A dovish consumer price index could cement a June Fed cut. (0:17) Adobe set to report earnings. (2:12) DOJ still wants to break up Google. (3:41)Show NotesPiper Sandler's actionable picks amid selloffEarnings CalendarDividend RoundupEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Full 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 9th, and I'm your host, Kim Kahn. Investors turned their attention to inflation once again this week, but now with a backdrop of uncertainty over government policy and real concern about growth.
In their weekly equities rundown, Goldman Sachs lists a host of things traders are fretting about, including said growth worries, tariff fatigue, weak technicals, challenging liquidity, consumer woes, and poor seasonality. If Wednesday's consumer price index again indicates sticky inflation, it could trigger a further leg down for stocks.
Economists expect that the headline CPI and the core CPI rose by 0.3% in February. That would bring the annual rate down to 2.9%, with the core rate edging down to 3.2%. Wells Fargo economists say, while February's CPI report is likely to deliver an initial taste of tariffs, it is likely to be just the start.
The implementation of a further 10% tariffs on Chinese goods and the follow-through on 25% tariffs on goods from Canada and Mexico, even with some carve-outs, is poised to stoke inflation in the near term.
Although we expect both headline and core inflation to take down on a year-over-year basis in February, we anticipate it will start moving back up this spring and remain stuck near 3% for the duration of this year despite further easing in shelter inflation and growing signs of consumer fatigue.
If the CPI delivers a dovish surprise, that could cement market expectations for a Fed rate cut in June. The odds of the Fed cutting by a quarter point that month jumped to 80% after the weaker-than-expected rise in February payrolls, and Fed funds' futures are pricing in a 1-in-4 chance now that rates could be down by 50 basis points from the current range in June.
Glenn Smith, CIO at GDS Wealth Management, says Friday's jobs report is concerning because this report doesn't account for the recent government job cuts from Doge, so it suggests that businesses are taking a pause on hiring until there is more certainty about tariff policy and the economic outlook.
Investors are starting to worry about a noticeable deceleration in first quarter GDP, which is set to be released at the end of April, and that is contributing to the past few weeks of stock market volatility. On the earnings front, Adobe will report on Wednesday the software company is expected to post EPS of $4.97 on revenue of $5.66 billion.
Piper Sandler said in a note earlier this week that 10% to 11% of annual growth in subscription may be partially masked by a year-on-year decline of 15% in Adobe's legacy product and service revenue. It expects margin expansion and stock repurchases to insulate EPS growth that should continue to grow double digits.
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