Thursday Morning Rebel Brief: Fed’s Preferred Inflation Gauge Hits Highest Level Since 1980s

Stocks are trading lower this morning with all major indices lower by more than a percent. The only sectors in the green are fixed-income bond ETFS (TIP, TLT) and Utilities (NEE, SO).

S&P Heatmap as of 10:23 EST. Source: FinViz

Fed’s Preferred Inflation Gauge Hits Highest Level Since 1980’s

• Personal Income +0.5% In May; Estimate: +0.4%
• Personal Spending +0.2% In May; Estimate: +0.4%
• Personal Savings Rate 5.4%, +0.2% MoM
• May PCE Core Price Index +0.3% MoM; +4.7% YoY; Estimate: 4.8%
• May PCE Price Index +0.6% Rate On MoM; +6.3% YoY
• Jobless Claims -2K To 231K (week of June 25); Survey 230K
• Continuing Claims -3K to 1,328,000 (week of June 18)

What does it all mean? Inflation is still raging, but by some measures, less than Wall Street expected. Metrics like personal income (which rose a tenth of a percent more than expected), personal savings rate (which rose two tenths of a percent month over month) and core personal consumption expenditures (which rose a tenth of a percent less than expected) all come together to build a mostly cooler-than-expected inflation report. This arrives ahead of July 13th’s upcoming CPI report and July 28th’s early GDP expectations — two highly anticipated data releases.

RH (formerly known as Restoration Hardware) Falls

Shares of RH are down more than 12% on news that they’ve lowered full year guidance. The company cites a weakening economy and slowing home sales. RH also said it will not be buying a single share using its buyback at this time.

Constellation Brands (STZ) Beats Earnings

The alcohol and cannabis business is booming — at least according to Constellation Brands, the maker of Corona, Modelo, Mi Campo and other popular brands. The company beat EPS estimates ($2.66 vs $2.52 estimated) and beat revenue estimates by $85.6M ($2.1B vs $2.014B expected). The stock also increased forward guidance for the full year. Shares of Constellation Brands are still trading lower by 4% despite the positive news. 

Bitcoin Falls Below $19,000 Once Again

Bitcoin fell to $18,756 today. If it breaks below $17,601, it will have reached its lowest level since 2020. Ethereum is in the same dire position, falling below $1,000 this morning. Ethereum must remain above $880 lest it fall to its lowest level since 2020. This fall hasn’t deterred Microstrategy CEO and billionaire Michael Saylor, who continues to buy the dip in Bitcoin. 

For more quick takes on this morning’s market-moving news, check out 60 Seconds With Jon Najarian!

https://twitter.com/jonnajarian/status/1542497157487292416

Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know where to enter and exit!