Morning Minutes

Producer Price Inflation Eases But Earnings Remain Mixed




US index futures have continued to climb from yesterday’s close, extending the post-consumer price inflation rally. In the initial minutes following today’s producer price report, futures are holding steady with Dow all three main index futures contracts up about 0.6% from yesterday’s close.  

US producer prices also showed inflation pressures easing, headline PPI fell more than expected (9.8% vs street 10.4% and previous 11.3%), while core PPI, excluding food and energy, fell as expected (7.6% in-line with street vs previous 8.2%).  

Currency action is mixed following the inflation news. The US Dollar is extending declines relative to the Euro, Yen and Australian Dollar this morning, but has stabilized relative to the Loonie, Pound and Gold. Cryptocurrencies are soaring again with Bitcoin up 4.5%. Commodities are up today with WTI crude oil gaining 1.3%, natural gas rallying 3.5% and copper climbing 1.0%.

Earnings reports continue to highlight uneven economic conditions. Walt Disney is up 8.7% in premarket trading after a big boost from its Parks business enabled it to beat the street on earnings ($1.09 vs street $0.96). Disney+ posted higher than expected subscribers (152M vs street 148M), but management cut its long-term subscriber forecast, announced it is launching a new subscriber tier with advertising in December and intends to raise its rates without ads by 38%. Interestingly, parks competitor Six Flags is down 12.8% premarket after announcing disappointing earnings ($0.53 vs street $1.01) due to a 22% decline in park attendance from last year.

Canadian earnings reports are also mixed. Canada Goose reported a smaller than feared loss per share (-$0.56 v street -$0.62), as sales exceeded expectations. Manulife Financial also beat the street ($0.78 vs street $0.76). On the other hand, Stelco highlighted the impact of stagflation on many companies. Although Q2 sales rose by 13% over year, adjusted earnings fell by 7.0% from a year ago. Management noted that its output price of steel has dropped by 40% since April while input costs continue to rise or remain high. With margins getting squeezed, management guided toward a potentially significant drop off in earnings for at least the next two quarters.  

Subscribe to the Morning Minutes:

Today's earnings reports and market activity, delivered right to your inbox.

Colin Cieszynski, Chief Market Strategist

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

Read More

Legal and Regulatory Disclosures

Terms and Conditions:
This information is for Investment Advisors only. The website is for informational purposes only and is not intended to provide a complete description of SIA Wealth Management’s products or services. Past performance is not indicative of future results. It should not be construed as investment advice or relied upon in making an investment decision. Products and services of SIA Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. The information contained in this Website does not constitute an offer or solicitation by anyone to buy or sell any investment fund or other product, service or information to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot be legally made or to any person to whom it is unlawful to make an offer of solicitation. All products and services are subject to the terms of each and every applicable agreement. It is important to note that not all products, services and information are available in all jurisdictions outside Canada.

SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, Advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIA Wealth Management Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.