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Household Inflation Remains Benign in January

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After a somewhat lackluster performance in the markets Tuesday, Wednesday’s pre-market activity looks solidly in the green once again. The Dow is up 150 points, the Nasdaq +65 and the S&P 500 +20. Stronger than expected quarterly earnings reports from Twitter from after the bell yesterday has helped bolster the bullish case into early morning trading today.

We’re also currently going through the biggest shortage of semiconductor microchips in years. Between smartphones, dashboard consoles on new cars, “work from home” PCs and laptops, etc. all hitting at around the same time, lagging chip manufacturing to keep up with demand has taken hold in the U.S. and around the world. We see modest gains from providers like ASE Tech (ASX - Free Report) +2%, Taiwan Semiconductor (TSM - Free Report) +1.3% and NVIDIA (NVDA - Free Report) +1.2% ahead of the opening bell.

General Motors (GM - Free Report) mentioned the chip shortage causing the auto major to make production cuts going forward, when the company announced better-than-expected results in its Q4 earnings report ahead of this morning’s open. Earnings of $1.93 per share was a big improvement over the $1.62 in the Zacks consensus, and worlds beyond the woeful 5 cents per share reported in the year-ago quarter. Revenues grew by more than 20% year over year to $37.5 billion, also beating estimates.

Although the chip shortage will hamper output for the maker of Chevy, Buick and Cadillac brands — along with a new electric Hummer expected to launch later this year — quarter by quarter the company has been making notable strides. Trailing four-quarter earnings surprise averaged out to +138%, and the company has only one earnings miss in the last five years. Current-year guidance of between $4.50-5.25 per share is in-line with a higher upside from the Zacks consensus $4.53 per share estimate prior to the earnings release.

New Consumer Price Index (CPI) figures for January have come out this morning, as well. An in-line +0.3% headline ticked up from the unrevised +0.2% for December, while core CPI (subtracting volatile food and energy costs) came in at 0.0%, down 10 basis points from what was expected and flat with the previous month. Both headline and core reads arrived at +1.4% year over year, historically tepid but relatively admirable, considering we’re still trying to emerge from pandemic conditions.

A big 7.4% jump in Gasoline prices bolstered the index last month (though still down 8.7% year over year), with the Energy sector +3.5% overall now that we’re fully emerged in the cold-weather seasons for much of the country. Apparel was up, as well, +2.2%, and for the third month in a row. These figures were slightly augmented by lower sales in new and used cars last month — a seasonal thing, for sure, but we’ve also seen some pent-up demand for new wheels get sated somewhat over the past few months.

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