Inflation nation

Get ready for a move above 7%. The latest CPI data is out today, with economists expecting the figure to have soared 7.3% in January, from a four-decade record notched in December. It'll be another important gauge for the market as investors seek more information on pace and level of coming Fed rate hikes that are due to start in March. As of the last count, estimates on Wall Street ranged from three rate increases all the way to seven for 2022, with the federal funds rate projected to end the year anywhere from 1.25% to 2.00%.

How will traders take it? "I can only hope for a 'no gasp' week in terms of the data. U.S. CPI is expected to be significantly hotter than the previous month, so I don't expect any real rattling of markets unless it comes in above expectations," said Kristina Hooper, chief global market strategist at Invesco. Meanwhile, the yield on the 10-year Treasury keeps climbing, notching a 2.5-year high this week at a level of 1.95%.

High inflation has already lifted costs on almost everything, ranging from groceries and gas to cars and rent, so it will be interesting to keep an eye on sub-sectors of the Consumer Price Index. Core CPI - which excludes food and energy - and is the Fed's preferred gauge of inflation, is forecast to rise 5.9% Y/Y vs; a pace of 5.5% in December. Looking to respond to the price pressures, the central bank has backed away from its "transitory" forecast that it had held for much of last year, signaling rate increases, the end of pandemic-era bond-buying and a reduction in the size of its balance sheet.

Earnings transcripts: Corporate America can't stop talking about inflation either. In fact, words like "supply chains," "logistics" and "inflation" appeared on 71% of Q4 earnings calls, up from 39.2% from the prior year. "This is a reversal from expectations at the beginning of the pandemic, where companies expected a fall in economic activity and an extended recession," noted supply chain researcher Panjiva, a unit of S&P Global Market Intelligence.

Disney gets an A+

The magic returned to Disney (DIS) late Wednesday as several upside surprises gave a much-needed boost to beaten-down shares. The stock rose as much as 10% in after-hours trading, with the Mouse House tacking on another 11.8M Disney+ subscribers (vs. 7M consensus) to reach 129.8M paying users at the end of the holiday quarter. "We are more confident than ever in this platform," CEO Bob Chapek announced on an earnings call with investors.

More content: Company executives also reiterated plans to spend $33B on new content this fiscal year as a key driver for new subscriptions in the U.S. and internationally. The investment includes $11B on sports and sports rights, as well as $22B on entertainment, with hits like Star Wars series The Book of Boba Fett, and two new Marvel titles, Eternals and Hawkeye. "We are not nearly tapped out in each of our major franchises," Chapek added on the call.

"These results speak volumes for Disney's storied brands and its ability to rise above the competition in an increasingly crowded digital media market," noted media analyst Paul Verna with Insider Intelligence.

Don't forget the parks: The company saw all-time-high revenue at its "theme parks, experiences and consumer products" division, which doubled over the prior year to reach $7.2B and exceeded pre-pandemic levels. Visitors flocked to its attractions across the U.S., Europe and Asia, while profit margins in part rose because of lower spending on labor due to two new park navigation apps: Genie+ and Lightning Lane. Attendance trends were also up double digits (vs. Q4) at Disneyland and Walt Disney World, and per-capita spending was up 40% Y/Y, amid higher outlays on food, beverages and merchandise.

That happened fast

Ford (NYSE:F), Toyota (NYSE:TM) and Chrysler-maker Stellantis (NYSE:STLA) have all halted production near Detroit, the historic heart of the U.S. auto sector, in response to the latest "Freedom Convoy" protests. Truckers have shut inbound Canada traffic on the critical Ambassador Bridge since Monday night, while another border crossing, connecting the province of Alberta with Montana, has been closed in both directions since late Tuesday. Tensions arose several weeks ago when trucker vaccine mandates kicked in north of the border on Jan. 15, while an American ban followed shortly thereafter.

Economic damage: "I think it's important for everyone in Canada and the United States to understand what the impact of this blockage is - potential impact - on workers, on the supply chain, and that is where we're most focused," White House Press Secretary Jen Psaki said during her latest briefing. "We're also looking to track potential disruptions to U.S. agricultural exports from Michigan into Canada."

There was also a response from the Canadian side, with more than two-thirds of the $600B in goods traded annually between the two countries transported by road. "If there were to be prolonged blockages at key entry points into Canada that could start to have a measurable impact on economic activity," Bank of Canada Governor Tiff Macklem declared, calling for a swift resolution. "We've already got a strained global supply chain. We don't need this."

Could the protests boost rail transport stocks like Canadian Pacific (NYSE:CP), Genesee & Wyoming (NYSE:BIP), CSX (NASDAQ:CSX) and Expeditors International (NASDAQ:EXPD)?

Growing weary: As the highly infectious Omicron variant begins to ease, copycat protests are now spreading to Australia, New Zealand and France. Truckers in the U.S. are even planning similar demonstrations, heaping pressure on authorities to ease up on pandemic restrictions. New York and Illinois just ended mask mandates in most indoor public settings, while New Jersey, Connecticut, Delaware and Massachusetts are lifting the restrictions for schools. Some provinces in Canada - Alberta, Saskatchewan and Quebec - have also dropped COVID measures since the start of the "Freedom Convoy," but have denied any connection to the demonstrations.

Trading on the Hill

Should members of Congress be allowed to trade stocks? That debate has been playing out on Capitol Hill over the last several weeks after news of Nancy Pelosi's (and her husband's) large bets on the equity market. The House speaker purchased millions of dollars in call options focused on tech and media names, like Google (GOOG, GOOGL), Roblox (NYSE:RBLX) and Disney (NYSE:DIS), though she is now taking a 180-degree turn on the issue following building momentum in both parties.

Flashback: Pelosi defended the trades in early December, saying the U.S. was a "free market economy" and lawmakers "should be able to participate in that." Her position then softened in January, saying, "I'm okay with that," if lawmakers want to tighten restrictions on trading. Now, Pelosi is moving to limit stock trading on Capitol Hill, greenlighted a plan and a bill that could come "pretty soon."

Members of Congress have a lot of privileged and classified information that could move stock prices (think back to the beginning of the pandemic), as well as financial incentives from companies that routinely lobby Congress. Those decisions could also play a role in how much a given stock is worth, and Congress sought to counteract that in 2012 by passing a bill known as the STOCK Act. While the legislation requires lawmakers to disclose trades within 45 days, many say it doesn't do enough to prevent insider trading and conflicts of interest.

Current proposals: One idea would ban lawmakers and senior staff from buying and selling individual stocks, while another would institute an outright ban on trading. Meanwhile, a measure proposed by freshman Sens. Jon Ossoff (D-Ga) and Mark Kelly (D-Ariz) would require stocks to be put into a blind trust within 120 days of the bill being enacted. The legislation, dubbed the Ban Congressional Stock Trading Act, would apply to all sitting (and incoming) members of Congress, their spouses and their dependent children.

Today's Markets

In Asia, Japan +0.4%. Hong Kong +0.4%. China +0.2%. India +0.8%.
In Europe, at midday, London +0.3%. Paris -0.1%. Frankfurt +0.2%.
Futures at 6:20, Dow flat. S&P -0.2%. Nasdaq -0.3%. Crude +0.1% $89.73. Gold -0.2% to $1833.40. Bitcoin +2.6% to $44,738.
Ten-year Treasury Yield +1 bps to 1.94%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Consumer Price Index
10:30 EIA Natural Gas Inventory
1:00 PM Results of $23B, 30-Year Note Auction
2:00 PM Treasury Statement
4:30 PM Fed Balance Sheet
7:00 PM Fed's Barkin Speech

Companies reporting earnings today »

What else is happening...

Rumble SPAC (NASDAQ:CFVI) sinks after Rogan rejects $100M podcast offer.

Lord of the Rings, Hobbit media rights going on block - Variety.

Peloton (NASDAQ:PTON) bulls hang tough after new look from company.

CVS (NYSE:CVS) posts weak forecast for COVID vaccine business in 2022.

Uber (NYSE:UBER) pops as core business rebounds following Omicron surge.

Tesla (NASDAQ:TSLA) accused of racial discrimination in California lawsuit.

GE (NYSE:GE) offloads Steam Power's nuclear power activities.

Twilio (NYSE:TWLO) rockets higher on strong revenues and guidance.

Restaurant stocks rally on sector earnings, rollback of pandemic rules