Morning Minutes

Netflix Earnings and More Stagflation Signs




US index futures are down 0.2%-0.3% this morning, as stocks consolidate yesterday’s US index gains of 2.4%-3.1% amid another round of earnings and economic reports. Over in Europe this morning, bourses are also down with the Dax dropping 0.6% and the FTSE sliding 0.3%. Commodities are mixed today with WTI crude oil down 1.9%, while natural gas and copper are both up 1.9%.  

Signs of stagflation (high inflation and a weak economy) continue to roll out around the world. Adding to this week’s signs of housing market weakness, US mortgage applications last week were down 19.0% from a year ago and dropped to their lowest level since the year 2000. US existing home sales are due at 10:00 am EDT.

Inflation reports from the UK and Canada were mixed. Canadian inflation was not quite as bad as feared. Consumer prices continued to increase, but less than expected, (8.1% vs street 8.4% and previous 7.7%), while industrial prices (-1.1% vs street 2.6% and previous 1.7%), and raw material prices (-0.1% vs street 0.0% and previous 2.5%) came down slightly. UK inflation accelerated across the board, mostly more than expected, including consumer prices (9.4% vs previous 9.1%), producer input prices (24.0% vs previous 22.4%), producer output prices (16.5% vs previous 15.8%), and retail prices (11.8% vs previous 11.7%).

The impact of stagflation on interest rates may become clearer over the next 24 hours with the Bank of Japan meeting overnight and the European Central Bank expected to confirm its first interest rate hike tomorrow morning. The US 10-year treasury note yield continues to hang around 3.00% and the US Dollar has been steady as US investors await next Wednesday’s Fed decision.     

Netflix is up 6.2% in premarket trading this morning after beating expectations on earnings ($3.20 vs street $2.94), while reporting a smaller than expected subscriber loss (-0.97M vs street -2.0M) and forecasting a 1.0M subscriber increase for the current quarter. Management also indicated they are working on new paid sharing and advertising tiers.  

On the other hand, oilfield service provider Baker Hughes is down 5.1% premarket today after reporting disappointing earnings ($0.11 vs street $0.22). The shortfall appears to be due to several factors including revenues also missing expectations, rising costs and parts shortages. Later today, Tesla Motors, United Airlines, and railroad CSX are scheduled to report results.

SIA Wealth In The Media:

We’ve been building up cash since the summer of 2021: Market strategist Colin Cieszynski

Chief Market Strategist Colin Cieszynski appeared on BNN Bloomberg where he discussed the importance of intraday market action, along with recent trends in relative strength, tactical rotation into cash and earnings season.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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