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PPI Moves Lower, Along with Big Banks on Q4 Earnings
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For all the hemming and hawing we have been doing in this column through the first half of this week, with little to no data to help reflect purpose behind moves in the stock market, we’re making up for that now. Following yesterday’s CPI report for December, this morning we get the Producer Price Index (PPI) for last month. Results at a glance appear to offer something of a re-balance toward interest rate levels having a profound effect on economic metrics.
Headline PPI came in at -0.1%, a mirror image from the +0.1% expected and in-line with the downwardly revised -0.1% for November. This marks the third straight month of negative headline PPI month over month. Core PPI reached 0.0%, 20 basis points (bps) below the +0.2% we were looking for and the third-straight unched print on core PPI month over month. We’d have to go back to April 2020 to find a lower read on this measure.
Headline PPI year over year last month got to +1.8%, 20 bps lower than the previous print and analysts’ expectations. For the first time since January 2021, we now see an economic print come in below the Fed’s optimum rate of inflation. Core PPI year over year ticked up 10 bps to 2.5% from the previous month’s downward revision, which now sits at the lowest level for this metric since February of 2021.
Besides being the sister report to CPI, PPI data is also significant because it is fed into Personal Consumption Expenditure (PCE) data, which is the Fed’s self-proclaimed favorite measure of economic inflation. And when we break down volatile elements of month-over-month pricing — ex-food, energy and trade was +0.2% in December — food prices came down -0.9%, energy fell -1.2% and trade -0.8%. All of these clearly point to low-growth elements within the wholesale market.
We also get Q4 earnings from the biggest of the big Wall Street banks, which are coming in largely below projections this morning. Let’s start with the biggest of them all: JPMorgan Chase (JPM - Free Report) reported a $2.9 billion fee related to government seizures on certain regional banks, which has taken down earnings in Q4 to $3.04 per share, -15% from the $3.81 per share expected. Revenues of $39.94 billion outperformed the Zacks consensus of $39.07 billion, partly on the $4.1 billion in profits from JPMorgan’s acquisition of First Republic Bank. Shares are up +1.8% on this news.
Citigroup (C - Free Report) also came in below expectations — earnings of 84 cents per share were two cents light of consensus, and $17.4 billion in revenues were much lower than the projected $18.75 billion — which broke a four-quarter winning streak for the bank. However, there were some forewarnings, with one-time charges speculating to have doubled from earlier expectations. Investment Banking grew +27% to $669 million, but this was below estimates as well. Yet shares are +2% on the news, having sold off in the days beforehand.
Bank of America (BAC - Free Report) beat by one penny on its bottom line to 70 cents per share on $21.96 billion in quarterly revenues, but this was -8.8% below expectations of $24.07 billion anticipated by analysts. And Wells Fargo (WFC - Free Report) posted the reverse: a slight beat on the top line to $20.48 billion in revenues while coming in light on earnings per share. Both big banks are trading lower in today’s pre-market as a result. For more on BAC’s earnings, click here.
Meanwhile, Delta Air Lines (DAL - Free Report) beat expectations on both top and bottom lines. Earnings of $1.28 per share easily surpassed the $1.17 in the Zacks consensus (though below the $1.48 per share reported a year ago). And UnitedHealthcare (UNH - Free Report) posted perhaps the most impressive earnings numbers of the morning: earnings of $6.16 per share bettered the $5.98 expected on $94.43 billion in sales, +2.57% ahead of the $92.06 billion analysts were looking for. Yet shares of UNH are down in early trading as the company announced higher medical costs relative to overall revenues.
Image: Bigstock
PPI Moves Lower, Along with Big Banks on Q4 Earnings
For all the hemming and hawing we have been doing in this column through the first half of this week, with little to no data to help reflect purpose behind moves in the stock market, we’re making up for that now. Following yesterday’s CPI report for December, this morning we get the Producer Price Index (PPI) for last month. Results at a glance appear to offer something of a re-balance toward interest rate levels having a profound effect on economic metrics.
Headline PPI came in at -0.1%, a mirror image from the +0.1% expected and in-line with the downwardly revised -0.1% for November. This marks the third straight month of negative headline PPI month over month. Core PPI reached 0.0%, 20 basis points (bps) below the +0.2% we were looking for and the third-straight unched print on core PPI month over month. We’d have to go back to April 2020 to find a lower read on this measure.
Headline PPI year over year last month got to +1.8%, 20 bps lower than the previous print and analysts’ expectations. For the first time since January 2021, we now see an economic print come in below the Fed’s optimum rate of inflation. Core PPI year over year ticked up 10 bps to 2.5% from the previous month’s downward revision, which now sits at the lowest level for this metric since February of 2021.
Besides being the sister report to CPI, PPI data is also significant because it is fed into Personal Consumption Expenditure (PCE) data, which is the Fed’s self-proclaimed favorite measure of economic inflation. And when we break down volatile elements of month-over-month pricing — ex-food, energy and trade was +0.2% in December — food prices came down -0.9%, energy fell -1.2% and trade -0.8%. All of these clearly point to low-growth elements within the wholesale market.
We also get Q4 earnings from the biggest of the big Wall Street banks, which are coming in largely below projections this morning. Let’s start with the biggest of them all: JPMorgan Chase (JPM - Free Report) reported a $2.9 billion fee related to government seizures on certain regional banks, which has taken down earnings in Q4 to $3.04 per share, -15% from the $3.81 per share expected. Revenues of $39.94 billion outperformed the Zacks consensus of $39.07 billion, partly on the $4.1 billion in profits from JPMorgan’s acquisition of First Republic Bank. Shares are up +1.8% on this news.
Citigroup (C - Free Report) also came in below expectations — earnings of 84 cents per share were two cents light of consensus, and $17.4 billion in revenues were much lower than the projected $18.75 billion — which broke a four-quarter winning streak for the bank. However, there were some forewarnings, with one-time charges speculating to have doubled from earlier expectations. Investment Banking grew +27% to $669 million, but this was below estimates as well. Yet shares are +2% on the news, having sold off in the days beforehand.
Bank of America (BAC - Free Report) beat by one penny on its bottom line to 70 cents per share on $21.96 billion in quarterly revenues, but this was -8.8% below expectations of $24.07 billion anticipated by analysts. And Wells Fargo (WFC - Free Report) posted the reverse: a slight beat on the top line to $20.48 billion in revenues while coming in light on earnings per share. Both big banks are trading lower in today’s pre-market as a result. For more on BAC’s earnings, click here.
Meanwhile, Delta Air Lines (DAL - Free Report) beat expectations on both top and bottom lines. Earnings of $1.28 per share easily surpassed the $1.17 in the Zacks consensus (though below the $1.48 per share reported a year ago). And UnitedHealthcare (UNH - Free Report) posted perhaps the most impressive earnings numbers of the morning: earnings of $6.16 per share bettered the $5.98 expected on $94.43 billion in sales, +2.57% ahead of the $92.06 billion analysts were looking for. Yet shares of UNH are down in early trading as the company announced higher medical costs relative to overall revenues.
For more on DAL’s earnings, click here.
For more on UNH’s earnings, click here.
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