Jira Pliankharom/iStock via Getty Images
Listen below or on the go on Apple Podcasts and Spotify
July’s CPI expected to highlight the challenge in lowering inflation to 2%. (00:26) Disney’s (DIS) quarterly revenues, streaming subscribers fall short of forecasts. (01:45) Alibaba (BABA) revenue expected to grow nearly 2% in Q1. (03:13)
This is an abridged transcript of the podcast.
Inflation has cooled but it’s still far from the Federal Open Market Committee’s 2% goal. In June, the CPI (consumer price index) rose 3.0% and core CPI, which excludes volatile food and energy prices, increased 4.8%.
Even though the Fed’s preferred inflation gauge is the core PCE (personal consumption expenditure) Index, the CPI provides an earlier view of inflation trends.
Paul Christopher, global economic strategist at Wells Fargo Investment Institute said, inflation has receded from last year’s peak, but further disinflation will be harder to come by as Y/Y comparisons become tougher.
The consumer price index report for July will be released. Economists forecast headline CPI will be up 0.2% month-over-month and be up 3.3% year-over-year. Core CPI is forecast to rise 0.2% month-over-month and be up 4.8% from a year ago to match the pace from June.
The market is pricing in fed fund rate cuts in March. That view is “presumptuous,” Christopher said. He doesn’t expect the Fed will be comfortable until core inflation comes down to under 3%, especially for the PCE data.
The Fed will have another CPI report, the PCE report, and one more jobs report before its Sept. 19-20 meeting.
Walt Disney (DIS) dipped 2% initially postmarket after posting fiscal third-quarter earnings where revenues fell short of estimates and there was another decline in Disney+ subscribers.
DIS then moved 3% higher following news of streaming price increases.
Revenues grew 4% for the quarter, to $22.33B which was short of expectations for 4.8% growth and $22.53B.
The company’s Parks unit carried the load with double-digit growth in revenue and operating income, while media and entertainment shrank.
Adjusted earnings per share also dipped, to $1.03 per share, but that easily topped consensus for $0.97/share.
“Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the center of our business,” CEO Bob Iger said.
In operating metrics, Disney+ subscribers slipped again, for the third straight quarter — to 146.1M overall, well short of expectations for 154.8M.
ESPN+ subscribers were flat and Hulu subs were also flat.
I mentioned that Disney is raising streaming prices. I’m leaving a link in show notes to an article that will tell you by how much and when.
Premarket DIS is up 1.5%
China’s Alibaba Group (BABA) is expected to post a 1.7% rise in revenue when it reports its first quarter results today before markets open.
Wall Street expects Alibaba to post earnings per share (EPS) of $2.01, while revenue is expected to be $31.21 billion.
China’s slow economic recovery following its “zero-COVID” policy and its severe lockdown has lowered consumer confidence, disrupted supply chain and production, keeping companies including Alibaba under pressure.
Adding to that, Beijing’s clamp down on its tech sector over the past two years continues to weigh on the business for some of its biggest companies.
Alibaba is also facing lower demand and increased competition from ecommerce rivals including Pinduoduo (PDD) and JD.com (JD) as well as newer ones.
Other headlines to look out for on Seeking Alpha:
Kenvue set to join S&P 500
Coach owner Tapestry in talks to buy Capri Holdings – WSJ
Amyris files for Chapter 11 bankruptcy
On our catalyst watch for the day-
The annual Def Con hacker convention has more potential stock market implications than in the past. Five teams of hackers will be in a sanctioned competition to successfully remotely infiltrate and hijack a U.S. government satellite while it is in space. In addition, companies such as OpenAI, Microsoft (MSFT), Google (GOOG), Nvidia (NVDA), and startups Anthropic, Hugging Face, and Stability AI have all agreed to provide their AI models for a hacking test.
U.S. stocks on Wednesday settled in negative territory.
The Nasdaq (COMP.IND) retreated 1.17%. The S&P 500 (SP500)slipped 0.70%, while the Dow (DJI) fell 0.54%.
Turning to the performance of the 11 S&P sectors, seven ended in the red, with Tech topping the losers and continuing its recent slide. Energy topped the gainers.
The 10-year yield (US10Y) was down 2 basis points to 4.00%. The 2-year yield (US2Y) was up 4 basis points to 4.80%.
Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.5%, the S&P 500 is up 0.6% and the Nasdaq is up 0.7%. Crude oil is down 0.3% at more than $84 a barrel. Bitcoin is down 1%
In the world markets, the FTSE 100 is flat and the DAX is up 0.4%.
Our biggest stock movers for the day premarket: First one of the biggest gainers Capri Holdings (CPRI) is up more than 31% premarket following news that the owner of the Michael Kors and Versace fashion labels was reaching an agreement to be acquired by Tapestry (TPR).
And for one of the biggest losers, Plug Power (PLUG) is down 10% premarket after the company’s Q2 loss widened.
On today’s economic calendar, at 830am CPI. also at 830 am initial jobless claims.
