Morning Reads

Morning Reads

Open Interest Changes



he core personal consumption expenditures price index is expected to have risen 0.2% in November from October, representing an increase of 3.4% Y/Y. That's some really great progress, given that the figure was above 5% just over a year ago, and shows that the Fed is continuing to get close to its 2% goal. In fact, the central bank appears to have already reached its target when examining the H2 annualized pace of inflation, or by chain-linking the index, giving way to the bull sentiment that has been felt across markets in recent weeks.

"Consider the two most common barometers of monetary policy: interest rates and the money supply," Alexander William Salter writes in Disinflation Dream Come True, comparing the metrics against the natural rate of interest. "Continuously compounded, headline inflation was a mere 0.59% last month. Core inflation, which excludes volatile food and energy prices, was 1.96%. Even the higher number is below the Federal Reserve's 2.0% target."

PCE vs. CPI: The core personal consumption expenditures price index is the central bank's preferred inflation gauge as it has a broader scope than the traditional consumer price index. For example, CPI only covers out-of-pocket household expenditures, instead of other expenses that are incurred in the broader cost ecosystem. PCE also better reflects how consumers substitute their purchases and uses certain calculations to smooth out price swings, making it a better tool for the Fed to size up the macroeconomic environment and make policy decisions. (2 comments)

Upping the ante

Trade tensions between Beijing and Washington are continuing to rise, with China banning the export of technology for extracting and separating rare-earth metals due to national security concerns. The move lifted uranium stocks such as Energy Fuels (UUUU), MP Materials (MP) and EnCore Energy (EU) on Thursday. The ban comes as the U.S. and Europe seek to reduce their reliance on China for rare-earth metals, as it is the world's top producer accounting for about 90% of the global refined output. China has already brought in rules to restrict exports of several metals this year as it leverages its critical mineral dominance to fight back against trade curbs from the U.S. (18 comments)

Retail shocker

Nike (NKE) slid 11.7% in postmarket trading on Thursday after posting a mixed Q2 earnings report and issuing cautious guidance for the rest of its fiscal year. Margins and profit topped estimates, but soft North America sales dragged down Nike's total revenue. $2B in cumulative cost savings are hoped to be identified over the next three years, including the simplification of product assortment, increasing automation and streamlining the organization. CFO Matthew Friend further warned of a "highly promotional" retail environment, which pushed other apparel and footwear names lower, including Under Armour (UAA) -5.8%, Lululemon (LULU) -1.9%, and Foot Locker (FL) -7.2%. (24 comments)

Losing control

Following a dispute over oil-production quotas, Angola said it would leave the OPEC cartel about 16 years after it first joined the group. "We feel at the moment Angola does not gain anything by remaining in the organization and, in defense of its interests, it has decided to leave," said Angolan President João Lourenço. Many oil majors operate in the country, which produces about 1.1M barrels of oil, including TotalEnergies (TTE), Chevron (CVX) and Exxon Mobil (XOM). Several other nations have also quit OPEC in recent years, such as Qatar, Indonesia and Ecuador, but for different reasons. (72 comments)

Today's Markets

In Asia, Japan +0.1%. Hong Kong -1.7%. China -0.1%. India +0.3%.
In Europe, at midday, London +0.1%. Paris flat. Frankfurt flat.
Futures at 7:00, Dow -0.3%. S&P flat. Nasdaq -0.1%. Crude +0.8% to $74.46. Gold +0.9% to $2,070.40. Bitcoin -0.4% to $43,778.
Ten-year Treasury Yield -3 bps to 3.87%.

Today's Economic Calendar

8:30 Durable Goods
8:30 Personal Income and Outlays
10:00 New Home Sales
10:00 Consumer Sentiment
1:00 PM Baker Hughes Rig Count
SIFMA Early Close at 2:00 PM

Companies reporting earnings today »

What else is happening...

White House urges 'serious scrutiny' of U.S. Steel (X) sale to Nippon.

Red Sea attacks: Freight rates, shipping firm valuations sail higher.

NetEase (NTES), Tencent dive as China eyes curbing gaming spend.

U.S. government opens investigation into frequent flyer programs.

Paramount-Warner Bros.: Streaming heavyweight or big loser?

Boeing (BA) delivers 787 to Chinese airline for first time since 2019.

Berkshire Hathaway (BRK.Bbuys more Occidental (OXY) stock.

Carnival (CCL) results top expectations with record annual sales.

RBC's (RY) $10.2B acquisition of HSBC (HSBCunit approved.

Farm groups urge reopening of border crossings; railroad firms hit.

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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