A key inflation measure showed that prices rose at their fastest level in nearly 39 years.  The core personal consumption expenditures price index, the Federal Reserve’s primary inflation gauge, rose 5.2% from a year ago. It was the highest level since April 1983.  Including food and energy prices, headline PCE was up 6.1%, the strongest gain since February 1982.

A separate report showed that gross domestic product, a sum of all the goods and services produced in the U.S. economy, increased at a 7% annualized rate during the fourth quarter.  On the jobs side, continuing claims, which run a week behind the headline number, totaled 1.48 million, a decline of 112,000 from the previous week and good for the lowest total since March 14, 1970.  The total of those receiving benefits through all government programs fell by just over 30,000 to 2.03 million. That level has continued to fall as pandemic -associated jobless aid programs have expired.

Sales of new U.S. single-family homes fell slightly more than expected in January, likely as rising mortgage rates and higher prices sidelined some first-time buyers from the market.  New home sales fell 4.5% to a seasonally adjusted annual rate of 801,000 units last month, according to the Commerce Department.  Sales dropped in the Midwest, Northeast and the densely populated South. But they rose in the West.   Sales tumbled 19.3% on a year-on-year basis in January. They peaked at a rate of 993,000 units in January 2021, which was the highest since the end of 2006. Mortgage rates are near three-year highs.
 

The conflict in Ukraine is roiling many sectors across the globe, with investors fearing contagion in all parts of the market. Stock index futures in the U.S. dropped precipitously overnight, and markets are opening near the lows. Equities in Europe are doing worse, with the Euro Stoxx 50 plunging 5% after bourses posted earlier losses across Asia.

For now, the western reaction to the unfolding situation in Ukraine will likely be limited to economic sanctions. U.S. and European diplomats have been working for weeks on a coordinated package that is set to be rolled out in the coming days, though initial measures will be announced today as President Biden delivers remarks from the White House.

Western energy majors are on course to buy back shares at near-record levels this year as soaring oil and gas prices enable them to deliver bumper profits and boost returns for investors. The seven supermajors — including BP, Shell, ExxonMobil and Chevron — are poised to return $38bn to shareholders through buyback programs this year, according to data from Bernstein Research

Existing-home sales increased by nearly 7% between December and January, hitting a seasonally-adjusted, annual rate of 6.5 million, according to the National Association of Realtors. Compared to a year ago, sales were down more than 2%. Unsold inventory dropped to a 1.6-month supply in January, representing a record low. A balanced market is indicated by a 6-month supply of homes. The supply imbalance is contributing to the higher median prices being reported. As of January, the median sales price for an existing home was up 15% on an annual basis to $350,300. According to National Association of Realtors chief economist Lawrence Yun, the inventory of homes priced at or below $500,000 has dwindled, while supplies of more expensive homes remain more robust.

The U.S. leading economic index fell 0.3% in January owing to a surge in omicron cases, high inflation and persistent supply-chain disruptions.  The decline in the index was the first since last spring.  The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys. Despite this month’s decline … widespread strengths among the leading indicators still point to continued, albeit slower, economic growth into the spring.

As mortgage rates jumped, millions of borrowers raced to lock in rates in January, according to a new report. Nationwide, rate locks rose 9.5% from December after four months of declines.  Driven by a 19.9% increase in purchase loans and a 9.2% rise in cash-outs refinances.  The report underscores how quickly the mortgage rate landscape has changed for homeowners and buyers, who now must act fast to secure low rates.

High inflation, strong consumer spending and a Fed that's expected to raise rates multiple times this year is shaking up things in the housing market. The 30-year fixed-rate mortgage averaged 3.92% in the week ending Feb. 17, up from the week before and higher than 2.81% a year ago, according to the Freddie Mac Primary Mortgage Survey. While rates are still near historic lows, the rising figures are putting some industry watchers on edge amid low inventories, elevated property prices and FOMO bidding wars.

Roku shares dropped as much as 25% in premarket trading Friday after the streaming company reported fourth-quarter revenue on Thursday evening that missed expectations and gave disappointing guidance for the first quarter. The decline is on top of the 10.3% drop Roku posted on Thursday before it published earnings.  Roku blamed the slower growth on supply chain disruptions that hit the television market. 

For a sector written off as in terminal decline, the US coal industry is raking in money. Over the past week America’s biggest coal mining companies have enjoyed profit bonanzas, notching up some of their best results in decades as they enjoy resurgent demand and soaring prices. Peabody Energy, the world’s largest private sector producer, reported its most profitable quarter on record. Arch Resources, the next biggest, posted its best results since large asset sales five years ago.

Is the COVID pandemic finally coming to an end? It sure looks like it, based on latest guidance from Shopify. After posting 86% revenue growth in 2020 and a 57% surge last year, the e-commerce software provider said its pace of growth won't be as strong in 2022. Shares of Shopify slid 16% on following the cautious update from the company, which dragged down related online retail stocks like Etsy, eBay, Wayfair, and Chewy.

Walmart topped quarterly earnings estimates on Thursday after shoppers turned to the retailer for groceries and gifts over the holidays and said it’s focused on value as some customers grow nervous about inflation. The company said it’s on track to hit its long-term financial targets, which call for adjusted earnings per share growth in the mid single-digits in the new fiscal year. Growth at that pace is above average analyst forecasts. Walmart posted net income of $3.56 billion for the quarter.

When purchasing a new car these days, it may feel a lot like you’re giving your dealership a fat tip.  To that point, 82% are paying above sticker price for new vehicles, according to new research from Edmunds.com. That compares to 2.8% a year ago and 0.3% in early 2020.

Consumer spending bounced back sharply in January as rising inflation and a post-holiday surge kept cash registers ringing.  Retail sales for the month rose 3.8%, much better than the 2.1% Dow Jones estimate. Online shopping contributed the most on a percentage basis, with nonstore retailers seeing a gain of 14.5%.

Prices at the wholesale level jumped twice the expected level in January as inflation pressures were unabated to start the year.  The producer price index, which measures final demand goods and services, increased 1% for the month, against estimates for 0.5%. Over the past 12 months the gauge rose 9.7%, which is a record in data going back to 2010.

The price of lumber has been on a roller coaster since the start of the pandemic, and it’s climbing a big hill yet again.   After falling back sharply from a record high in May of last year, lumber prices began climbing again in December. They are now about 22% lower than that peak, but still about three times their average pre-pandemic price.  The National Association of Home Builders estimated the recent price jump added more than $18,600 to the price of a newly built home. It also added nearly $7,300 to the cost of the average new multifamily home.

Markets are getting a lift this morning from headlines out of Russia, where the country's defense ministry announced the pullback of some forces after they completed military drills near the border with Ukraine.  Ukraine appears to be doubting the "overstated" assessments as well.  Adding to the confusion over the situation on the ground, Ukrainian President Zelensky, a former comedian, took to social media yesterday to troll western media, triggering a bout of selling across equity markets.  His chief of staff later explained the remarks identifying tomorrow as the “day of the attack” should be interpreted as ironic.

Shares of Tower Semiconductor skyrocketed 50% in premarket trade after Intel agreed to buy the Israeli chipmaker for $53 per share in cash, representing a total enterprise value of $5.4B. The acquisition advances Intel's as the company expands its manufacturing capacity, global footprint and technology portfolio to address industry demand. It will also accelerate its path to becoming a major provider of foundry services and capacity globally.

The producer price index, which measures wholesale prices, rose 1% in January and 9.7% for the 12-month period, the latter just off the record high.  The increase was double the Wall Street estimate.

Major defense names like Northrop Grumman and L3Harris rallied into the weekend on signs of Russian escalation in Ukraine, though another sector headline made waves on Sunday. Lockheed Martin called off plans to acquire rocket engine maker Aerojet Rocketdyne under a $4.4B deal that was announced in late 2020. Aerojet is the only large, independent producer of engines for rockets and missiles in America.

St. Louis Federal Reserve President James Bullard made his case for a rapid move higher in interest rates, saying Monday that the central bank needs to react to accelerating inflation.  Those comments came after Bullard rattled markets last week by saying he thinks the Fed should raise its benchmark short-term borrowing rate a full percentage point by July. The commentary sent stocks on a volatile ride and caused futures markets to price in as many as seven quarter-percentage-point interest rate hikes by the end of 2022.

There’s also a final rush of big earnings, with Cisco Systems and Nvidia on Wednesday; Walmart on Thursday; and Deere on Friday. With more than 70% of the S&P 500 companies already having reported financial results, according to FactSet, over three-quarters of them beat on earnings.

U.S. stocks traded lower on yesterday after a key inflation report showed a faster-than-expected rise in prices making it an almost certainty the Federal Reserve will have to raise interest rates significantly this year.

The Labor Department reported initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 223,000 for the week ended Feb. 5. Claims had jumped to a three-month high in mid-January as Omicron raged across the country.  But wage gains are being wiped out by inflation. Average weekly earnings adjusted for inflation fell 3.1% in January from a year earlier. According to economists at Moody's Analytics, inflation was costing the average America household over $250 per month or about $3,000/year.

Mortgage rates in the U.S. jumped to the highest level since January 2020, before the pandemic rocked financial markets.  The average for a 30-year loan was 3.69%, up from 3.55% last week, according to Freddie Mac. That was the highest since Jan. 2, 2020, when rates averaged 3.72%.

Share of both Coke and Pepsi are trading lower even though both companies beat analysts earnings expectations after both companies warned of cost pressures effecting their margins.

Consumer prices in January surged more than expected, indicating a worsening outlook for inflation and cementing the likelihood of substantial interest rate hikes this year.  The consumer price index, which measures the costs of dozens of everyday consumer goods, rose 7.5% compared to a year ago, according to the Labor Department. It was the highest reading since February 1982.

House leaders have finally greenlit a plan to craft legislation that would prohibit members of Congress from trading stock, after months of resistance to a ban by Pelosi, who was one of the biggest offenders.  The House Administration Committee is working on drafting the rules, and the legislation is expected to be put up for a vote this year, likely before the November midterm elections.

Shares of Disney are sharply higher after reporting fiscal first quarter 2022 results that beat.  New membership additions for the company’s two-year-old Disney+ streaming service surpassed analysts' expectations. The metric was in focus after a surge in direct-to-consumer video streaming at the height of stay-at-home orders during the COVID pandemic helped buoy Disney.  Turnout at Disney's lucrative parks and resorts also jumped, with theme park revenue more than double from a year before.

The NFIB Small Business Optimism Index decreased slightly in January to 97.1, down 1.8 points from December. Inflation remains a problem for small businesses as 22% of owners reported that inflation was their single most important business problem, unchanged from December when it reached the highest level since 1981. The net percent of owners raising average selling prices increased four points to a net 61%, the highest reading since the fourth quarter of 1974.  More small business owners started the New Year raising prices in an attempt to pass on higher inventory, supplies, and labor costs.  In addition to inflation issues, owners are also raising compensation at record high rates to attract qualified employees to their open positions.

Consumers ended 2021 with record levels of debt, leading into a year in which interest rates are expected to rise substantially.  Total U.S. consumer debt at the end of the year came to $15.6 trillion, a year-over-year jump of $333 billion during the fourth quarter and just over $1 trillion for the full year, according to data released from the Federal Reserve’s New York district.  The quarterly rise was the biggest since 2007, and the annual gain was the largest ever in records going back to 2003.

The U.S. trade deficit in goods soared to record levels in 2021, topping $1 trillion as Americans continued to spend heavily on computers, toys, bicycles, clothing, pharmaceuticals and other goods made in foreign factories during the pandemic.  The overall trade deficit in both goods and services also hit an annual record, rising 27 percent as the country’s imports far outpaced its exports.

Spirit Airlines and Frontier Airlines are merging into a massive discount airline, the country’s two largest discount airlines, announced a $6.6 billion merger yesterday.  Spirit and Frontier expanded aggressively over the last decade offering travelers no-frills service in exchange for ultra-low airfares.  Their executives vow to keep it that way, even if the carriers complete their $6.6 billion-merger that would turn the carriers into a discount behemoth and the country’s fifth largest airline. Frontier will have a controlling stake.

Shares of Peloton are sharply higher on multiple reports that showed the connected fitness company gaining interest as a potential acquisition target.  Activist investors have pushed the company to sell itself, and media reports indicated that both Amazon and Nike were considering making an offer. Some analysts suspected Apple could even get in on a potential bidding war.  Peloton stock is up 19.7% on the news.

Homeowners hurried to refinance their mortgages this week, capitalizing on a break from recent rate increases that added more than a half-point to the 30-year fixed rate in the last month.  The rate on 30-year fixed mortgages remained largely flat for the third week in a row, averaging 3.55%.  Refinance applications were up 18% for the week ending January 28, according to the Mortgage Bankers Association.

US Stocks posted their best week of the year, boosted by quarterly earnings reports and a better-than-expected January employment report.  Last week’s gains follow a rocky start to the year for the major averages as rising rates prompted investors to shed growth names in favor of value-oriented areas of the market.

So far 56% of S&P 500 companies have posted quarterly earnings, with 79% beating earnings estimates and 77% topping revenue expectations.  Individual performance has been different, however. Amazon shares added 13.5% on Friday, while Snap surged 58.8%. Facebook-parent Meta dropped 26% on Thursday after its quarterly update. The social media company is coming off its worst week on record.

The Labor Department reported that 467,000 jobs were added in the US in January, well ahead of the 150,000 economists were expecting.  The increase sent confirmation to investors that Fed rate hikes are imminent, with the first occurring in the March meeting.

A new poll by the Portland firm DHM Research finds 63% of Oregonians say they are worried, or very worried, about their own financial situation. That’s on par with March 2020, as COVID hit Oregon, and the highest level of negativity in DHM’s polling since 2014.

The economy added 467,000 jobs last month, a far better than expected performance for the labor market.  The surprise rise in the payrolls defied predictions by economists who projected gains of 150,000 jobs. It will fuel expectations that the Federal Reserve will move more aggressively than planned to tighten monetary policy to stamp out inflation. It will also come as a relief for the White House, which had warned that jobs growth might be temporarily hit by the jump in Covid-19 infections. In addition to the jump in payrolls in January, there were also large upward revisions to data from previous months, while wage growth also rose more than predicted.

Facebook is still looking for friends after a massive plunge that saw parent Meta lose $251B in market value - the biggest single-day equity wipeout ever - but things were more welcoming elsewhere in Big Tech. Amazon reported a set of bumper earnings late Thursday that smashed operating income and EPS expectations

With inventory levels in Cushing at multi-year, seasonally-adjusted lows WTI is trading above $90 for the first time since mid-2014.

Many are still trying to size up monetary policy for 2022 as the market heads into February. What we know so far is the central bank will begin hiking interest rates in March, assuming that the "conditions are appropriate for doing so," but it's anyone's guess how aggressive the Fed will be after that as it tries to snuff out the strongest pace of inflation in decades.

The gaming frenzy is not showing any signs of slowing down as Sony announced a $3.6B acquisition for privately held video game developer Bungie. The latter is the beloved maker of multiplayer shooter games like Destiny and Halo, and was bought by Microsoft in 2000 (to develop games for its Xbox console) before splitting off in 2007. The company will continue to operate independently after the deal closes, and will be run by its board and the current management team.

ExxonMobil registered its highest quarterly profit since 2014 as rising oil and gas prices boosted the American oil supermajor’s earnings. The Texas-based company’s $8.9bn fourth-quarter profit easily beat Wall Street’s expectations.  Please use the sharing tools found via the share button at the top or side of articles. The company said it was using the influx of cash to launch a $10bn share buyback program, and that it had paid back much of the debt it took on during the 2020 market downturn.