But let's start with macroeconomic statistics, which do not offer much respite to the addicts of the temporary inflation theory. Yesterday in the U.S., the September consumer price index exceeded expectations and accelerated very slightly from the already upward trend in July and August. On a yearly basis, inflation in the United States stands at 5.4%, with no signs of weakness for the moment. The Labor Department said its producer price index for final demand increased 0.5% in September after progressing by 0.7% in August. In the 12 months through September, the PPI rose 8.6%, after surging 8.3% in August. Economists polled by Reuters had forecast the PPI gaining 0.6% on a monthly basis and increasing 8.7% year-on-year.
Several thousand miles away, in China, the National Bureau of Statistics announced that producer prices were up 10.7% year-on-year in September, a figure unseen in the 21st century for the former Middle Kingdom. However, Chinese consumer prices continue to remain surprisingly moderate, up 0.7% year-on-year. However, this weakness is due to episodic factors, such as the plunge in pork prices and sluggish tourism due to the slight upturn in the country's epidemic at the end of the summer.
Price increases are known to be fueled by current shortages and the disruption of supply chains. But what is actually happening? For example, in California, according to Platts data, 57 container ships are currently queuing in San Pedro Bay waiting to be unloaded in Los Angeles or Long Beach. These vessels are both useless while they are idle and unavailable to go reload in Asia. No delivery schedule can be met under these conditions. And the situation is repeated elsewhere, in other ports, leading to exponential disorder. The Freightos Baltic Index shows that a 40-foot container currently costs $16,000 to travel from Southeast Asia to the U.S. West Coast. Prices are down from their recent highs, but they are still 5 to 10 times higher than average rates prior to the current logistics crisis. To speed up unloading, the White House yesterday authorized the Port of Los Angeles to operate 24/7, a maximum rate that was already in place in Long Beach. Together, the two terminals handle about 40% of the country's container imports. Enough to save Christmas. For a return to normal, we will have to wait several more months.
It seems that investors have already priced in ongoing inflation and hawkish moves from central banks. Equity markets went through a positive breakthrough moment since yesterday, like we experienced a few times this summer. Central banks still want to reduce their support, prices remain high, bond yields have only fallen a little and supply chains are still messy, as we saw above. The only real support comes from the first corporate results, from LVMH, SAP or BlackRock. Quarterly earnings continue today with a big delivery of US financials, as well as players like Rio Tinto or UnitedHealth.
Today's economic highlights:
The August producer price index and weekly jobless claims are on the agenda in the United States, before the weekly oil inventories. Initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 293,000 for the week ended Oct. 9.
The dollars is trading at EUR 0.8627, while gold finally wakes up, climbing back to USD 1,100% an ounce. Oil remains firm, with a barrel of North Sea Brent crude at USD 83.70 and a barrel of U.S. light crude WTI at USD 80.85. Bond yields are rather on the downside, with a T-Bond at 1.55% and a Bund at -0.13% over 10 years. Bitcoin is hanging on to USD 57,500.
* Morgan Stanley reported a stronger-than-expected rise in third-quarter profit on Thursday, as the U.S. bank benefited from record merger and acquisition activity. In pre-market trading, its stock gained 1.7 percent.
* Bank of America gained 2.2 percent in premarket trading after it reported better-than-expected quarterly results Thursday, helped by strong growth in its credit and equity trading divisions and a $1.1 billion reduction in provisions.
* Citigroup reported better-than-expected earnings, helped by the reversal of provisions and its consulting business.
* Wells Fargo's third-quarter profit rose on the reversal of provisions. The California-based bank's stock rose 1.4% in premarket trading.
* The Boeing Company - A new malfunction has been identified on the 787 Dreamliner built over the past three years that involves some titanium parts that are not as strong as expected, the Wall Street Journal reported Thursday, citing people close to the matter. The stock is down 1.1% in premarket trading.
* UnitedHealth - The No. 1 U.S. health insurer reported a better-than-expected quarterly profit on Thursday, helped by a jump in revenue at its Optum division, which handles pharmacy benefits. The stock is up 2.6 percent in premarket trading.
* Walgreens Boots Alliance saw its quarterly profit jump 68% on higher sales at its U.S. and U.K. pharmacies. In pre-market trading, the company gained 1.6%.
* Domino’s Pizza fell 6% in pre-market trading after its U.S. same-store sales surprisingly fell in the third quarter due to a slowdown in delivery demand.
* Taiwan Semiconductor Manufacturing - The Taiwanese company's Wall Street-listed stock gained 3.4% in premarket trading after it reported a 13.8% jump in third-quarter profit.
* Walmart, Target- U.S. President Joe Biden on Wednesday urged the private sector, especially retailers, to do everything possible to reduce supply chain bottlenecks that threaten holiday sales.
* Amazon, Alphabet - A group of Democratic and Republican U.S. lawmakers, led by Democratic Senator Amy Klobuchar and Republican Chuck Grassley, is considering introducing legislation to ban large technology platforms, such as Amazon and Google's parent company Alphabet, from favoriting their products and services.
* Shopify - The Canadian e-commerce platform announced Thursday that it has entered into a cloud partnership with Microsoft and Oracle to allow its marketplace customers to streamline their operations.
Akamai: RBC Capital Markets reinstated coverage with a recommendation of outperform. PT set to $140
Asos: J.P. Morgan remains Overweight with a price target reduced from GBp 6680 to GBp 3300.
Avis Budget: Morgan Stanley downgrades to underweight from equal-weight. PT up 27% to $110
BAE Systems: Kepler Cheuvreux initiates a Buy rating on the stock, targeting GBp 670.
Bed Bath & Beyond: Morgan Stanley downgrades to underweight from equal-weight. PT down 17% to $12
CRISPR Therapeutics: Stifel adjusts price target to $101 from $139, keeps hold rating
The Clorox Company: Morgan Stanley adjusts clorox's price target to $154 from $160, keeps underweight rating
Extra Space Storage: Morgan Stanley adjusts price target to $160 from $157, keeps underweight rating
Fastenal: UBS adjusts price target to $53 from $49, maintains neutral rating
Kansas City Southern: UBS adjusts price target to $300 from $275, maintains neutral rating
Linde: UBS adjusts price target to $375 from $365, maintains buy rating
M.D.C. Holdings: J.P. Morgan downgrades to neutral from overweight. PT up 36% to $66
Meritage Homes: J.P. Morgan upgrades to overweight from neutral. PT jumps 41% to $143
Microchip: Stifel reinstated coverage with a recommendation of hold. PT up 8.2% to $76
Neurocrine Bio: Morgan Stanley cut the recommendation to equal-weight from overweight. PT up 8.1% to $112
On Semiconductor: Stifel reinstated coverage with a recommendation of hold. PT set to $45
PTC : Barclays adjusts price target to $149 from $161, keeps overweight rating
Reliance Steel: KeyBanc Capital Markets raised the recommendation to overweight from sector weight. PT up 14% to $165
Schlumberger: Oddo BHF initiated coverage with a recommendation of outperform. PT up 36% to $44.50
SSE: Berenberg remains a Hold with a price target raised from GBp 1,300 to GBp 1,690.
Teck Resources: Raymond James adjusts teck resources pt to ca$42 from ca$39, maintains outperform rating
UPS: Stifel raised the recommendation on United Parcel Service Inc. Class B to buy from hold. PT rises 22% to $224