Coffee With Greta: PCE Inflation Hits 40-Year High

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DJIA Futures: -27 (-0.1%)

SPX Futures: -1 (-0.01%)

NASDAQ Futures: +28 (+0.2%)

Good morning friends!

Futures are flat as the market gears up for the final day of Q1 and digests fresh economic data.

Let’s get right to it!

PCE Inflation Hits 40-Year High

U.S. inflation pressures hit a fresh 40-year high in February. 

The Bureau of Economic Analysis’ Personal Consumption Expenditures (PCE) Price Index surged 6.4% year-over-year last month, the strongest annual gain since January 1982.. 

That was in-line with expectations and an increase from 6.0% in January.

The Core PCE Price Index, which is the Fed’s preferred inflation measure, jumped 5.4% year-over-year, the biggest jump since April 1983.

That was slightly cooler than the 5.5% gain economists were expecting but is still an increase from 5.2% in January.

On a monthly basis, the headline price index rose 0.6% while the core price index rose 0.4%.

The Fed expects PCE inflation to be at 4.3% by the end of this year and fall to 2.7% by the end of 2023.

JPMorgan analysts now expect the Fed to raise rates by 0.5% at the May 4 meeting.

Weekly Jobless Claims Rise More Than Expected

Weekly jobless claims rose more than expected last week. 

The Labor Department reports 202,000 Americans filed initial claims for unemployment benefits. 

That was up 14,000 from the previous week and higher than expectations for 196,000. 

That was the first increase in three weeks.

Continuing claims fell by 35,000 to 1.307 million vs 1.340 million expected.

Biden to Order Historic Oil Reserve Release

Oil prices are sliding as President Biden is expected to announce a plan to release oil from the U.S. strategic petroleum reserve (SPR) today. 

West Texas Intermediate crude futures are down more than 6% to $101 per barrel while Brent crude futures are down nearly 6% to $107 per barrel. 

Biden is set to deliver an address on his administration’s efforts to combat high energy prices at 1:00 p.m. ET. 

Several outlets are reporting his plan includes the release of 1 million barrels per day from the SPR, for several months. 

Goldman Sachs researchers said such a release would help the oil market rebalance in 2022 but would “ not resolve the structural supply deficit, years in the making.”

The U.S. consumes, on average, 20 million barrels of oil per day. 

Meantime, OPEC+ met today and stuck to its modest production plans. 

The group voted to increase its output by 432,000 barrels per day starting May 1. 

OPEC+ has been slowly raising its output targets after the record supply cuts seen in 2020 due to Covid.

Walgreens Earnings

Walgreens Boots Alliance (WBA) shares are down 2.3% ahead of the open despite beating fiscal Q2 expectations. 

The drugstore chain reported adjusted earnings of $1.59 per share on $33.76 billion in revenue. 

That beat analysts’ expectations for adjusted EPS of $1.40 on $33.4 billion in revenue. 

Same-store sales in the U.S. jumped 14.7% year-over-year, the largest gain in more than 20 years.

In the U.K., same-store sales surged 22% compared to a year ago.

Walgreens reiterated its previous full-year guidance, expecting earnings growth in the low single digits.

Apple Snaps Winning Streak

Apple (AAPL) latest win streak was snapped on Wednesday as shares fell 0.7%.

That was the iPhone maker’s first loss in 11 sessions.

The 18.8% gain over those 11 days was the company’s longest win streak since 2003.

The rally added $462 billion to Apple’s market cap, which stands at $2.92 trillion. 

AAPL shares are up 0.3% in premarket trade.

The stock is back on “$3 trillion watch” after becoming the first company in U.S. history to briefly surpass that milestone on the first trading day of 2022.

In Case You Missed It

• Private-sector job growth beat expectations in March. Payroll firm ADP reported private employers added 455,000 workers this month vs 450,000 expected. Small businesses added 90,000, mid-sized companies gained 188,000, and large businesses added 177,000. It was the slowest month of private job growth since August 2021 as the labor market nears full employment.
• Consumer confidence rose for the first time this year in March. The Conference Board’s consumer confidence index rose to 107.2 this month from February’s revised reading of 105.7. Confidence in current economic conditions rose 10 points to 153, the highest since July 2021. Expectations for the next 6 months fell to 76.6 from 80.8. Consumers’ inflation expectations for the next 12 months hit a record high at 7.9%.