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Stock Futures Flat Ahead of Inflation Reading 

Stock Futures Flat Ahead of Inflation Reading 

US And European futures are trading almost flat as investors hesitate to place bigger bets ahead of today’s big economic data release. Traders are paying attention to Fed member’s comments, and from there, they are trying to draw their own conclusion about the Fed’s monetary policy. In terms of earnings, Disney overwhelmed investors with its earnings, and the stock is likely to rule the headlines today. As for Bitcoin, fundamentals are only improving,  more naysayers are changing their mind and joining Bitcoiners.

Economic Data

The most important economic data for this week will be released today. The US CPI is important for markets because inflation is considered a direct catalyst for the Federal Reserve’s interest rate hikes. The reading is likely to impact the Fed’s monetary policy decision in terms of their interest rate hike decision and how quickly they should reduce their asset purchase programme. 

The Fed has made it clear that it will battle inflation, and interest rates are largely projected to increase numerous times this year, beginning with a quarter-point increase in March.

Traders anticipate another strong US inflation report, with the main consumer price index rising at a 7.2 percent annual rate in January.

The US CPI will be released at 8:30 a.m. ET and is predicted to rise by 0.4 percent, a smaller monthly increase than December’s revised headline gain of 0.6 percent. The 7.2 percent year-over-year prediction is the highest since 1982, and it is up from 7 percent in December. Core inflation excluding food and energy is predicted to grow 0.4 percent in January, or 5.9 percent year on year. This is compared to a 0.6 percent monthly gain in December and a 5.5 percent year-over-year increase in the last month of last year.

Fed

Traders are trying to understand the Fed’s next monetary policy move. There are so many speculations about their policies and rumours are that the Fed may increase the interest rates seven times this year. Yesterday, Loretta Mester, President of the Cleveland Federal Reserve, put out an ambitious strategy for ending easy-money policies this year, saying the central bank will be ready to boost rates at any time and should consider selling mortgage-backed securities it owns. Every meeting will be in play, Mester said at a virtual session held by the European Economics and Financial Centre on Wednesday. She also said, “We’ll analyse conditions, we’ll examine how the economy is evolving, we’ll look at threats, and we’ll remove accommodation.”

Mester also put some cold water on expectations that the Fed will increase the interest rate by 50 basis points. In her comments she said that there is no compelling case for the Fed to increase the interest rate by 50 basis points—a scenario which many are expecting. However, she also added that everything is on the table which means that traders can’t completely discount the fact that the Fed may increase the interest rate by 50 basis points next month.

Earnings

Disney is going to be the stock of the day as it reported its earnings last night.  Disney+ subscribers exceeded expectations– a figure which was closely watched by investors. The company reported earnings per share: $1.06 adj. vs. 63 cents predictions. Its revenue came in at $21.82 billion, up from $20.91 billion predicted. The overall number of Disney+ memberships is 129.8 million, up from 125.75 million forecasted.

In the first quarter, approximately 12 million Disney+ memberships were added to the subscriber base. In addition, the service’s average revenue per user (ARPU) in the United States and Canada increased to $6.68 per month from $5.80 a year before. On the company’s earnings call, CFO Christine McCarthy stated that Disney intends to invest considerably on streaming in the second quarter. She stated that the company anticipates programming and production costs for the direct-to-consumer business to rise by $800 million to $1 billion, including Hulu live programming fees. They foresee a $500 million rise in linear expenditures, owing in part to pandemic-related scheduling adjustments.

Cryptos

Bitcoin is once again on the move and in terms of optimism, there is plenty, which is purely driven by fundamentals. Firstly, the fact that the biggest asset manager in the world, BlackRock is going to offer Bitcoin trading for its clients is highly positive news for Bitcoin adoption. There is no doubt that for some, Bitcoin is a great asset to speculate on, and trading Bitcoin is the perfect vehicle for that. For others, Bitcoin is the future, and on this front, we have learned that Bitcoin is becoming legal tender in Russia. These are mammoth developments for Bitcoin, and looking at the price action, it seems that the rally is about to begin, which could push the Bitcoin price towards the 100K price level.