Consumer prices in January rose more than expected over the past 12 months. The consumer price index gained 7.5% compared to a year ago, the Labor Department reported today.

Economists expected prices to rise by an average of 7.2% year-on-year, a level that already exceeds the peak of 7% recorded in December. The main issue with the statistic is increases the chances to have a Fed rate hike of 50 basis points at the March 16 decision, instead of 25. Currently, CME's FedWatch tool gives a 73.1% probability of a quarter-point hike versus 26.9% for a double dose. Note in passing that the status quo is not an option for the market. What will happen now?

A quarter point rate hike would probably be "business as usual" for markets, as investors would consider that the central bank is doing enough (but not too much) to try to curb rising prices without damaging economic growth. But as inflation accelerates further, forecasts could shift to a half-point increase, nervousness could rise as it would be a sign that the Fed is a little off track and needs to proceed more aggressively than it initially envisioned to regain control.

As you will have understood, today's inflation statistic could create some turmoil…

Regarding earnings season, after the good figures of Uber and Walt Disney yesterday, Coca-Cola, PepsiCo and Philip Morris are due to report today.

 

Economic highlights of the day:

In the United States, the weekly unemployment figures and the January inflation figures are today's main indicators.

It takes EUR 0.8745 to buy $1 today. The ounce of gold trades at USD 1830. In the oil market, the barrel is up to USD 90.66 for WTI and USD 92.36 for Brent. The T-Bond is yielding 1.93% (-1 point) over 10 years. Bitcoin is hovering around USD 44,000.

 

On markets:

* Coca-Cola - The soda giant reported quarterly sales Thursday that beat analysts' expectations thanks to higher prices and a gradual reopening of restaurants around the world as health restrictions are eased. Coca-Cola shares, however, lost 1.2% in premarket trading.

* Pepsico reported better-than-expected quarterly sales on Thursday and announced a $10 billion share buyback plan and a 7% increase in the annual dividend paid to shareholders. The stock is up 1.5% in pre-market trading.

* Walt Disney on Wednesday reported better-than-expected revenue for the October-December period thanks to a solid rebound in attendance at its U.S. theme parks and strong growth in the number of subscribers to its streaming services. Walt Disney's stock is up 7.8% in premarket trading.

* Uber Technologies - The U.S. group reported Wednesday the second quarterly profit in its history thanks to a jump in demand for VTCs, now close to its level before the health crisis, while the meal delivery business is also now profitable. The share price is up 5.8% in pre-market trading.

* Mattel - The toy maker issued a better-than-expected annual profit forecast on Thursday, as the group counted on strong demand for Barbie dolls and other items to help it cope with persistent supply problems. The stock jumped 10% in after-hours trading.

* Tesla - A California public agency filed a lawsuit Wednesday against Tesla for discrimination against the company's black employees at its Fremont plant, the Wall Street Journal reported. Tesla shares are down 0.3 percent in premarket trading.

* Alphabet - Russia's anti-monopoly agency (FAS) said Thursday that Google's parent company violated antitrust law related to the suspension and blocking of accounts on YouTube, the U.S. Internet giant's video service.

* Microsoft on Wednesday introduced new rules for its online application store that will allow greater freedom for developers as it seeks regulatory approval for its proposed $68.7 billion acquisition of Activision Blizzard.

* Tapestry - The owner of fashion group Kate Spade on Thursday raised its full-year revenue and profit forecast on the back of strong demand in Europe and the U.S. for its luxury handbags and clothing.

* Grab - The Asian VTC services giant jumped 10% in premarket trading after being included in MSCI's flagship ACWI global index.

* General Electric - EDF announced Thursday that it has signed an exclusive agreement with General Electric to acquire part of GE's Steam Power nuclear business.

* Ford announced Wednesday that it has suspended part of its production in Oakville, Ontario, due to ongoing blockades at the U.S.-Canada border over health restrictions put in place to fight the COVID-19 pandemic.

* Regeneron - Sanofi announced Thursday that its drug Dupixent, developed in partnership with Regeneron and used to treat atopic dermatitis, would receive priority licensing review in the U.S. for use in children aged six months to five years.

* Lumen Technologies - The telecom operator fell 11.7% on the stock market after reporting fourth-quarter sales below expectations.

 

Analyst recommendations:

  • AIG: Wolfe Research downgrades to peerperform from outperform. PT up 4.1% to $65.
  • American Express: Daiwa Securities upgrades to outperform from neutral. PT up 9.5% to $215.
  • Compass Minerals: J.P. Morgan downgrades to underweight from neutral. PT down 1.9% to $52.
  • Crown Holdings: BMO Capital Markets upgrades to outperform from market perform. PT rises 21% to $140
  • Gartner: Morgan Stanley adjusts price target to $339 from $357, maintains equalweight rating
  • ITM Power: Berenberg remains Sell with a price target reduced from GBP 300 to GBP 225.
  • Lyft: Canaccord Genuity adjusts price target to $65 from $75, maintains buy rating
  • Pfizer: Wells Fargo adjusts pfizer's price target to $60 from $65, reiterates overweight rating.
  • Shaftesbury: HSBC reiterates its recommendation to Hold with a target of GBp 600.
  • S&P Global: Oppenheimer adjusts price target to $497 from $540, maintains outperform rating
  • Sysco: Morgan Stanley adjusts price target to $86 from $85, maintains equal weight rating
  • Thomson Reuters: Morgan Stanley adjusts thomson reuters price target to $108 from $110, maintains equal weight rating
  • Virgin Galactic: Bernstein adjusts price target to $10 from $22, maintains market perform rating