By Geoffrey Smith
Investing.com — The U.S. releases consumer inflation data for September, a day after Atlanta Fed President Raphael Bostic jibed that inflation pressures are not as ‘transitory’ as hoped. The global chip shortage has finally caught up with Apple (NASDAQ:AAPL), which is reportedly cutting production of its flagship iPhones due to supply chain problems. China’s exports rose a whopping 28% on the year, but the Eurozone’s industrial production fell below pre-pandemic levels due to you-know-what. JPMorgan (NYSE:JPM) and Blackrock (NYSE:BLK) kick off the third-quarter earnings season, and the American Petroleum Institute publishes weekly U.S. inventory data for crude oil. Meanwhile in Europe, Vladimir Putin is set to style himself again as the world’s savior from gas shortages. Here’s what you need to know in financial markets on Wednesday, 13th October.
1. CPI data due as Bostic takes swipe at ‘transitory’ inflation narrative
U.S. inflation data for September will be released at 8:30 AM ET, into a market increasingly paranoid about how fast prices are rising and how long they will stay elevated for.
The Consumer price index is expected to have risen 5.3% from a year earlier, and core prices are expected to have risen 4.0%. That would represent no change for either from August. Grumblings from the Federal Reserve’s inflation hawks got louder on Tuesday as Atlanta Fed President Raphael Bostic said that ‘transitory’ – Fed chairman Jerome Powell’s favorite epithet for inflation this year – is turning into “a dirty word.”
Other macro developments in the U.S. have been more positive over the last 24 hours, with the announcement that Covid-19 restrictions for crossing the border with Canada and Mexico will be relaxed, while the House of Representatives also completed the formalities of putting off a reckoning with the debt ceiling.
2. Apple reportedly forced to cut iPhone production; Eurozone factory output hit
Bostic’s warning that the supply chain disruptions that have driven inflation this year will be around for some time yet got support in near-real time, after Bloomberg reported that Apple is preparing to cut production of its new iPhone 13 models by over 10% due to component shortages.
The agency cited problems with Broadcom (NASDAQ:AVGO) and Texas Instruments (NASDAQ:TXN), in particular, being unable to supply the necessary volume of chips.
On the same theme, Eurozone industrial production fell 1.6% in August to below its pre-pandemic level as the region’s carmakers were especially hard hit by chip shortages. The problems didn’t stop China’s export industry responding to global demand that is still supercharged by stimulus policies. Chinese exports rose 28% on the year in August, defying expectations for a slowdown to 21.6%.
3. JPMorgan, Blackrock kick off earnings season as stocks steady
JPMorgan and investment giant Blackrock kick off the third-quarter earnings season, at a time when the stock market is struggling with its biggest pull-back in months amid concerns about the withdrawal of stimulus by the Federal Reserve.
Blackrock beat expectations for earnings by some 10%, reflecting the inflows that drove stocks to all-time highs in August. Delta Air Lines (NYSE:DAL) and First Republic Bank (NYSE:FRC) are also due to report.
Overnight, there were signs of strength from two very different sectors, with software specialist SAP and French luxury giant LVMH both rising after earnings updates.
By 6:30 AM ET, Dow Jones futures were up 47 points, or 0.1%, while S&P 500 futures were up 0.2% and Nasdaq 100 futures were up 0.5%. All three have fallen on both days so far this week.
4. Vlad to the ‘rescue’ as energy crisis sends zinc higher
Vladimir Putin is expected to make a fresh overture to Europe over gas supplies in a keynote speech to an energy conference.
Earlier Wednesday, newswires quoted Russia’s deputy energy minister as saying that the country will complete preparations for its own winter heating season on November 1. After that, there should be more gas available for exports to Europe.
It will be too late for some, however. Metals specialist Nyrstar said it would stop three of its European smelters due to soaring energy costs earlier. As Nyrstar is one of only few producers of refined zinc in the region, zinc futures in London rose another 3.7% to a new three-year high.
5. Oil eases; API data due; IEA warns on investment needs
Crude oil prices eased a little but stayed above $80 a barrel ahead of the release of weekly inventory data at 4:30 PM ET from the American Petroleum Institute. Analysts expect crude stockpiles to have edged up by 140,000 last week, which would represent the third straight week of gains.
By 6:30 AM ET, U.S. crude futures were down 0.7% at $80.06 a barrel, while Brent futures were down 0.8% at $82.77 a barrel.
Elsewhere, the International Energy Agency warned that the world isn’t investing enough either in fossil fuels or in renewables to avert future energy and climate crises. The IEA said investment in renewables needed to triple investment in renewables to meet the Paris Accord’s aim of limiting average temperature rises.