Markets

Daily Markets: Are Consumers Feeling the Pinch of Inflation?

Man walking past a store in London while wearing a mask
Credit: Simon Dawson / Reuters - stock.adobe.com

Today’s Big Picture

Equity indices in Asia finished today’s trading mostly in the red led by the 1.1% drop in South Korea’s Kospi. Japan’s Nikkei fell 0.6% while China’s Shanghai Composite retreated 0.4% and Hong Kong’s Hang Seng closed the day 0.7% higher. By mid-day trading, equity indices in Europe were mostly lower and US futures imply a weak market open later this morning.

Potentially re-shaping the U.S. market open is the October read on the Consumer Price Index that will be released at 8:30 AM ET. Consensus expectations call for a 5.8% YoY increase but given the number of companies announcing price increases to offset rising costs over the course of this earnings season, we could see the October CPI come in hotter than expected. In Washington today, U.S. President Biden is expected to meet with European Commission President von der Leyen to discuss various areas of cooperation. And more than a few eyes will be watching to see if China Evergrande (EGRNF) makes its $148.1 million in coupon payments that are due today.

Data Download

International Economy

China’s inflation rate in October accelerated more than expected to 1.5% YoY from 0.7% in September, which was expected to accelerate to a 1.4% pace. October’s PPI also accelerated more than expected to 13.5% YoY after rising 10.7% in September and compared to expectations for an increase to 12.4%.

Germany’s final inflation rate reading for October came in at 4.5% on a YoY basis, matching the consensus forecast and compares to September’s 4.1% reading.

The UK's National Institute of Economic and Social Research expects 2021 GDP to grow 6.9%.

Domestic Economy

Yesterday October’s Producer Price Index came in broadly in-line with expectations. Both headline and core producer prices reversed the slowdown we saw through September with overall producer prices rising 7.7% annualized, core rose 4.8%, and PPI core ex trade services up 5.2%.

U.S. President Joe Biden and China President Xi Jinping are scheduled to hold a virtual summit next week, although no specific date has been set.

Later today we the October reading on the Consumer Price Index for October with the consensus estimate for a 5.8% YoY gain versus the 5.4% pace in September. Core CPI is expected to accelerate to 4.3% YoY from September’s 4.0% pace. We will also get the usual weekly jobless claims, wholesale inventories, the usual weekly EIA Crude and Gasoline stocks, and the federal government’s monthly budget statement.

Markets

After what seemed a nearly endless series of up days, the market finally took a breather with the Dow falling 0.3%, the S&P 500 lost 0.4%, its first down day in nine trading sessions, and the Nasdaq fell 0.6%. The worst performing sector was Consumer Discretionary, which fell 1.4%, driven by a 12.5% drop in Tesla (TSLA).

Crude oil prices climbed again, with the latest speculation that the Biden administration may refrain from tapping into the U.S. Strategic Petroleum reserve in light of expectations shared by the Energy Information Administration in its Short-Term Energy Outlook that the global oil market would become oversupplied and lead to lower prices early next year.

Stocks to Watch

Facebook parent Meta Platforms (FB) said it would eliminate micro-targeting options for advertisers on topics related to politics and other sensitive issues.

Beginning today, Netflix (NFLX) is bringing its mobile gaming effort to Apple (AAPL) iOS devices through its mobile app at no added charge (no purchase price, no ads and no in-app purchases). This follows the recent launch on Android powered devices.

Infineon Technologies AG (IFNNY) shared its business will grow faster and with higher profitability than expected, as its automotive semiconductor segment in particular benefits from strong demand.

Taiwan Semiconductor (TSM) reported its October revenue rose 12.8% YoY to NT$134.5 billion.

Google (GOOGL) lost its appeal of a 2.4 billion euro ($2.8 billion) antitrust fine for allegedly thwarting smaller shopping search services. The EU General Court in Luxembourg ruled yesterday, the company breached competition rules and deserved the penalty doled out by the European Commission in 2017.

Earnings Announcements & Guidance

Before U.S. equity markets open, 23andMe (ME), Energizer (ENR), Shift4 Payments (FOUR), Wendy’s (WEN), and Wolverine (WWW) will be among the companies issuing their latest quarterly results.

Poshmark (POSH) reported its latest quarterly revenue rose 15.8% YoY to $79.65 million, missing the $82.8 million consensus. Gross Merchandise Value for the quarter increased 18% YoY to $442.5 million and trailing 12 months Active Buyers reached 7.3 million, up 17% YoY. Poshmark issued downside guidance for the current quarter with revenue of $80-$82 million vs. the $84.90 million consensus.

Reporting its first quarter as a public company, Toast (TOST) missed bottom line expectations but revenue for the quarter soared 105.4% YoY to $486.38 million, easily topping the 433.6 million consensus. For the current quarter, the company sees revenue of $465-$495 million vs. the $447.5 million consensus.

DoorDash (DASH) revenue came in 10% above expectations with order volumes a 5.7% beat over Wall Street estimates. Gross order value came in 6.8% higher than estimates.

Yesterday after the close Coinbase (COIN) reported third quarter revenues that missed revenue estimates by 16.6%, echoing the crypto trading decline Robinhood (HOOD) reported. COIN had a much less painful experience as trading volumes beat by nearly 6% and monthly transacting users were a 4.4% beat over forecasts. Retail trading volumes fell 36% QoQ and were 6.5% below estimates. Institutional trading volumes came in 26% lower than the prior quarter and were 11% above forecasts.

IPOs

The Amazon (AMZN) and Ford Motor (F) backed Rivian Automotive (RIVN) priced its IPO yesterday at $78, which values the company at $66.5 billion, from a previous range $57 to $62 per share. Rivian is expected to produce ~1,200 EVs this year but ramp its annual production to 150,000 at its main facility by 2023. RIVN shares will begin trading today.

For more, visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Beazer Homes (BZH), Beyond Meat (BYND), Dutch Bros. (BROS), GoodRX (GDRX), Honest Company (HNST), Red Robin Gourmet (RRGB), and Walt Disney (DIS) will be reporting their latest quarterly results. Those looking for more on what companies are reporting and when should truck on over to Nasdaq’s Earnings Calendar.

On the Horizon

  • November 12: JOLTs report, Michigan Consumer Sentiment
  • November 15: NY Empire State Manufacturing Index
  • November 16: Retail Sales, Export & Import Prices, Industrial Production, NAHB Housing Market Index, Business Inventories, Overall Net Capital Flows, Foreign Bond Investment, Long-Term Tic Flows, API Crude Oil stock changes
  • November 17: Housing Starts, Building Permits, EIA Crude Oil and Gasoline Stocks
  • November 18: Weekly jobless claims and Philadelphia Fed Manufacturing Index

Thought for the Day

“The world as we see it is only the world as we see it. Others may see it differently.” ~ Albert Einstein

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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Lenore Elle Hawkins

Lenore Elle Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, her focus is on macroeconomic influences that create investing headwinds or tailwinds. Lenore co-authored the book Cocktail Investing and in addition to her Tematica work, provides M&A consulting services for companies in Europe looking to expand globally. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.

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Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

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