Here is what you need to know on Wednesday, May 12:
US CPI is all you need to know for today. It was as expected – way too high. On the other hand, one might ask why expectations were pencilled in so low. You really do have to wonder about these analysts on Wall Street sometimes. Can they not look out and see prices in the real world? They have not done too well in forecasting earnings in recent times, and now they get the CPI this wrong!
In case you missed it, the US Consumer Price Index came in at 0.8% versus the forecast of 0.2%. The highest reading since 2008. Futures immediately dumped, while the dollar and yields jumped. Eurodollar futures now are pricing in a 100% chance of a rate hike in December 2022.
This data really sets the scene for a test of sentiment in equity markets. Markets have a tendency to do what they want irrespective of data. Last Friday’s jobs report was shockingly bad, but the market rallied anyway. Despite tensions in the Middle East rising, the market staged a huge intraday rally. If markets somehow ignore this CPI data, it will be a huge bull flag.
Right now it looks unlikely as the dollar gains to 1.2111 versus the euro, yields on the 10-year jump to 1.65%, and oil continues to gain above $66 now.
European markets are sliding with the Dax now just negative, FTSE +0.6%, and EuroStoxx +0.2%.
US futures are lower, Nasdaq -1.4%, S&P -0.7%, and Dow -0.4%.
US CPI comes in at 0.8% monthly versus 0.2% expected.
France warns UK that the financial services access agreement will be delayed until fishing rights are resolved.
Bank of Japan does not buy stock ETFs against its usual practice of buying when the market drops over one percent.
UN warns that Israel and Palestinians are heading for full-scale war.
AMZN wins an appeal against EU judgement to pay EUR250 million in back taxes.
Tesla (TSLA) sales slump 27% in China for April.
Wendy’s (WEN) beats earnings and revenue.
FUBO smashes earnings estimates, shares jump 20% in premarket.
QuantumScape (QS) misses earnings estimates, shares down 5% premarket.
Wolverine World Wide (WWW) earnings in line, raises guidance.
Electronic Arts (EA) beats earnings estimates on EPS and revenue.
Lordstown Motors (RIDE) will restate its financial statements after SEC guidance on SPACs.
Lemonade (LMND) revenue beats forecasts, EPS in line, buy outlook disappoints, shares drop 6% premarket.
Diageo (DEO) resumes buyback, sees organic profit growth of at least 14%. shares up 4% premarket.
WIX beats earnings, raises guidance but below analyst forecasts. Shares drop 4% premarket.
Upgrades
Big Commerce (BIGC) – Guggenheim and Morgan Stanley
CapStar Financial (CSTR) – Piper Sandler
Norton Life Lock (NLOK) – Bank of America
Unity Software (U) – Stifel
DraftKings (DKNG) – Berenberg
Hanesbrands (HBI) – Stifel and Wells Fargo
Downgrades
Grocery Outlet (GO) – Deutsche and Craig Hallum
Ferro (FOE) – Deutsche and JPMorgan
Dollar General (DG) – RBC
Imperial Oil (IMO) – Goldman
Novavax (NVAX) – JPMorgan
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