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PPI 0.4%, Jobless Claims Up to 225K, WMT Q3 Mixed

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Thursday, November 14, 2019

 

A fresh read on October Producer Price Index (PPI) has come out this morning, with results slightly hotter than expected: +0.4% on headline and +0.3% core (ex-food & energy) outpaced estimates by 10 basis points on either side. These are also a welcome boost from -0.3% on both headline and core reported for September.

 

Final demand year over year came in at +1.1%, with +1.6% on core. These figures demonstrate low levels of inflation affecting PPI numbers during the first full year of the U.S.-China trade war. The question going forward will be whether a new round of tariffs — potentially hitting the market December 15th — will finally produce economic headwinds for producers.

 

Compare these numbers also with yesterday’s Consumer Price Index (CPI) print for October, which brought a 0.4% twin on the headline, though +0.2% on core. Year over year, these numbers arrived at +1.8% and +2.3%, respectively. A little hotter than PPI year over year, but still very underwhelming inflation-wise.

 

Initial Jobless Claims last week spiked 14K from an unrevised 211K reported the prior week to 225K — at the top of the long-term range we’ve seen through most of 2018-19. We haven’t been this high in 21 weeks, although 225K is still representative of a very healthy labor market overall, which we’ve seen bear out (mostly) in our monthly non-farm payroll reports.

 

Continuing Claims also creeped higher two weeks ago, to 1.693 million from 1.683 million reported for the previous week. We’ve not been above 1.7 million since the week of August 18th, but even that level is consistent with robust employment. We keep waiting for weekly jobless totals to reflect what we see as a cooling jobs market overall, but to this point Americans do not seem to be losing the jobs they’ve got in any economically meaningful way.

 

Walmart (WMT - Free Report) posted an earnings beat in its Q3 earnings report released ahead of today’s opening bell, with $1.16 per share outperforming by 7 cents, and $1.08 reported in the year-ago quarter. The Zacks Rank #2 (Buy)-rated company with a Value-Growth-Momentum grade of A slightly missed on the top line to $127.99 billion, though rose $3 billion from Q3 2018.

 

Online groceries performed well in the quarter, and the company raised full-year earnings guidance going into the most important retail quarter of the year. Walmart has only missed earnings expectations twice in the past 5 years, with a trailing 4-quarter average beat of 6.7%. Shares have outperformed the S&P 500 year to date, and are poised to open at new all-time highs, +2.3% a half hour before the market opens. For more on WMT’s earnings, click here.

 

Mark Vickery

Senior Editor

 

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