EMR - Wall Street Breakfast Podcast: CPI Day

2023-04-12 07:03:26 ET

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify March CPI expected to cool further , but to a level still well above Fed's target. Wells Fargo (WFC): ‘Expect a 10% correction in the next 3-6 mos.’ Emerson Electric ( EMR ) near deal to acquire National Instruments ( NATI ) for $60/share- report. Learn more about these stocks with Seeking Alpha Premium .

This is an abridged transcript of the podcast.

• Today is CPI day. The Consumer Price Index is expected to be released at 8:30 this morning.

• Today is stock of the week Wednesday. We’re hearing from Julian Lin, the leader of the Investing Group, Best of Breed Growth stocks on Seeking Alpha. He recently talked about two of his top undervalued stock pics and one of them is *SentinelOne*

• Elon Musk is speaking about Twitter’s future. He says he believes the company is trending towards being cash-flow positive soon.

OUR TOP STORY

The closely-watched Consumer Price Index is seen easing further last month but not by nearly enough to meet the Federal Reserve's price stability mandate. The inflation data due out today will offer a signal as to whether the central bank will raise or pause interest rates in May.

Economists expect March's headline CPI to rise 0.2% from the month before, down from the 0.4% pace recorded in February. On a year-over-year basis, headline inflation is expected to climb 5.2% vs. 6.0% in February. Stripping out food and energy sectors, core CPI is expected to advance 0.4% M/M vs. the 0.5% February reading, and 5.6% vs. 5.5%.

While the headline print would mark the slowest annual increase since May 2021, it would still be more than double the Fed's 2% inflation objective.

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Several major U.S. banks that contributed a significant portion of the $30 billion in deposits to help out First Republic Bank last month , are now planning to bolster their reserves by setting aside around $100 million each.

According to Bloomberg, the group includes JPMorgan Chase ( JPM ), Wells Fargo ( WFC ), Citigroup ( C ) and Bank of America ( BAC ).

The decision to bolster their reserves is driven by accounting regulations that require provisions to be set aside for potential losses across various assets.

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Wells Fargo issued a near-term bearish call on the U.S. stock market Tuesday, arguing that Wall Street should anticipate a market correction over the next 3-6 months. The firm said the S&P 500 ( SP500 ) could fall as far as 10% during that period, which would send the index to a level near 3,700.

The reasoning behind the call falls into three separate buckets. First, Wells Fargo notes the aggressive monetary policy by the Federal Reserve. Second, the bank outlines the potential capital and liquidity problems brought on by the bank crisis. Finally, the firm notes its concerns around a consumer that has become increasingly more dependent upon credit to sustain spending.

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Today is stock of the week Wednesday. We’re hearing from Julian Lin. He’s the leader of the Investing Group, Best of Breed Growth Stocks on Seeking Alpha.

He recently sat down with Rena Sherbill on the Investing Experts podcast.

*audio from Julian Lin*

Today we’ll hear more from Julian about the latter of those he just mentioned, SentinelOne, ticker symbol “S”.

*audio from Julian Lin*

If you haven’t checked out the Investing Experts podcast, I highly recommend it. The conversations are always in-line with what’s happening in the investing world and the guests share their insight about stocks they’re keeping an eye on. You can find it wherever you get your podcasts.

NOW MORE ON THE MARKET

The major U.S. equity averages finished mixed again on Tuesday,

The Nasdaq ( COMP.IND ) closed -0.4%, the S&P 500 ( SP500 ) finished with a fractional loss, and the Dow ( DJI ) ended +0.3%.

Weakness in technology stocks weighed on the Nasdaq, with losses coming from the Communication Services and Tech sectors. However, the other nine S&P market segments finished in the green, although none posted a gain of more than 1%. Energy, Financials and Materials all recorded modest advances.

Looking at bond trading, the 10-year yield ( US10Y ) rose 2 basis points to 3.43%, while the 2-year yield ( US2Y ) edged up 3 basis points to 4.03%.

MORE OF OUR TOP STORIES

Elon Musk commented on Wednesday that Twitter ( TWTR ) is "roughly breaking even."

Most advertisers are back after quitting when Musk took over.

Twitter currently has about 1500 employees, a sharp cut from 8000 previously .

In an interview with BBC, he was asked if he had any regrets after buying Twitter for $44B last year, and he said the pain level of Twitter has been “extremely high”, and that owning the company hasn’t been “some sort of party”.

He pointed out that many mistakes had been made along the way, but argued that “all’s well that ends well”. He also said that the company is roughly breaking even and that he believes they’re trending towards being cashflow positive very soon, as in a matter of months.

Musk also highlighted that he faced scrutiny from Tesla ( TSLA ) investors about the amount of time he spends running the social media platform.

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Walmart (NYSE: WMT ) said Tuesday that it will close four of its eight stores in Chicago by April 16 due to underperformance.

The retailer said that its Chicago stores have not been profitable since the first one opened nearly 17 years ago.

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Emerson Electric (NYSE: EMR ) is in advanced talks to purchase National Instruments (NASDAQ: NATI ) after beating a rival bid from Fortive Corp. ( FTV ).

According to a Bloomberg report, which cited people familiar, Emerson ( EMR ) is discussing paying about $60 a share for National Instruments ( NATI ). A deal could be announced as soon as this week.

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Strong Global Entertainment ( SGE ), which produces cinema screens and content, has downsized its proposed initial public offering to $8M from $10M.

Strong said in a filing that it is now looking to offer 1.6M shares priced at $5 per share. Underwriters would receive a 45-day option to buy up to 240K additional shares to cover over-allotments.

The company hopes to list its shares on NYSE under the symbol SGE.

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Google (NASDAQ: GOOG ) has said it will no longer require people to be vaccinated against Covid if they want to enter company office buildings.

According to CNBC, the vice president of global security sent a letter to employees explaining that Google ( GOOG ) was changing its vaccination policies due to a higher level of immunity, stabilized case rates and hospitalizations and the ending of emergency declarations all over the world.

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And finally, if you’re signed up to receive direct messages from Mark Zuckerberg you probably saw this one when he slid into your DM’s on Instagram Tuesday.

Meta Platforms (NASDAQ: META ) is allowing WhatsApp users in Brazil to pay merchants directly within the app.

Small businesses using WhatsApp Business can build an order within the app to securely accept payments.

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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.3%. The S&P 500 is also up 0.3% and the Nasdaq is up 0.2%. Crude oil is flat at more than $81 a barrel. Bitcoin is down 0.4% at $30,027.

The FTSE 100 is up 0.7% and the Dax is up 0.6%.

On today’s economic calendar, at 8:30 am the Consumer Price Index. At 2 pm the FOMC minutes will be released.

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