MARKET WRAPS
Watch For:
Weekly Petroleum Status Report
Today's Top Headlines/Must Reads:
- Forget Core CPI, Market Pros Are Searching for Supercore Inflation
- Tesla Considers $775 Million Texas Factory Expansion
- Voyager Nears Deal to Move Crypto Accounts to Binance.US
- Russia Claims Success in Ukraine's Soledar
- Frackers Flush With Cash Shed Huge Debt Loads
- U.S., Allies Prepare Fresh Sanctions on Russian Oil Industry
Follow WSJ market coverage here
Opening Call:
Stock futures were slightly firmer on Wednesday as the market consolidated after a positive start to 2023 and traders looked to tomorrow's inflation report.
Investors will be looking for more evidence that inflation is continuing to slip and will thus allow the Fed to ease monetary policy soon.
"Investors seem to be pricing in an expectation that inflation is set to loosen further," Hargreaves Lansdown said.
"Reports of global supply chain bottlenecks easing, and the reopening of China mean that ultimately, markets are baking in some renewed optimism. There is a ceiling to this good mood, though. Stock markets remain highly sensitive and have been prone to some misdirection in recent trading days."
However Fed officials remained resolute in stressing they are prepared to err on the hawkish side to ensure high inflation is slain.
And to that point, there will be a slew of Fed members making comments on Thursday to accompany the CPI numbers.
Stocks to Watch
Blend Labs said it will cut costs by over $100 million in 2023, including a 28% reduction in its onshore employee base. Shares increased 6.5% after hours.
Franchise Group is considering a deal to acquire the Conn's furniture chain.
Conn's rose 5.8% in premarket trading to $10.60. Franchise Group was inactive ahead of the opening bell. It closed at $30.13 on Tuesday.
Ichor Holdings cut its fourth-quarter revenue guidance to a range of $300 million to $302 million. Shares slid 16% after hours.
Rivian Automotive has parted ways with several of its top executives after production targets were missed over the past year. The stock gained 1.3%.
Warner Bros. Discovery was down 0.5% in premarket trading. On Tuesday, BofA Securities added the stock to the bank's U.S. 1 list, rating Warner Bros. as a Buy with a $21 price target.
Stephanie McMahon, co-CEO of World Wrestling Entertainment, said she was resigning from the company. The stock was rising 5.4%.
Forex:
The dollar was steady in Europe at weaker levels, with investors likely to wait until tomorrow's inflation data before they resume selling the currency as they continue to bet that the pace of Fed rate rises is set to slow, analysts at UniCredit Research said.
"The dollar remains broadly soft and selling the currency into its modest intraday recovery attempts is still prevailing."
---
The options market shows investors are becoming much less inclined to bet on the euro falling versus the dollar, ING said.
The skew in favor of EUR/USD put options, which expect the currency pair to fall, has narrowed, ING added.
The skew turning positive, indicating that traders have turned to favoring EUR/USD call options that bet on the pair rising, would be a "big moment" for the foreign exchange market, ING said.
"The seemingly benign investment environment (despite the horrors in Ukraine) probably has investors wanting to buy EUR/USD on dips."
Energy:
The G7 nations are seeking to place two price caps on Russian refined oil products in February, Reuters reported, citing a G7 official.
The group has already implemented a price cap on Russian oil exports, setting the level at $60 a barrel level, which was introduced alongside an EU ban on Russian crude imports, according to Reuters.
The caps on Russian refined products, such as diesel and kerosene, would be split into one targeting oil products currently trading at a premium to crude and one targeting products trading at a discount, Reuters reported.
A separate EU ban on imports of Russian crude products is set to come into effect on Feb. 5.
Metals:
Metals prices were increasing as more positive economic sentiment in China helped boost the purchase of base metals.
"China's total social financing, a broad measure of credit and liquidity in the economy, dropped to CNY1.31 trillion in December 2022, less than market expectations," Marex said.
Lower social financing was likely due to more corporate debt and local government debt issuance, something which would "promote growth in 2023," it added.
Copper
Copper prices moved past $9,000 a metric ton for the first time since June, as positive sentiment around China demand boosted buying of the red metal.
Fitch Solutions said it expects stronger demand in China and a weaker dollar to boost buying, upping its price expectation for 2023 to $8,500 a ton from $8,400 a ton.
"In the longer term, we expect the copper market to remain in deficit as the green transition accelerates along with the demand for 'green' metals including copper," Fitch said.
TODAY'S TOP HEADLINES
Tesla Considers $775 Million Texas Factory Expansion
Tesla Inc. is considering more than $775 million in expansions at its electric-vehicle plant near Austin, Texas, an indication the auto maker is maintaining production growth ambitions in the face of Wall Street concerns over demand for its cars.
Work on the new infrastructure could start as early as this month, according to regulatory filings in Texas. The registration documents filed this week with the Texas Department of Licensing and Regulation cover facilities to make and test batteries and other aspects of making its vehicles.
Voyager Nears Deal to Move Crypto Accounts to Binance.US
Bankrupt crypto firm Voyager Digital Ltd. received preliminary court approval to sell its customer accounts to Binance.US, a proposal that had drawn objections from state and federal regulators.
Voyager will seek customers' vote in support of the deal, and will return for final approval from the bankruptcy court, Judge Michael Wiles of the U.S. Bankruptcy Court in New York ruled on Tuesday.
List of FTX Backers Expands to Include Kraft Group, Other Family Offices
FTX raised equity capital before its collapse from Robert Kraft's Kraft Group and entertainment giant Endeavor Group Holdings Inc., among other newly-identified backers who now face the loss of their investments in the once-highflying exchange.
The crypto firm's chapter 11 administrators disclosed a new roster of its financial backers that listed affiliates of Kraft Group and entertainment giant Endeavor as holding common and preferred stock. FTX also disclosed that it raised capital from affiliates of investment offices including Daniel Och's Willoughby Capital LLC and Blue Pool Capital, a Hong-Kong office backed by Alibaba Group co-founder Joseph Tsai, according to the shareholder list, filed in bankruptcy court on Tuesday.
Coinbase Crypto Exchange to Cut Nearly 1,000 Jobs
Coinbase Global Inc. said that it would eliminate around 20% of its staff and enact broad cost cuts, the latest sign of pain in the cryptocurrency industry.
Chief Executive Brian Armstrong said in a blog post Tuesday that crypto exchange Coinbase will reduce operating expenses by 25% from the previous quarter, including laying off about 950 people. At the end of September, the company had around 4,700 employees.
Wells Fargo Is Shrinking Its Mortgage Business
Wells Fargo & Co. is dramatically shrinking its home-lending business following a string of scandals and a record fine from the Consumer Financial Protection Bureau.
Going forward, the bank said it would largely focus on lending to existing customers and minority borrowers. It will no longer work with outside intermediaries who arrange loans on the bank's behalf. The practice, known as correspondent banking, makes up nearly half of its mortgage originations.
WWE Board Elects Vince McMahon Executive Chairman
World Wrestling Entertainment Inc. said Tuesday that its board of directors unanimously elected majority owner Vince McMahon as executive chairman, less than a week after the former chief executive returned to the company.
In addition, Mr. McMahon's daughter, Stephanie McMahon, has resigned as chairwoman and co-CEO. Nick Khan, who was co-CEO with Ms. McMahon, will serve as the sole chief executive, the WWE said.
Forget Core CPI, Market Pros Are Searching for Supercore Inflation
Prices of services are rising quickly. Prices of goods are falling. Energy is all over the map. Policy makers and market watchers already strip out volatile components of price indexes to understand "core" inflation. These days, many are on the hunt for an even narrower measure: a supercore.
When the Labor Department releases its latest inflation reading on Thursday, most investors will still look first at the monthly change in the so-called core consumer-price index, which excludes food and energy categories to provide a better sense of inflation's longer-term trajectory.
Frackers Flush With Cash Shed Huge Debt Loads
The U.S. shale industry's balance sheet is finally getting out of the red.
After carrying enormous debt loads for more than a decade, frackers have paid down billions of dollars in debt since the start of the coronavirus pandemic, capitalizing on higher commodity prices and sticking to austerity pledges.
The holiday PC market stunk for everyone except Apple, report says
A sharp drop in global shipments of personal computers in the holiday quarter wrapped up a year of such declines, but Apple Inc. reportedly suffered the least.
Global PC shipments fell 28.1% to 67.2 million units in the fourth quarter from a year ago, research firm International Data Group reported Tuesday. All manufacturers except for Apple AAPL recorded similar double-digit percentage declines from the 2021 holiday season, the report said.
Singapore Tightens Rules on Executive Pay Disclosure, Board Tenures
(MORE TO FOLLOW) Dow Jones Newswires
01-11-23 0606ET
