Thursday, July 12, 2018
Matching yesterday’s Producer Price Index (PPI) figures, this morning we see results for the Consumer Price Index (CPI): a headline read of +0.1% is a tick below expectations (PPI numbers came in 10 basis points hotter than anticipated), but +0.2% when we strip out volatile food & energy costs. The PPI and CPI numbers are not always in real-time lock-step, but do show trends continuing with inflation seeping further into the economy.
Pull out the focus a bit to look at the year-over-year numbers: CPI reached 2.9% — 10 basis points ahead of expectations. Ex-food & energy, we see this figure drop to 2.3%, in line with estimates. This also compares to the PPI’s “core” read of 2.8%. To give even more perspective here, by way of explaining these seemingly tepid numbers are actually historically pretty hot, the last time we saw year-over-year headline CPI north of 2.9% was back in December of 2011; ex-food & energy year over year was last higher than 2.3% in September 2008, a month prior to the Great Recession.
Initial Jobless Claims continued their winning ways ahead of the bell this morning as well, falling 18,000 claims back to historic lows of 214K for last week. We had begun to think our labor market was having trouble sustaining the sub-225K range, but looking back at the 4-week average, we’re still at 223K. Keep in mind these claims reflect the week with Independence Day in the middle of it, so these figures are probably showing some near-term seasonality.
Continuing Claims also sank lower, by 3,000 to 1.74 million last week. Again, consider the holiday-shortened time period, but there’s simply no denying that we are in excellent shape with this few continuing jobless claims week over week. We have been under 1.8 million for months now, and it hasn’t been too long since we breathed a collective sigh of relief that we’d finally sunk below 2 million claims per week.
Also, while we await Q2 earnings from some of Wall Street’s biggest banks tomorrow morning, Delta Air Lines (DAL - Free Report) is out with new quarterly numbers, topping estimates on both top and bottom lines. Earnings of $1.77 per share outperformed the Zacks consensus by a nickel, while revenues of $11.78 billion in the quarter beat the $11.68 billion analysts were expecting.
PRASM, an important metric for airline companies, rose 4.4% year over year, and Delta also announced a 15% rise in its dividend yield. Shares are up 1.5% a half-hour before the opening bell. For more on DAL’s earnings, click here.
Pre-market indexes are green across the board, looking to wipe out yesterday’s trade-war-fear selloff. However, these indexes were already up prior to the release of Delta’s earnings, CPI and jobless claims. Bullish investors are proving tough to keep down in the face of trade tariff worries.
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