Market Morning: PCE Inflation, California Burning, Lab Grown Mouse Meat & Apple Earnings

Market Morning

Futures Steady With Inflation Data on Tap, Fed Decision Tomorrow

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Stock futures are floating slightly higher this morning as the Personal Consumption Expenditures index data are due at 8:30am Eastern. Market expectations for the Core PCE, excluding food and energy prices, are for a 2% year over year rise. Anything significantly above that and we could see a jump in bond yields (especially given the record amount of treasury debt being issued currently) and gold prices. The Federal Open Market Committee concludes its meeting on Wednesday and announces its rate decision at 2pm. Rates are expected to be held steady, as there is no press conference organized post decision, which usually means nothing will be changed. Fed Chair Jerome Powell has changed that policy starting next year and will host a press conference after every FOMC meeting beginning in 2019. This probably means more rate hikes are expected in the future.


SEE: Swiss Financial Regulator Launches Investigation Against Envion AG

California Burning on Such a Summer’s Day

107 square miles of rural land in Northern California have been burned along with 7 homes in the latest California wildfire. 100 miles north of that, the Carr fire has already burned down 800 homes and killed 6 people. The northern California town of Lakeport has been evacuated, close to 5,000 people. In total, 27,000 have been ordered to evacuate so far across the state. 68,000 acres have been destroyed. The intensity of the fires is related to drought conditions, and the fires are only minimally contained so far.  The Carr fire is now the 9th most destructive fire in California history.

Peter Thiel Invests in Lab-Grown Mouse Meat Pet Store Chain

One of the biggest changes since the industrial revolution may be the growing of meat from cell cultures in laboratories. Successfully culturing meat could eventually lead to the end of cattle farms, or at least their drastic reduction, allowing for forest reclamation due to overall less agricultural land requirements, more efficient use of water, less need for cattle feed and so forth. Well, Paypal founder Peter Thiel is investing half a million in the equivalent of a preclinical study for this technique to be set in motion in an animal pet store chain called Wild Earth. The chain aims to cell lab-grown mouse meat as cat food. The size of the US pet food market is about $30 billion.


Apple Earnings, Wall Street Wants Service Growth

Apple (NASDAQ:AAPL), will be reporting earnings today and Wall Street wants to see service growth from the App Store and iTunes particularly. Apple has consistently beat earnings and revenues and will likely do so again. Investors are also, of course, awaiting iPhone sales numbers, which have been a bellwether for Wall Street sentiment for years. Estimates are for 42 million shipments, and adjusted earnings of $2.18 per share, up from $1.67 this quarter last year, and revenue of over $50 billion, about a fourteenth the size of the entire TARP bailout. So in less than 3 years, Apple will make enough money to bail out the entire 2008 banking system. That’s comforting.

European Growth Slows, Inflation Rises, Tariffs Feared

Economic growth in the European Union is getting a bit tenuous, with inflation rising across the single market, unemployment above 8%, and growth at 0.3% for the quarter, below market expectations.  Inflation in France for one is at the highest rate since 2012. The European Central Bank though isn’t freaking out because it actually wants higher inflation, since they think this means a better economy. Core inflation across the EU is at 1.1%, but including food and energy it is at 2.1%, slightly over the 2% target. New tariffs imposed by the Trump Administration, and retaliatory tariffs against US imports, would raise prices in both directions and exacerbate the already high inflation statistics.

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