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- 📊 Is Disinflation Transitory?
📊 Is Disinflation Transitory?
Ticker Tea
April 11, 2024
Happy Thurs 👇
Yesterday, major indices declined, with the S&P 500 and Dow Jones hitting multi-week lows, influenced by:
#1 - inflation coming in hotter than expected (3.5% YoY vs 3.4% est) (summary HERE)
#2- a jump in treasury note yields as a result of inflation data, coupled w/ poor demand for the scheduled 10yr note auction (summary HERE)
#3 - U.S. intelligence indicated an imminent threat of an attack by Iran or its proxies on Israeli targets (summary HERE)
Inflation specifics revealed both the overall and core CPI for March rose more than forecasted, reinforcing the likelihood of persistent high interest rates. The Federal Reserve's meeting minutes indicated a consensus for rate cuts within the year, though the exact timing and scale remain uncertain due to ongoing inflation concerns.
A few earnings releases y’day:
*Delta Airlines (DAL) reported adjusted revenue $12.56 billion (vs $12.5b est) and adjusted net income $288 million, +77% y/y (vs $234.6mm est). The stock closed ↓ 2.3% (CHART)
*Rent the Runway (RENT) stock jumped ~56% after reporting 4Q revenue and adjusted Ebitda that topped estimates. Its shares had slid nearly 90% in the past year. (CHART)
*Costco (COST) reported total comparable sales for March of +7.7% and raised it’s quarterly cash dividend 14% to $1.16 per share, est. $1.05 per share. (CHART)
First quarter earnings season is set to kick off this Friday (see earnings calendar 👇). Expectations are tempered, with projected profit growth at its lowest since 2019, indicating a cautious outlook among investors.
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» Inflation concerns and geopolitical uncertainties are causing a market shift, with the S&P 500 experiencing a 1% drop and Treasury yields climbing. Investors adjust expectations as the Federal Reserve signals a slower approach to interest rate reductions, influenced by persistently high core CPI readings and potential geopolitical conflicts. (link)
» As the latest hot inflation data drives Treasury yields to new highs for 2024, market expectations for Federal Reserve rate cuts have been dramatically scaled back. Now, traders anticipate only one or two rate reductions later in the year, influenced by enduring high inflation and economic resilience. (link)
» Delta Air Lines ($DAL) reports a profitable first quarter with earnings per share projected to outpace analyst expectations for Q2, signaling robust demand in leisure and business travel despite economic headwinds. The airline emphasizes efficiency and steady growth, forecasting earnings between $2.20 to $2.50 per share and annual free cash flow of $3 to $4 billion. (link)
» Vertex Pharmaceuticals ($VRTX) is set to acquire Alpine Immune Sciences for approximately $4.9 billion in cash, securing innovative protein-based immunotherapies for autoimmune and inflammatory conditions. The transaction, which prices Alpine shares at a 67% premium, reflects Vertex's strategic expansion into mid-stage gene therapies. (link)
» BMW AG reported a notable 41% surge in sales of its fully electric vehicles in the first quarter, bucking the broader market trend of declining EV demand in Europe. While competitors like Tesla and Volkswagen faced faltering sales, BMW's strategic EV initiatives and market adaptations have fueled its growth in a challenging environment. (link)
» Microsoft ($MSFT) is poised to introduce cutting-edge AI functionalities for PCs and cloud platforms at its upcoming Build conference in May, highlighting the integration of AI into daily computing. The announcement includes new tools that will allow for more sophisticated interactions within Windows environments and enhancements to Azure services. (link)
» Alibaba ($BABA) founder Jack Ma has reemerged, lauding the company’s significant transformations over the past year, which have helped the Chinese tech giant begin its recovery. Shares of Alibaba climbed nearly 2% following Ma's optimistic remarks about the future and leadership changes within the company. (link)
» Following a hotter-than-expected US inflation report, real estate stocks suffered significant losses, marking their worst performance since mid-2022, with the sector plunging over 4% in a single day. Utilities also faced declines as rising interest rates dampened prospects for rate cuts, affecting sectors heavily reliant on borrowing. (link)
Major ($10bn+) earnings releases scheduled the next five business days 👇 Click here for a comprehensive list of upcoming earnings releases
Results from yesterday’s economic releases & today’s schedule below 👇 Click here for full schedule & live updates of Wall Street estimates.
It still holds true that man is most uniquely human when he turns obstacles into opportunities.
Eric Hoffer
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