Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **North American economic outlook**, focusing on **core PCE inflation** and **PPI data**. Core Points and Arguments 1. **Revised Core PCE Inflation Estimate**: The tracking estimate for July core PCE inflation has been revised up by 6 basis points to **0.307%** from a previous estimate of **0.243%** [2][9] 2. **June Core PCE Inflation Revision**: Backward revisions to PPI data suggest that June core PCE inflation will likely be revised up by **2 basis points** [2] 3. **Three-Month Annualized Core Inflation**: If the forecast materializes, the three-month annualized pace of core inflation is expected to increase to **3.22%** in July from **2.70%** in June [2][8] 4. **PPI Components Performance**: PPI's portfolio management and investment prices rose sharply by **5.4%** month-over-month, significantly higher than the forecasted **2.7%** increase [6][9] 5. **Airline Fares Impact**: The increase in portfolio management prices was only partially offset by a decline in airline fares, which fell by **2.3%** month-over-month [12][9] 6. **Federal Reserve Rate Cut Expectation**: The expectation remains for the Federal Reserve to deliver a **25 basis point** cut at the upcoming September meeting, despite the upside surprise in portfolio management prices [9][20] 7. **Core PCE Tracking**: Core PCE is tracking close to the Fed's year-end forecast of **3.1%**, allowing officials to focus on downside risks to growth and employment data [9][20] 8. **Inflation Above Target**: Inflation is currently running well above the Fed's **2%** target, making a **50 basis point** cut unlikely [21] Additional Important Insights 1. **Broadening Price Pressures**: There are signs of broadening price pressures beyond the components that directly feed into core PCE inflation [12] 2. **Final Demand Services Growth**: Final demand services grew by **1.1%** month-over-month, marking the largest advance since March 2022, primarily driven by margins for final demand trade services [13] 3. **PPI's Finished Consumer Goods Prices**: The price index for finished consumer goods continued to rise in July, consistent with factory survey reports [13][18] This summary encapsulates the critical insights from the conference call, highlighting the economic indicators and expectations surrounding inflation and Federal Reserve policy.

It is time for a little money power politics. The Labor Department published new numbers on US wholesale prices today and spoiler they are much higher than expected. The PPI surged nearly 1% last month.That is the biggest monthly jump in over 3 years. Now if you are not familiar with this measure, what it is, what it means, why do we care. Well, PPI stands for producer price index.That means the wholesale price of goods. we care because it provides unique insight into the real inflation picture that's comin ...

Inflation & Tariffs Impact - Wholesale prices rose by 09% last month, exceeding Wall Street estimates, marking the largest monthly increase in over three years [1][2] - Tariffs are impacting prices, with the government raising $27 billion in tariffs in July, equivalent to an annual rate of $250-300 billion [3][5] - Companies may absorb some tariff costs in profit margins or spread them across other costs to avoid raising prices significantly [4][6] - A surge in imports ahead of tariffs means some inventory was sold at old prices, but retailers will eventually sell goods at new tariff prices, impacting margins or consumer prices [8][9] Consumer Price Implications - Increased wholesale prices could lead to higher prices at the checkout counter [6] - Strategies to mitigate price increases include absorbing costs or spreading them across other areas [6] - Consumer choice influences the extent to which companies pass along tariff costs [7] Federal Reserve Considerations - The Fed faces a difficult situation with pressure to lower rates while needing to manage inflation related to tariffs [10] - The Fed must ensure tariff-related price increases do not lead to broader inflation [10]

Economic Data Impact - Major economic data released this morning has significantly affected trading futures, with the Dow dropping from +3 points to -180 points, the S&P 500 from -1 to -30 points, and the Nasdaq from +7 to -140 points [1] - The small-cap Russell 2000 has also declined, giving up most of its previous gains, down -36 points [1] Producer Price Index (PPI) - Headline PPI increased by 90 basis points from 0.0% last month to +0.9% for July, indicating a rise in wholesale inflation [2] - Core PPI, excluding food and energy, also rose by 90 basis points month over month, reaching +0.6%, which is significantly above expectations and the highest levels since 2022 [2] - Year-over-year, July's headline PPI is at +3.3%, up from an upwardly revised +2.4% for June, marking the highest since February [3] - Core PPI year-over-year increased by +1.1% to +3.7%, the highest level since March, while ex-food, energy, and trade rose by 30 basis points to +2.8% [3] Jobless Claims - Weekly Jobless Claims reported a decrease of -3K to 224K, remaining below 230K for six consecutive weeks [5] - Continuing Claims are at 1.953 million, down -15K from the previous week, maintaining above 1.9 million for 12 straight weeks [6] - Longer-term claims have remained just below 2 million since mid-April, with a notable increase of +120K from mid-April to late May [7] Earnings Reports - Deere & Co. reported fiscal Q3 results with earnings of $4.75 per share, beating consensus by +7.8%, and revenues of $10.36 billion, exceeding expectations by +1% [8] - Despite outperforming, Deere's full-year guidance was softer than anticipated, leading to a -6% decline in shares [8] - Chinese firms also reported earnings, with JD.com achieving a +38% positive surprise at 69 cents per share, Weibo surpassing estimates by +100% to 54 cents, and NetEase exceeding expectations by 3 cents to $2.07 [9] - JD, Weibo, and VIPS saw gains in pre-market trading, while NTES experienced a -6% decline [9]

Inflation and Economic Growth - The data suggests that inflation is not a major concern, with the bigger problem being a lack of real growth [2] - Real GDP growth in the first half of the year is slightly less than 1% annualized, and job creation is up 60 basis points annualized [3] - Current inflation is running at 2.5% to 3% [3] Federal Reserve (Fed) Policy - A Fed rate cut is anticipated, with the expectation that the Fed will choose to ease next month [3] - The market has been narrow in this bull market because the Fed has been tightening [7] - If the Fed cuts the funds rate, long-term bond yields and mortgage rates could decrease, the dollar could weaken, and the money supply could increase, all of which are positive for stocks and the economy [9] - A Fed rate cut could be a game-changer, potentially initiating a new bull market [10] Market Outlook and Investment Strategies - Small caps and midcaps offer a very attractive relative PE discount, trading at more than 30% discounts to their average 20-year relative PE with the S&P 500 [12][13] - Historically, 12 months after the Fed starts cutting interest rates, large caps gain less than 4%, while small caps are up about 3%, indicating significant room for small caps to move [13] - If the Fed eases, leadership may broaden out to small caps, international value plays [11]

Company Performance - United Airlines reported Q2 earnings, missing both revenue and earnings estimates, with earnings of $2.97 per share compared to the expected $3.86 and the previous year's $4.14 [3] - Revenues for United Airlines were $15.2 billion, falling short of the anticipated $15.36 billion [3] - Despite the earnings miss, United Airlines saw increases in cabin revenues (+5.6%) and cargo revenues (+3.8%), along with an 8.7% growth in its loyalty program [4] Market Overview - The Dow closed up +231 points (+0.53%), the S&P 500 increased by +19 points (+0.32%), and the Nasdaq rose by +52 points (+0.25%) [2] - The small-cap Russell 2000 gained +21 points (+0.99%) during the session [2] - Bond yields showed mixed movements, with the 10-year yield rising to +4.45% and the 2-year yield decreasing to +3.89% [2] Economic Indicators - Industrial Production for June matched the previous month's revised figure, showing a +0.7% increase for the seventh consecutive month, with manufacturing up +0.8% and mining up +1.6% [5] - Capacity Utilization was reported at 77.6%, exceeding the expected 77.4% and the previous month's revised 77.5% [6]

Economic Indicators - The Producer Price Index (PPI) for June showed a month-over-month change of 0.0%, which was lower than the expected +0.2% and down from the revised +0.3% of the previous month [2][3] - Year-over-year, the headline PPI increased by +2.3%, which is 30 basis points below expectations and the lowest since +2.1% reported in September of the previous year [4] - Core PPI year-over-year reached +2.6%, slightly below estimates and down 40 basis points from the May figure of +3.0% [4] Financial Sector Performance - Bank of America reported earnings of 89 cents per share, beating expectations by 3 cents, although revenues missed estimates by 0.5% [7] - Goldman Sachs delivered a strong Q2 earnings report with earnings of $10.91 per share, surpassing expectations by +15.7% and revenues of $14.58 billion, exceeding estimates by +8% [8] - Morgan Stanley reported earnings of $2.13 per share and revenues of $16.79 billion, outperforming consensus estimates by +10.36% and +5.5% respectively [9] Company-Specific Highlights - Johnson & Johnson's Q2 earnings beat expectations with earnings of $2.77 per share, exceeding projections of $2.66, and revenues of $23.7 billion, which were higher than the expected $22.80 billion [10]

as the PPI shows inflation under control for now. Let's get straight to CNBC senior economics reporter Steve Leeman with the latest on the economic front, Steve, and some new comments from the president on Fed Chair Powell. In the past hour, yeah, Kelly, Walt, welcoming the lower inflation reports the past two days.Forecasters are still puzzling over the mystery of where and when the tariffs are going to increase and will they show up, if they do at all. Producer prices well under control up just 01 in the ...

Inflation Trends (PPI) - Headline PPI for May increased by 01% (one-tenth of a percent), lower than expected [1] - Previous month saw a significant decrease of 05% (minus half of 1%), the largest drop since COVID [1] - PPI excluding food and energy rose by 01% (one-tenth of a percent) [2] - Year-over-year headline PPI increased by 26%, slightly higher than the previous month's 24% [3] - PPI excluding food and energy increased by 3%, slightly lower than the previous month's 31% [4] - PPI excluding food, energy, and trade increased by 27%, showing progress from the previous 29%, reaching levels of January 2024 [4][5] Labor Market - Initial jobless claims reached 248000, approaching 250000, and are unchanged from the slightly revised previous week's 248000, reaching levels last seen in October of the previous year [6] - Continuing claims are nearing 1956 million, marking the third consecutive week above 19 million, the highest since November 2021 [6] Market Reaction - Interest rates remained relatively stable despite some weakness observed in equities [6] - Pre-opening equities were in the red, showing a slight improvement following the data release [7]