Coffee With Greta: Stubborn Inflation


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DJIA Futures: +9 (+0.03%)

SPX Futures: +1 (+0.02%)

NASDAQ Futures: +23 (+0.2%)

Good morning friends!

Futures are flat as traders digest the latest inflation data and monitor progress in debt ceiling talks.

Let’s get right to it!

PCE Inflation Hotter Than Expected

The Fed’s preferred inflation gauge ran hotter than expected in April. 

The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.4% monthly and 4.4% year over year last month. 

That was up from the 4.2% gain in March. 

The core PCE price index, which excludes food and energy and is the Fed’s preferred inflation measure, rose 0.4% monthly and 4.7% year over year. 

That was hotter than expectations for 0.3% monthly and 4.6% annually. 

The data showed the U.S. economy tilting back toward a services focus as goods prices increased 2.1% year over year but services prices jumped 5.5%.

The report also showed consumer spending held up strong during the month despite stubborn inflation pressures. 

Consumer spending jumped 0.8% in April vs 0.4% expected.

Personal incomes rose 0.4%, in line with expectations.

Debt Ceiling Talks Continue

Debt ceiling talks are still ongoing after negotiators reportedly moved closer to a deal on Thursday.

But the final phase of talks is expected to be the most difficult.

Republican Representative Patrick McHenry told reporters, “We’re at a sensitive phase, with sensitive issues that remain. Those sensitive issues are the thorniest issues that we’ve been discussing. Everybody’s trying to do a fine job of figuring out the finer details of this, but nothing’s done.”

President Biden said, “The only way to move forward is with a bipartisan agreement, and I believe we’ll come to an agreement that allows us to move forward and protects the hardworking Americans of this country.”

No in-person meeting at the White House is scheduled for today but McHenry said, “there’s alignment on the set of things that we need to work on.”

Costco Slips After Earnings Miss

Costco (COST) shares are down 0.2% ahead of the open after missing fiscal Q3 expectations. 

Here’s how the warehouse retailer’s results compared to analysts’ estimates: 

  • EPS: $2.93 vs $3.29 expected
  • Revenue: $52.6 billion vs $54.5 billion expected

Same-store sales rose just 0.3% globally and dipped 0.1% in the U.S., missing expectations for 2.8% growth.

Coming Up: Consumer Sentiment

The University of Michigan releases its final consumer sentiment index for May at 10:00 a.m. ET. 

That survey is expected to be unchanged from the flash reading of 57.7 earlier this month. 

The index also includes consumers’ inflation expectations over the next one, three, and five years.

In Case You Missed It

  • Pending home sales stalled in April as buyers struggle with low inventory. The National Association of Realtors reported the number of contracts signed to purchase a home was unchanged last month. That missed expectations for a 0.8% increase. Pending sales tumbled 20.3% year over year.

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