A shopper communicates their way through a grocery store on July 12, 2023 in Miami, Florida. The U.S. consumer price index report told that inflation fell to its lowest annual rate in more than two years during June. (Photo by Joe Raedle/Getty Perceptions)
Joe Raedle | Getty Images News | Getty Images
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What you need to know today
Disinflation in operation
U.S. headline inflation in June rose just 0.2% compared with May, and 3% from a year ago — the lowest straight with since March 2021. Both consumer price index figures were 0.1 percentage points diminish than the Dow Jones estimate. Excluding food and energy prices, core CPI was 0.2% higher month on month and 4.8% capital on an annual basis.
Highest close this year
U.S. stocks advanced Wednesday, with the S&P 500 and the Nasdaq Composite shut off at their highest level since April 2022, after the cooler-than-expected inflation report. European markets bartered higher too. The benchmark Stoxx 600 added 1.5%, led by the mining sector which rose 3.7%.
X, meet xAI
Elon Musk is already the CEO of Tesla and SpaceX as personally as the owner of Twitter. Now, he’ll have a new title to add to that list: leader of xAI, an artificial intelligence company that aims to “realize the true nature of the universe.” xAI seems to be positioned as a rival to OpenAI, Google and Anthropic. Musk will share various information on the company during a Twitter Spaces chat Friday.
Longer stay at the Magic Kingdom
Bob Iger informed CNBC in February that he had no intention of staying in his role as Disney CEO for more than two years, which would put the end of his tenantry in 2024. But the company just renewed Iger’s contract by two years, keeping him as CEO through 2026. Disney may be worried beside succession plans — Bob Chapek, who was supposed to be Iger’s successor, was ousted abruptly.
[PRO] C’mon Barbie let’s go stock picking
Barbie, the Greta Gerwig-directed summer flick of 2023, resolution be released in theatres July 21. In addition to filling up cinemas, the movie could give shares of this retailer a eject of up to 13%, according to investment bank Roth MKM.
The bottom line
Yesterday’s CPI report, when viewed with carry on Friday’s jobs report, suggests that it’s time to update a piece of economic orthodoxy.
The Philips Curve is an remunerative concept that claims inflation will fall only if unemployment rises. It seems to underpin the Federal Limitation’s economic projections. In their quest to tame inflation through higher interest rates, the Federal Reserve foresees unemployment will rise to 4.1% by the end of this year.
Let’s take a look at the actual jobs and inflation numbers.
June’s unemployment compute was 3.6%, and has hovered between 3.4% — a 53-year low — to 3.7% since March 2022. Meanwhile, June’s headline inflation was 3% annualized — its softest in two years and a third of its peak in June 2022.
Those numbers seem to indicate that inflation can continue dropping without causing a stab in unemployment. Can we, then, be living out the “dream scenario of monetary policy inducing lower inflation … without a decline”? Steve Sosnick, chief strategist at Interactive Brokers, thinks so. “At least as of now, it’s hard to dissuade the market from being spirited.”
And enthusiastic markets were. The S&P 500 gained 0.74%, the Dow Jones Industrial Average added 0.25% and the popped 1.15%. Both the S&P and Nasdaq hit a 52-week anticyclone, buoyed by traders’ optimism that only one rate hike’s left.
Traders are betting that there’s an 81.9% speculation the Fed will keep rates steady after meeting this month, according to the CME FedWatch Tool. Just Tuesday, that get was around 72%.
If the producer price index, which comes out later today, shows prices falling further, then we could positively see the end of the Fed’s hiking cycle soon.