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Chapter 1: What does the February CPI reveal about current inflation trends?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Wednesday, March 11th, and I'm your host, Kim Kahn. Our top story so far. Inflation holds steady, for now. The February CPI showed modest monthly increases in both the headline and the core, matching expectations.
Annual CPI held at 2.4%, and core CPI stayed at 2.5%. But the numbers don't yet reflect the shock from the U.S.-Israel Iran war, which pushed crude above $100 a barrel from about $65 before the action, Oil is currently around 87%. Economist Joseph Bresuelis of RSM sees the CPI top line rising to 3% year-over-year in March and 3.5% or more in April.
That will not provide much comfort to an American central bank now focused like a laser beam on short- and medium-term inflation expectations and on notice for any bleeding of top-line inflation into the core, he said. Scholar Winant, CIO of Reagan Capital, says tariff refunds, if they appear, will also juice prices. The Fed's attention now turns to the February core PCE price index out Friday.
Pantheon Macro notes the CPI components feeding into the gauge were hot. The jump in prices for computer software will boost the core PCE deflator by 0.08 percentage point alone, they said. And bad news for travelers, airfares jumped 7% last month, even before the surge in jet fuel.
Among active stocks, Campbell's is the biggest S&P decliner after it lowered its full-year outlook, reflecting a more cautious view for the balance of the year. Campbell's now expects full-year organic sales growth of down 1% to down 2% versus its prior down 1% to up 1% range. Adjusted EPS of 215 to 225, midpoint 220, is well below the prior guidance of 240 to 255 and the 241 consensus.
Starz Entertainment said its board has adopted a poison pill to stave off hostile takeover attempts. The rights activate only if a person or group acquires 17.5% or more of the equity. Each right allows shareholders to purchase one share at $93.
The move comes days after media mogul Byron Allen bought a 10.7% stake in the company, a stake previously held by Hollywood producer and former Trump Treasury Secretary Steve Mnuchin.
And Nebius is popping after announcing that NVIDIA will invest $2 billion in the Dutch AI infrastructure provider as part of a strategic partnership to develop the next generation of hyperscale cloud for the AI market. The partnership will help Nebius deploy more than 5 gigawatts of NVIDIA systems by the end of 2030.
In other news of note, JPMorgan Chase has marked down the value of certain loans held by private credit groups and is tightening its lending to the sector, according to the Financial Times. The move limits how much the bank will lend against those loans going forward. The devalued loans are tied to software companies, a sector that's been in the spotlight in recent weeks.
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Chapter 2: How is the ongoing oil crisis impacting inflation forecasts?
Private credit executives told the paper they haven't seen other banks take a similar approach. And in the Wall Street research corner, Wedbush securities analyst Dan Ives is pushing back against the ongoing software sector sell-off calling it the most disconnected technology trade he has seen in 15 to 20 years.
Ives argues that fears of AI disrupting traditional software companies have been overblown, leading to what he calls an AI ghost trade that unfairly punished the group. It's ultimately software, the use cases from Salesforce to ServiceNow to cybersecurity, that's going to protect CrowdStrike, Palo Alto Networks, and others, Ives said.
I think it's the most sold-off I've seen in this sector in decades.
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