Coffee With Greta: PPI Comes In Hot


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DJIA Futures: +54 (+0.2%)

SPX Futures: +7 (+0.2%)

NASDAQ Futures: +38 (+0.3%)

Good morning friends!

Futures are higher but have trimmed some earlier gains after the release of hotter-than-expected inflation data.

Let’s get right to it!

Wholesale Inflation Runs Hot

Wholesale inflation pressures were hotter than expected in September. 

The Bureau of Labor Statistics’ producer price index rose 0.5% monthly and 2.2% year over year vs 0.3% monthly and 1.6% annually expected. 

The core PPI jumped 0.3% monthly and 2.7% annually vs 0.2% monthly and 2.2% annually expected. 

This data is a leading indicator for the CPI as producers pass down higher prices to consumers.

The September CPI will be released Thursday morning.

Adjustable-Rate Mortgage Demand Jumps

Overall mortgage demand rose slightly last week, driven by a jump in adjustable-rate applications. 

The Mortgage Bankers Association reported total application volume rose 0.6% from the previous week. 

Purchase applications rose 1% weekly while refinance applications increased 0.3%. 

MBA’s vice president said, “The level of ARM applications increased by 15% over the week, bringing the ARM share up to 9.2% of all applications, the highest share since November 2022.”

The average 30-year fixed contract rate rose to 7.67% from 7.53%, the highest level since 2000. 

But the average rate on 5/1 ARMs decreased to 6.33% from 6.49%.

Exxon To Buy Pioneer Natural Resources

Pioneer Natural Resources (PXD) shares are up 1.8% ahead of the open after Exxon Mobil (XOM) announced it has agreed to buy the company. 

Under the agreement, Exxon will buy Pioneer for $59.5 billion in an all-stock deal. 

That values the stock at $253 per share. 

Pioneer stockholders will receive 2.3234 XOM shares for every PXD share they own. 

The deal is expected to close in the first half of 2024. 

Exxon said this acquisition will more than double its production volume in the Permian Basin.

The oil giant’s CEO said, “The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis.”

Plug Power Rallies On Rosy Forecast

Plug Power (PLUG) shares are jumping 8.9% in premarket trade after the company released strong guidance for the next few years. 

In a regulatory filing, the company said it expects to generate $6 billion in revenue by 2027 and $20 billion in revenue by 2030.

Plug Power expects to generate about $1.2 billion in 2023, slightly below analysts’ estimates of $1.28 billion. 

The company projected a compound annual growth rate in revenue of about 50% and a 5% gross margin over the next seven years.

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