Wall Street awaits the speech by Jerome Powell, president of the Fed, which will finally be delivered today, Friday, August 27, at the Jackson Hole symposium. The Dow Jones is up 0.30% to around 35,303 points, the S&P 500 is up 0.26% to 4,481 points and the Nasdaq is + 0.16% to 14,967 points. US 10-year Treasury rates are up 1.356%, while the euro-dollar ratio is under mild pressure, down 0.08% to $ 1.1738.
Just today, the PCE index was released, a crucial inflation thermometer monitored by the US central bank for its monetary policy decisions.
The core component of the figure rose by 3.6% on an annual basis in July, in line with consensus expectations, unchanged compared to + 3.6% in June (revised upwards from the + 3.5% initially reported).
On a monthly basis, the core PCE was up by 0.3%, as expected and compared to + 0.4% previously.
Overall, the PCE index rose 4.2% year-on-year, accelerating from the previous + 4% and reaching a 30-year record. The data was released as part of the report relating to consumption expenses and personal income.
Consumer spending fell by 0.1% in July, compared to the + 0.3% forecast and the previous 1% rise.
Personal income rose by 1.1%, compared to an estimated + 0.2% and + 0.1% in June.
The rise in US inflation is one of the reasons that fueled the fear known as the ‘taper tantrum’ in the markets, that is, the fear that the Fed will begin to reduce its quantitative easing plan by $ 120 billion a month.
And important information about the future of QE could come today in the words of Jerome Powell. Powell is called by the markets to tone down the decidedly hawkish tones that have come from some members of the Fed, in favor of the tapering of Quantitative easing.
Interviewed by Yahoo Finance, Dallas Fed President Robert Kaplan said he was convinced of the resilience of the US economy against the Delta variant. In his opinion, he therefore stressed, a US rate hike in 2022 would be so appropriate. Regarding the tapering of QE, Kaplan pointed out that the purchases of the assets that Jerome Powell’s Federal Reserve is carrying out with its QE program, worth $ 120 billion per month, have done their homework and are now not they are better suited to the situation.
Hawkish comments also from Esther George, president of the Kansas Fed who, in an interview with Cnbc, said that, “given the progress we have seen”, the reduction of the purchasing program “is appropriate”.
However, no clarification has come about when tapering should start. But, “looking at the job growth that happened last month and the inflation levels right now, I think the economy doesn’t need that much (monetary) stimulus – George pointed out – I’d rather speak of tapering more before than after “.
The hawks’ statements depressed sentiment yesterday, along with the news of the suicide attack at Kabul airport, which took place yesterday.
“The markets do not like uncertainty and uncertainty in Afghanistan is high and the impression is that it is increasing”, Bob Doll, chief investment officer of Crossmark Global Investments, commented to Cnbc. ‘Isis.
Meanwhile, anxiety about the Delta variant and the consequences it could have on the US economy is growing.
The numbers pitted in the last few hours on the new infections from Covid-19 in the United States are the following, based on data from the New York Times reported by the Marketwatch.com website.
In the last week that ended yesterday, Thursday 26 August, the daily average of new Covid-19 cases in the US rose to 156,296 units, up 24% compared to two weeks ago.
The daily average of deaths increased to 1,233, a 100% jump in two weeks, and over 1000 for the first time since March.
The daily average for hospitalizations rose to 96,586, up 29% in the past two weeks.
From the data of the federal agency Centers for Disease Control and Prevention it emerges that the number of people who have been fully vaccinated in the United States stands at 172.2 million, 51.9% of the total population of the States.
Among the titles, Peloton under pressure on Wall Street, after having issued a balance sheet that highlighted a loss higher than expected by the consensus and after announcing a cut in the prices of its bikes, which will have negative consequences on its profitability. The fitness equipment group, which became popular in the period of the Covid-19 lockdown, has warned that its profits will suffer in the short term, due to the 20% reduction in the prices of its original Bike.
The American company has also announced plans to return to focus on the sales of its treadmills, which are less profitable than those of its bicycles.
In addition, Peloton announced that it identified a problem in the way its stocks were accounted for. However, a reformulation of the budget will not be necessary.
In numbers, in the fourth quarter ended June 30, Peloton suffered a net loss of $ 313.2 million, or $ 1.05 per share, compared to the net profit of $ 89.1 million, or 27 cents per share, of the same period of 2020.
Liabilities exceeded the loss of 45 cents per share expected by analysts.
Revenue was up 54% to $ 936.9 million, from $ 607.1 million last year. However, the pace of turnover growth slowed the pace from the previous quarter, when sales more than doubled on an annual basis to exceed $ 1 billion.
The slowdown was also caused by Peloton’s decision to recall its Tread and Tread + products, temporarily halting sales of the tools. The publication of the financial statements brought good luck to Gap, up by more than + 4%, after the chain of clothing stores improved its outlook on sales for the whole year for the second time, betting on the boom in demand, especially for its Old Navy and Athleta brands. Gap now expects revenue growth, on a net basis, of around 30% for fiscal year 2021, compared to the previous outlook of growth between 20% and 25%, and against the + 24.3% expected by the consensus .