Chapter 1: What is the main topic discussed in this episode?
Welcome to Seeking Alpha's Wall Street Brunch, our Sunday look-ahead to this week's market-moving events, along with the weekend's top news and analysis. Hello, today is Sunday, March 8th, and I'm your host, Kim Kahn.
Chapter 2: What recent events are driving the oil market's focus?
The oil market will remain the key focus this week after WTI Crude posted its biggest weekly rise since the contract launched in 1983, up 36%. WTI and Brent futures that have traded on the hyperliquid blockchain topped $95 a barrel over the weekend. On IG Group's weekend market, which offers spread betting and CFDs, U.S. crude was trading just below 95.
Chapter 3: How are geopolitical tensions affecting oil production?
Kuwait has reduced production and refining as the conflict in the Middle East sends ripple effects across the region, including a near-total shutdown of the Strait of Hormuz. Meanwhile, Qatar's energy minister warned that Persian Gulf exporters could shut down production within days, potentially driving oil to $150 a barrel. Prediction markets are also pricing in further upside.
On Polymarket, traders see about a 25% chance that oil tops $150 a barrel, a 90% probability it moves above $100, and a roughly 7% chance it declines past $200.
Chapter 4: What do prediction markets indicate about future oil prices?
Economists at Goldman Sachs say a sustained 10% rise in oil prices typically boosts headline CPI by about 28 basis points. If oil prices increase by $10 and remain elevated for three months, U.S. year-over-year headline CPI inflation could likely rise from 2.4% in January to 3% in May, they said. We'll get the latest consumer inflation numbers on Wednesday when the February CPI is released.
Chapter 5: How will rising oil prices impact consumer inflation?
Forecasts call for a 0.3% monthly gain in the headline, with the annual rate nudging up to 2.5%. Core CPI is expected to rise 0.2% on the month, with the yearly rate holding at 2.5. Economists at Wells Fargo say energy is set to reassert upward pressure on overall prices as oil and gasoline were already rising in anticipation of conflict in the Middle East.
Softer food inflation should provide a partial offset, with grocery prices due for a modest decline in February. They add that the core rate will see some payback in services after outsized increases in travel and medical care in January, while core goods inflation likely firmed, reflecting higher used vehicle prices and ongoing tariff pass-through.
The earnings calendar continues to thin out, with just four S&P companies reporting this week, but Oracle will generate plenty of buzz on Tuesday as the canary in the coal mine for hyperscaler CapEx concerns. Consensus calls for EPS of $170 on $16.91 billion in revenue. Analysts expect investors to focus on Oracle Cloud infrastructure revenue growth and outlook.
SA analyst Amrita Roy says Oracle has likely found a bottom after a significant underperformance tied to AI CapEx skepticism and free cash flow worries, especially given its backlog concentration towards open AI. She recommends buying ahead of earnings, calling the valuation compelling.
Chapter 6: What earnings reports should investors watch this week?
Also on the earnings calendar, Hewlett Packard Enterprise reports Monday, and on Thursday we hear from Adobe, Dick's Sporting Goods, Lenar, and Ulta Beauty. Also in the news this weekend, Novo Nordisk plans to sell its obesity drugs on the telehealth platform run by Hims and Hers Health as part of a new partnership between the two firms, according to Bloomberg.
A similar deal fell apart back in June after Hims refused to discontinue sales of low-cost compounded versions of Novo's semaglutide therapy, even after the GLP-1 was no longer in shortage in the U.S.
And for income investors, Alphabet and FedEx go ex-dividend on Monday, Alphabet pays out on March 16th, and FedEx on April 1st. Travelers goes ex-dividend on Wednesday, with a March 19th payout date, and Coca-Cola goes ex-dividend on Friday, paying out on April 1st as well.
That's all for today's Wall Street Brunch. Look for links to stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com slash WSB. And join the elite community of real investors to unearth great investing ideas. Just head to seekingalpha.com slash subscriptions.