Stock bulls remain on shaky ground as another inflation print comes in higher than expected. The culprit this time is the Producer Price Index, which rose almost twice as much as Wall Street was expecting for January.

Several Fed officials yesterday weighed in on this week's "hot" data, with St. Louis Fed President James Bullard voicing support for a 50 basis-point hike at the central bank's next meeting on March 21-22 while Cleveland Fed President Loretta said inflation risks remain "tilted to the upside."

Mester sees inflationary risks particularly stemming from the ongoing war between Russia and Ukraine as well as increased commodity demand as China reopens from Covid-19 lockdowns. Mester and Bullard also apparently pushed for a 50 basis-point hike at the previous meeting, though the actual increase was 25 basis-points. Most still anticipate 25 basis-point hikes at the March and May meetings (no meeting in April) but some are now starting to pencil another hike in June and traders have begun lifting the odds for another hike in July.

Keep in mind, bulls have been hoping that the anticipated March hike could be the Fed's last in this cycle. Fed officials this week have mostly been advocating to lift rates above 5% and hold them there for an extended period, which has been the script for several months now.

The Fed funds rated currently stands at 4.5%-4.75%. More investors are also now betting on a "no landing" scenario for the economy, meaning the economy continues to grow and inflation remains elevated.

This is decidedly better than a combination of no-growth and high inflation but would still have it's own set of negatives for the stock market, including the likelihood that Federal Reserve will not be able to end rate hikes in the near-future.

Some worry sustained inflation could even prompt the Fed to deliberately cause a recession. Meanwhile, the idea of the Fed "pivoting," or lowering rates, as many bulls had been hoping for by the end of the year is looking more and more like a pipe dream.

Today, investors will be digesting Import/Export Prices on the data front, and earnings results from Deere & Co.

Looking to next week, remember that US markets are closed on Monday for the "Presidents' Day" holiday.

The top data highlight next week will be the PCE Prices Index on Friday, which is one of the Fed's favorite inflation gauges. The report last month showed continued moderation with the year-over-year headline rate dipping to +5.0% from 5.5% previously.

Other data for the week includes preliminary PMI reads and Existing Home Sales on Tuesday; the second estimate of Q4 2022 GDP on Thursday; and New Home Sales and Consumer Sentiment on Friday.

Earnings from US companies next week will include some key consumer goods businesses with the top highlights being Walmart and Home Depot on Tuesday and TJX on Wednesday.

Other releases include Medtronic and Diamondback Energy on Tuesday; eBay, NVIDIA, and Rio Tinto on Wednesday; Block, Intuit, Moderna, Monster Beverage, VMware, and Warner Bros. Discovery on Thursday; and Berkshire Hathaway on Friday.

All Debt Rising... Credit Card Debt Hits Record Levels: The New York Federal Reserve reported yesterday that consumer debt hit a fresh record at the end of 2022 while delinquency rates rose for several types of loans. Debt across all categories totaled $16.9 trillion, up about $1.3 trillion from a year ago, as balances rose across all major categories. Despite a decline in originations, mortgage balances increased to $11.9 trillion, up about $250 billion from the third quarter and about $1 trillion from a year ago. Mortgage loans considered in “serious delinquency” of 90 days or more rose to a rate of 0.57%, still low but nearly double where they were from the year prior. As credit card debt hit an all-time high just shy of $1 trillion, in the final three months of 2022, delinquencies among borrowers accelerated. Balances grew $61 billion in the fourth quarter from the previous one to $986 billion, the Federal Reserve Bank of New York found. That marked the largest quarterly increase and the highest total since the series began in 1999. The $130 billion year-over-year increase in credit card debt, also the highest annual gain on record per the New York Fed, came as interest rates on credit cards also hit new highs. The average rate is near 20%, according to Bankrate, surpassing levels from the last 37 years. Source YahooFinance

Under Armour Making Shoes "Easier" with New $150 SlipSpeed Sneaker: Under Armour Inc. founder and brand chief Kevin Plank raised the seed money to start the $5 billion sportswear company by selling flowers on Valentine’s Day when he was a college student at the University of Maryland. So the company chose this week to release its new SlipSpeed, a product aimed at athletes as well as teens and twentysomethings. Plank says UA has not yet built its defining product, but this comes close. What's different about SlipSpeed is its design which allows the heel to collapse and quickly turn into a slide. The idea came about when Marcus L. Cheatam, Under Armour’s director of product for special teams noticed that young basketball players and others were sticking their feet into their sneakers and crushing the back of their heels to turn them into slides. Seeing that as an opportunity, the company created the collapsible heel. I'm told the sneaker also includes some other attributes such as its tread, which allows for quicker pivots on a basketball court, with little or no squeaking sound normally caused by rubber soles rubbing on a gym floor. Source Market Watch

Tesla Recalls More Than 300,000 Over Full Self Driving Software Safety Concerns: Tesla has issued a recall of its Full Self-Driving software, an advanced driver assistance system that federal safety regulators say could allow vehicles to act unsafe around intersections and cause crashes. Tesla said it is recalling certain 2016-2023 Model S, Model X, 2017-2023 Model 3, and 2020-2023 Model Y vehicles equipped with Full Self-Driving Beta (FSD Beta) software or pending installation. The recall, which was posted on the National Highway Traffic Safety Administration’s website, affects as many as 362,758 vehicles equipped with the software, according to the notice. Tesla will release an over-the-air software update, free of charge, to fix the issue. Tesla vehicles are not self-driving. Instead, FSD includes a number of automated driving features that still require the driver to be ready to take control at all times. NHTSA said it found that in certain situations, Tesla’s Autosteer on City Streets feature led to an unreasonable risk to motor vehicle safety based on insufficient adherence to traffic safety laws. As required by law and after discussions with NHTSA, Tesla launched a recall to repair those defects, the agency said in an emailed statement. Source Techcrunch

DraftKings Scores Record Revenue, Raises 2023 Outlook: DraftKings reported stronger than expected revenue and raised its outlook for 2023. Its business is getting a boost as more states legalize sports gambling. The gambling firm reported fourth quarter revenue of $855 million and a loss of 53 cents a share. Wall Street expected an adjusted loss of 46 cents a share on sales of $801 million, according to FactSet. The surge in revenue compares with the $473 million reported in the fourth quarter of 2021. Average monthly payers in the fourth quarter rose 31%, to 2.6 million, representing player retention and the expansion of its Sportsbook and iGaming products into new jurisdictions. For full year 2022, the company reported a loss per share of $3.16 on revenue of $2.24 billion, also beating expectations. DraftKings raised its full year 2023 revenue guidance to a midpoint of $2.95 billion, from $2.9 billion, and said it expects to report a smaller loss than it forecast back in November. The company said it is now live with mobile sports betting in 20 states that collectively represent 42% of the U.S. population. Its online Sportsbook rolled out in Maryland in November and in Ohio in January. Source Barrons

Titanic Wreck Footage, Captured in 1986, Released for the First Time: Almost 38 years after the wreck of the “unsinkable” Titanic was first discovered at the bottom of the North Atlantic, previously unseen footage has been released. Researchers from the Massachusetts-based Woods Hole Oceanographic Institution located the remains of the famed ocean liner in 1985, and returned a year later to take a three-person submersible thousands of feet below the surface to investigate. The footage, taken in July 1986 and released Wednesday, marks the first time humans set eyes on the ship since it sank in 1912. The rare footage was released this week to coincide with the 25th anniversary of the James Cameron movie, “Titanic,” which smashed box-office records and told the story of the ship’s ill-fated maiden voyage. Source WSJ Video Here

Twitter to Allow Cannabis Advertising: Twitter this week updated its advertising policies to allow cannabis ads to run on its service in states where cannabis is legal, in accordance with federal guidelines. The policy represents the biggest step forward that any major tech company has made toward allowing cannabis advertising where it's legal in the U.S. Meta allows ads for some hemp products, but not THC or CBD products. Google updated its policies last month to allow ads for FDA-approved pharmaceuticals containing CBD and "topical, hemp-derived CBD products with THC content of 0.3% or less" in California, Colorado, and Puerto Rico. But some ad formats, like the YouTube Masthead, are still off limits, and ads promoting other CBD-based products, like supplements, still aren't allowed. The ads that Twitter will accept will be limited, according to a policy update posted to its website. Similar to gambling advertisers, Twitter said that any marijuana advertisers wishing to run ads on its service must get certified. Source Axios

The OPEC+ Oil Plan for 2023 Brings New Inflationary Risks: The OPEC+ oil cartel has a plan for 2023 – and, for now at least, it involves doing absolutely nothing. The group, led by Saudi Arabia and Russia, feels vindicated about its cautious approach. In October, weeks before the US mid-term elections, it cut production, triggering a political onslaught from Washington. Despite the cut, Brent crude, the global oil benchmark, declined to $75 a barrel from $95 during the final quarter of last year due to weak Chinese demand and strong oil exports from sanctioned Russia and Iran. For OPEC+ officials, the 20% drop is a validation of its guarded attitude. If that prudent strategy paid off last year, it should work again in 2023, the thinking goes. It’s tempting to think that what did the job in 2022 will work again this year. But OPEC+ is taking a gamble: If the group gets its supply and demand calculations wrong, it risks inflicting higher energy prices on a world still fighting elevated inflation. Already, Brent prices have recovered from the December lows. Source Bloomberg

Inflation Drives Homeowners to Opt for DIY Home Improvements: As high home prices and mortgage rates force many homeowners to stay put rather than trade-up, a whopping 90% of homeowners are looking to make their existing living space more comfortable this year, according to a new survey. But as inflation continues to drive up material costs, many are turning to DIY projects to save money. "If you wanted to get new furniture or if you wanted to paint your house, or if you wanted to put new siding up outside, if you wanted to build a deck, really anything related to improving your home, we found that this category, was about 10% more expensive," Hailey Neff, a researcher on the survey told USA TODAY. "For a lot of homeowners, DIY project has become a more more affordable way of doing it." Roughly 60% of respondents said they expect to pay for projects using money from checking and savings accounts (60%). Additionally, 37% of homeowners cite credit cards as one of the ways they will pay for improvement projects. Fewer homeowners expect to turn to financing options, and of those, nearly 9% report home equity and personal loans as their preferred choices. Due to volatile and elevated mortgage rates, fewer homeowners are interested in a home equity line of credit (HELOC) or cash-out refinancing as ways to fund their home improvement. Source USA Today

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