Investors are anxious to see the Producer Price Index (PPI) and Retail Sales today.

The February read for PPI will be especially important following stronger-than-expected results from the Consumer Price Index (CPI) earlier in the week.

Economists expect headline PPI to accelerated to +1.2% year-over-year from +0.9% in January but “core” PPI (strips out food and energy) is expected to pull back a bit to +1.9% from +2.0% previously. PPI in January, similar to CPI, was stronger than expected and another “hot” read will support concerns that the inflation slowdown has stalled.

Wholesale prices take a while to work their way into consumer prices so PPI is not necessarily a market moving report but a strong result will nonetheless provide more fodder for stock bears.

Retail Sales could be a dangerous report for the bulls today if it ends up fanning the inflation worries. February Retail Sales results are already expected to be strong at around +0.8% due to higher gas prices.

Economists will be closely watching the bars/restaurants category, where they are forecasting the first decline in about a year. This is the only “services” component in Retail Sales, which is the main area of the economy where inflation is still accelerating.

But if consumers aren’t pulling back as expected and Retail Sales comes in even hotter, it will likely add to doubts about the timing of Federal Reserve rate cuts.

Bottom line, if data keeps stacking up showing little evidence of the economy and inflation still cooling, Wall Street may start penciling fewer rate cuts in 2024.

Keep in mind, bond yields have already been ticking higher this week but stocks have mostly brushed it off. It hasn’t been a big move - yields on the 10-year note ended yesterday at 4.192% versus 4.103% on Monday - but bond yields and stock prices don’t tend to move the same direction.

On the earnings front today, Adobe is the big highlight and could help feed Wall Streets ongoing AI mania. Adobe has gone all-in on AI and rolled the technology out into many of its products already, so investors are eager to see how it’s paying off. Dollar General, Dick’s Sporting Goods, and Ulta Beauty also report results today. s.  

Trump, Biden Quickly Clinch Nominations for First Presidential Rematch Since '56:  A slate of primaries in states where Biden and Trump faced no serious opposition officially pushed America into a brutal and unprecedented general election. The earliest both major parties finished up their nominations was in 2000, George W. Bush and Al Gore both clinched on March 9, 243 days before Election Day, Pew found. The last time a major political party gave a previously unsuccessful presidential nominee a second shot was in 1968, according to Pew. That year, Richard Nixon secured the GOP nomination despite losing to John F. Kennedy in 1960. Should a Biden-Trump sequel come about, it would be the seventh presidential rematch in U.S. history, and the first since the 1950s, Pew said. The last rematch, in 1956, saw Dwight D. Eisenhower face off against Adlai Stevenson. As of Wednesday, Election Day is 237 days away! Source Axios

Chick-fil-A to Open First Mobile Pickup Restaurant:  Chick-fil-A is opening its first-ever mobile pickup restaurant next week, the company announced in a news release. The restaurant, set to open on Thursday, March 21, is one of two digital-focused test concepts the company plans to open – the second of which is the elevated drive-thru concept slated to open later this year. The mobile pickup restaurant, according to the company, will not offer a seating area or dine-in services, as it will cater to busy people by focusing solely on delivery and mobile app ordering for a quick and easy pickup experience. According to Chick-fil-A, the new restaurant concept begins when customers order ahead for delivery or carryout via the Chick-fil-A app or online. The restaurant will be alerted by geofencing when customers are on their way to expedite the process and ensure each meal is timed with the customer's arrival. Again, according to the company, digital orders make up more than half of total sales in some markets, and this number continues to grow.  Source USA Today

Wind Energy Surpasses Gas in Electricity Generation in the European Union: In a first for the European Union (EU), wind energy has surpassed gas, with more of it being used to generate energy in 2023. In a win for the renewable energy sector, wind energy produced 18 percent of the electricity generated last year, compared with 17% for gas. Combined with solar energy, the two renewable sources created 27% of the EU’s electricity, which is the first time it has ever generated more than a quarter. This is an increase from 2022, where wind energy generated 13% of all electricity.

How Boeing’s Manufacturing Issues are Derailing Airlines' Growth: Major carriers from United Airlines Holdings Inc. to Southwest Airlines Co., Delta Air Lines Inc. and Alaska Air Group Inc. gathered at an industry conference this week and most of them had a similar story about how Boeing’s troubles are bleeding into their businesses. Most notably, airlines lack the aircraft they had previously planned on receiving in 2024 because Boeing has slowed output. And the troubles run deeper than just this year. At the JPMorgan investor event, United Chief Executive Officer Scott Kirby said he’d gone as far as telling Boeing to stop building 737 Max 10 jets for the carrier because the timeline for certification of the largest variant of the single-aisle jet has become so uncertain. Southwest said it doesn’t expect to receive any of its long-awaited 737 Max 7 aircraft this year. The airline now plans to cut capacity in 2024 and it’s reducing most hiring — including 50% fewer pilots and 60% fewer flight attendants — as it reviews its spending plans in response to reduced deliveries from Boeing. The crisis has created a massive bottleneck in an industry where there are only two main suppliers to choose from: Boeing and rival Airbus. But with Airbus’s order book stretching well into the next decade, patching up the holes left by Boeing will be hard even for the most dedicated buyers.  Source Bloomberg

Oil Prices Rising After Ukraine Attacks Russian Refineries: Ukraine attacked more Russian oil facilities by drone, extending a campaign designed to hurt Russia's most important industry and sending global crude prices higher. One of the overnight attacks targeted a huge refinery southeast of Moscow in Ryazan, according to a social-media post by the regional governor. He said Wednesday that a fire broke out, but that the fuel-producing plant—owned by state giant Rosneft Oil—was fully operational. Ukraine has this week stepped up its attacks on critical energy infrastructure, some of it deep inside Russia's territory. The full extent of the damage caused by strikes in recent months isn't clear, but the attacks have prompted Moscow to ban gasoline exports to preserve domestic supplies. The strikes also aim to disrupt supplies of road and jet fuels to Russia's forces on the front line. Western nations have all but cut off direct imports of most Russian energy products, which now mostly end up in places such as China, India and Turkey. But because of the global nature of oil markets, the country retains formidable sway over prices everywhere.  Source WSJ

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Jeff Bezo Fund Earmarks $60 Million to Make Fake Meat Taste Better: Jeff Bezos' philanthropic fund is allocating $60 million to improving alternative meats by making them taste better and cost less. Lauren Sánchez, Bezos' fiancée and the vice chair of the Bezos Earth Fund, announced that the fund is investing the money as part of a $1 billion commitment to transforming the food industry. The $60 million will go into establishing research centers, which will work to improve quality and nutrition, and reduce the cost of manufacturing fake meat, according to a press release. A third of US consumers say they won't buy plant-based meat because it costs too much, the institute said.  Source Business Insider

Why American Cars are So Big: Americans love to super-size—and not just their fast food. They favor huge sport-utility vehicles (SUVs) and pickup trucks over small cars. Some 8.7m hit the road in 2023, accounting for more than half of all sales of new vehicles. Wide roads and big parking spaces accommodate this preference for hefty rides—and so does the law. But a loophole that for nearly 50 years has incentivized sales of big vehicles will soon be tightened. In order to meet mandated fuel efficiency standards starting in the 1970s, manufacturers had to use more complex engines, which made their cars costlier. To ease the burden on small businesses that relied on big vehicles, the government exempted “light trucks”, any vehicle that could be used off road and weighed less than 8,500lb (3855kg). That meant SUVs were swept into the category and avoided the new fuel standards. By 2002 light trucks made up a bigger share of light-duty vehicle sales than cars. But the rule is about to change. The Environmental Protection Agency (EPA) announced in April 2023 that it planned to tighten standards across the board and narrow the definition of a light truck. The agency is due to publish final rules this year.  Source The Economist

America is Struggling to Keep Up with Power Demand

Reports filed in 2023 with the Federal Energy Regulatory Commission (FERC) show grid planners expected nationwide electricity demand to grow +7.8% over the next five years, compared to 2022 estimates that called for just +3.8% growth. Grid planners forecast peak demand growth of +38 gigawatts (GW) through 2028, which GridStrategies says will require “rapid planning and construction of new generation and transmission.”

In other words, the US electric grid is not prepared for the significant load growth currently happening, which could limit growth for both manufacturing and artificial intelligence technologies. GridStrategies says that while it may take one or two years to connect new load to the grid, it may take over four years to bring new generation online and even longer to build new transmission connections between regions to enable power sharing during peak periods.  Pleases note:  If you wish to read more on this, I can share.   Just email me.

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At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, “Yes, but I have something he will never have … enough.” 

For a critical element of our society, including many of the wealthiest and most powerful among us, there seems to be no limit today on what enough entails. 

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