Morning Reads

Todays Open Interest Change



All eyes are turning to the Consumer Price Index report due later today, as traders hope for more clues on whether the Federal Reserve is done with its tightening cycle. The headline inflation rate has been steadily tracking downwards at around 2.5% in the past couple of months, bolstering expectations of a soft landing. However, the core figure remains elevated, because of which Fed officials are hesitant to declare victory in their fight to tame inflation.

Market expectations: Headline inflation is expected to rise 3.6% Y/Y in August, accelerating from 3.2% in July. However, the core number - excluding volatile food and energy prices - is expected to increase 4.4% Y/Y, easing from 4.7% in July. The Cleveland Fed Inflation Nowcast estimates an even bigger increase in headline inflation, to 3.8%, while core inflation is estimated to ramp up to 4.5%. On a month-over-month basis, CPI is widely expected to rise 0.6% in August from 0.2% in July, and core CPI is anticipated to scale 0.2% higher, the same increase it saw in the prior month.

Trouble spots: Kevin Rendino, CEO of 180 Degree Capital (TURN), expects the August report to show "a similar trend to what we've been seeing for over a year." A major concern is rising crude prices, which have fueled concerns of inflation pressures continuing for longer than expected. While headline and core inflation have receded from their peaks of last summer, "some trouble spots remain," said Bankrate Chief Financial Analyst Greg McBride, including shelter and automotive costs. Markets continue to expect the Fed to leave rates unchanged at its meeting next week, although there is still some uncertainty regarding the remaining meetings this year.

What to watch: Even as the equity market dreams about rate cuts, the bond market has accepted that inflation will likely be here for longer, Mott Capital Management's Michael Kramer noted in The Inflation Nightmare May Come Back To Haunt The Market This Week. With oil and gasoline prices on the rise, "it serves as a reminder that the Fed may be slowing the pace of rate hikes, but unless the data starts to change materially, the Fed probably isn't finished raising rates." (3 comments)

iPhone 15

Apple (AAPL) failed to excite investors with its new iPhone 15 lineup and the next generation of Apple Watch operated by finger movements, with its shares ending 1.7% lower. While some analysts expected the iPhone 15 to be more expensive, Apple kept its price unchanged. Prior to the launch, SA analyst Michael McGrath had said price hikes would be a viable revenue-increasing strategy as iPhone sales saturate. The iPhone 15 includes “Dynamic Island” - an interface previously exclusive to iPhone 14 Pro and Pro Max - and the Pro version will feature the new A17 chip, which should upgrade the gaming experience. The Pro's price was unchanged and Pro Max was raised to $1,199 from $1,099. All products now have USB-C charging ports in compliance with European law. (215 comments)

Surprise exit

BP (BP) CEO Bernard Looney has resigned with immediate effect after admitting he was "not fully transparent" about detailing past personal relationships with colleagues, sending its shares down 1.3%. BP CFO Murray Auchincloss will serve as interim CEO. The oil and gas giant's board began reviewing allegations about such relationships in May, and no breach of the company's code of conduct was found. However, "further allegations of a similar nature" recently surfaced and the probe remains ongoing. Looney, who took over the company in 2020, had laid out ambitious plans for BP to cut emissions. His exit has sparked uncertainty over these plans. (38 comments)

Tracking emissions

California legislators have passed a first-of-its-kind bill that will require large companies operating in the state to disclose all emissions tied to their operations and supply chain. The state senate approved the bill, sending it to Governor Gavin Newsom, who will decide on signing it by October 14. The bill, aimed at businesses with $1B or more in annual revenue, will require companies to report a wide range of emissions, including Scope 3 emissions, which opponents said would be nearly impossible to measure accurately. The California bill was supported by several big companies, including Apple (AAPL) and Google (GOOGGOOGL), but was fiercely opposed by the state's Chamber of Commerce. (126 comments)

Today's Markets

In Asia, Japan -0.2%. Hong Kong -0.1%. China -0.5%. India +0.4%.
In Europe, at midday, London -0.3%. Paris -0.8%. Frankfurt -0.8%.
Futures at 7:00, Dow -0.1%. S&P -0.1%. Nasdaq -0.2%. Crude +0.7% to $89.43. Gold -0.1% to $1,933.90. Bitcoin flat at $26,138.
Ten-year Treasury Yield +4 bps to 4.30%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $20B, 30-Year Bond Auction
2:00 PM Treasury Statement

Companies reporting earnings today »

What else is happening...

CDC recommends updated COVID shots for fall/winter virus season.

DOJ: Google (GOOGGOOGL) pays $10B yearly to maintain monopoly.

T-Mobile to buy 5G airwaves from Comcast (CMCSA) for up to $3.3B.

Amazon (AMZN) to hike wages for third-party contract delivery drivers.

More job cuts likely at Wells Fargo (WFC) as bank improves efficiency.

These over-the-counter cold remedies could be pulled after FDA vote.

Binance.US chief Brian Shroder quits, over 100 employees laid off.

Rocket Lab (RKLB) declines after founder files to sell $22M in shares.

German sandal maker Birkenstock, backed by LVMH, files for U.S. IPO.

The GameStop (GME) meme stock frenzy of 2021 hits the big screen.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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