Coffee With Greta: Hot CPI


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DJIA Futures: +7 (+0.02%)

SPX Futures: -1 (-0.01%)

NASDAQ Futures: -10 (-0.1%)

Good morning friends!

Futures are flat as traders digest hotter-than-expected inflation data.

Let’s get right to it!

CPI Runs Hot

U.S.inflation pressures were hotter than expected in August. 

The Bureau of Labor Statistics’ consumer price index rose 0.6% monthly and 3.7% year over year. 

That was hotter than economists’ expectations for a 3.6% annual gain. 

The core CPI, which excludes food and energy prices, rose 0.3% monthly and 4.3% annually. 

That was higher than economists’ estimates for a 0.2% monthly gain but in-line with annual expectations. 

Gas prices saw the largest jump on a monthly basis, surging 10.6% from July. 

On an annual basis, gas prices were still down 3.3%.

Grocery prices rose 3% annually, restaurant prices were up 6.5%, and transportation services prices jumped 10.3%.

Oil Prices Extend Gains

Oil prices are up again this morning on supply concerns. 

West Texas Intermediate crude futures are 0.5% higher at over $89 bbl while Brent crude futures are up 0.4% at just under $92.50 bbl. 

Bank of America analysts expect Brent futures to top $100 bbl by year-end.

On Tuesday, OPEC maintained its forecast for global oil demand to rise by 2.25 million barrels per day in 2024.

But supply is expected to remain tight as Saudi Arabia and Russia continue supply cuts of 1.3 million bpd until the end of this year.

The International Energy Agency meantime lowered its Q4 demand growth forecast by 600,000 bpd. 

American, Spirit Airlines Cut Forecasts

American Airlines (AAL) shares are down 4% with Spirit Airlines (SAVE) shares falling 3.7% ahead of the open after both companies cut their summer profit forecasts. 

American now expects Q3 adjusted EPS between $0.20 and $0.30 vs $0.85 to $0.95 previously. 

The company cited higher fuel prices and a new pilot labor deal for that revision. 

The airline also cut its operating margin forecast in half to between 4% and 5%. 

Spirit expects to report margins of -15.5% in Q3, worse than the previous forecast for -5.5% to -7.5%.

The airline also lowered its revenue guidance to between $1.245 billion and $1.255 billion vs $1.3 billion to $1.32 billion previously.

Mortgage Demand Stalls

Mortgage demand continued to fall last week as high rates put pressure on buyers.

The Mortgage Bankers Association reported total application volume was down 0.8% from the previous week. 

Purchase applications actually rose 1% weekly but were 27% lower from a year ago. 

Refinance applications dropped 5% weekly and 31% year over year. 

The refinance share of applications also dropped to 29.1% vs 63% at the same time in 2020. 

It was the seventh decrease in eight weeks and the lowest level of applications since 1996. 

The average 30-year fixed contract rate rose to 7.27% from 7.21%. 

In Case You Missed It

  • Apple (AAPL) shares fell 1.7% on Tuesday after the company unveiled 4 new models of the iPhone. The basic iPhone 15 model will come in two sizes, with the smaller starting at $799. The iPhone 15 Pro will also come in two sizes, starting at $999. As expected, the phones will come with a new USB-C charging port in compliance with new EU regulations. The phones can be pre-ordered starting this Friday and will be available September 22.

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