The Fed's favorite inflation measure is seen ticking up. (0:17) CoreWeave IPO will gauge AI trade demand. (1:55) GameStop earnings on tap. (2:48)Show NotesStocks that weather downturns the bestEarnings 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 23rd, and I'm your host, Kim Kahn. Investors will be looking through a new lens at the latest income and spending figures out at the end of the week.
Last week, Fed Chairman Jay Powell said, tempting fate, some would say. that inflation from tariffs would likely be transitory. On Friday, the Fed's favorite inflation gauge, the Core PCE Price Index, arrives along with the Personal Spending and Income Report.
Wells Fargo economists say, inflation remains a big hurdle for consumers, and we forecast some sticky price pressures in the February data, which should keep the headline deflator at 2.5% and nudge the core deflator, or PCE, up a tenth to 2.7%. But even if the inflation measure comes in hot, traders could give it a pass, assuming that the Fed is already pricing in a tariff boost to prices.
The March summary of economic projections showed forecasts for core PCE at 2.8% for this year, up from 2.5% forecast in December. Markets are still pricing in a quarter-point rate cut in June and are split between two and three cuts for the year. So, if inflation is losing the wow factor, the attention will likely turn to growth.
February durable goods orders arrived Wednesday, with a 1% decline expected in headline and a 0.2% rise in core orders ex-transportation. Orders shot up in January, and for a manufacturing sector beset by more bad news than good in the past few years, purchasing managers wonder if this is promises of what seemed to be or a genuine uptick in activity, Wells Fargo's team said.
Core capital goods orders have shown some signs of life more recently, suggesting a more sustained albeit slower rebound in activity. It's hard to see conditions overly supportive of a broad and sustained recovery in capex spending, though, amid elevated uncertainty and still high rates, they added.
It's been a while, but focus this week will also be on the new issues market, with what could be a litmus test for tech IPOs and the AI trade. As listeners heard on Wall Street Lunch last week, CoreWeave, a hyperscaler startup backed by Nvidia, looks to raise as much as $2.7 billion with its deal. The IPO will price Wednesday night and trade Thursday under the symbol CRWV.
The price range is a wide $47 to $55 per share, but that could narrow as the pricing nears. The deal has been scaled back from initial estimates, and a lower pricing could further underscore skittishness in investors putting cash back into AI names. One hedge fund manager told the FT that no one knows where Coral Reeve is going to be in three years' time.
Uncertainty is also the devil of all good investments. It may be fine, but it may not be. but another manager called it the WeWork of AI data centers due to its long leases but short-term customer commitments. Earnings season continues to wind down, but retail names are still in the picture. Dollar Tree reports on Wednesday and Lululemon on Thursday. Mean Favorite GameStop reports Tuesday.
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