hikes have begun.
Consumer inflation pressures hit a fresh 40-year high in February as the CPI surged 7.9% year-over-year.
And wholesale inflation hit a record high as the PPI skyrocketed 10% annually.
Retail Sales Slow
U.S. retail sales slowed more than expected in February as consumers were dragged down by inflation.
The Census Bureau reported retail sales rose 0.3% last month to $658.1 billion.
That was weaker than economists’ expectations for 0.4%.
January’s retail sales were revised higher to show a gain of 4.9% vs the previous 3.8%.
Core retail sales, which exclude gas auto sales, rose 0.2% vs expectations for a 0.9% increase.
Import Prices Surge
U.S. import prices jumped 1.4% in February, continuing to fuel inflation.
That was better than economists' expectations for a 1.6% increase and lower than 1.9% in January.
January and February combined marked the largest increase in 11 years.
Oil made up most of February's gain, rising 8.1%.
Excluding fuel, import prices rose just 0.8% last month.
Export prices meantime jumped 3%, the largest increase on record, and surged 16.6% year-over-year.
Oil Falls Below $100
Oil prices are rising slightly today after tumbling below $100 on Tuesday.
West Texas Intermediate crude futures are up 0.6% to just over $97 per barrel while Brent crude futures are up 0.2% to just over $100 per barrel.
The oil market has cooled amid ongoing peace talks between Ukraine and Russia.
Ukraine’s President said today those talks were sounding “more realistic” but more time is needed.
Russia’s Foreign Minister said some deals are close.
Nickel Trading Shut Down Again
Nickel trading resumed on the London Metal Exchange today after a week-long halt.
The LME halted trading March 8 after Nickel prices more than doubled and topped $100,000 per tonne for the first time in history.
Price moves today were limited to 5% above or below the last closing price before trading was suspended.
But LME was forced to halt trading again after an error allowed trades to go through below the daily price limit.
The exchange said it is investigating the glitch and will try to reopen the market ASAP.
The trades executed below the limit will be canceled.
LME also imposed 15% limits on aluminum, copper, lead, tin, and zinc.
This is the first time the exchange has ever placed limits on physical contracts.
Metals trading has been volatile amid the war in Ukraine as both Russia and Ukraine are key global suppliers of several metals.
Starbucks CEO Retiring
Starbucks (SBUX) shares are up 5.7% ahead of the open after CEO Kevin Johnson announced his retirement.
In a statement, Johnson said, “A year ago, I signaled to the Board that as the global pandemic neared an end, I would be considering retirement from Starbucks. I feel this is a natural bookend to my 13 years with the company.”
Founder and former CEO Howard Schultz will take over as interim CEO.
Starbucks plans to find a permanent replacement by the fall.
Chair of the board, Mellody Hobson said, “We have a great slate of candidates. People want this job, and we’re fully confident we’ll have a new leader in the fall.”
Raskin Withdraws Fed Nomination
In other Fed related news, Sarah Bloom Raskin withdrew her nomination to serve on the Federal Reserve board Tuesday.
Raskin had been nominated by President Biden to be the Central Bank’s next vice chair for supervision.
But she faced an uphill battle for confirmation in the Senate over her views on climate policy.
All 50 Senate Republicans were opposed to her confirmation.
Then West Virginia Democrat Senator Joe Manchin confirmed this week he would not confirm her.
That made it virtually impossible for her nomination to move forward in the 50-50 Senate.
Homebuilder Sentiment Preview
The National Association of Homebuilders releases its sentiment index at 10:00 a.m. ET.
The survey is expected to show confidence among builders slipped two points this month to 80.
Builders have seen their business boom due to low supply of existing homes on the market.
But they’ve faced severe supply chain and labor shortages as they struggle to keep up with record high demand.
In Case You Missed It
- U.S. airline stocks rallied Tuesday after three major airlines hiked their 2022 revenue forecasts. Delta (DAL) shares jumped 8.7%, while United (UAL) surged 9.2%, and Southwest (LUV) rose 4.9%. All three companies raised their revenue forecasts, predicting a strong rebound in travel demand this year. Delta said its bookings are already outpacing 2019 levels.
- Tesla raised prices for the second time in a week amid high inflation pressures. The automaker hiked prices on all of its models in the U.S. as well as the Model Y and Model 3 in China. TSLA shares rose 4.6% Tuesday. The price hikes range from $2,000 to $10,000 depending on model. Tesla did not specify the reason for the price hikes but the decision comes days after CEO Elon Musk said they were “seeing significant recent inflation pressure in raw materials & logistics”.
