Today in the Market (2/10/2022)

Good Evening. Here is everything you need to know about today’s recap on the in’s and out’s of the major market and economic events.

On Thursday, Wall Street was pulled down by another decade-high inflation reading and words by St. Louis Federal Reserve President James Bullard, who hinted that the central bank could operate more aggressively than expected to tighten monetary conditions in the face of rising prices.

On the heels of comments from Bullard, who said in an interview that he favors an interest rate increase of 100 basis points (1%) by July 1, the Dow Jones Industrial Average ended a three-day winning streak by closing 1.5% lower after erasing 500 points earlier in the session. The S&P 500 fell 1.8%, while the Nasdaq Composite fell 2.1%, driven down by tech losses. Meanwhile, the 10-year Treasury note surged to 2% for the first time since August 2019.

INFLATION

In January, inflation in the United States intensified, with prices for a wide range of goods and services rising even higher due to persistent shortages and supply chain disruptions.

The Bureau of Labor Statistics released the Consumer Price Index (CPI) on Thursday morning, which showed a 7.5% annual increase. According to Bloomberg data, a consensus of economists expect a 7.3% increase. This was the fastest growth since 1982, and it was an acceleration from December’s 7.0% year-over-year increase.

Energy prices remained a significant contributor to the overall CPI, rising by 27% year over year. Within the energy sector, monthly fuel oil prices rose 9.5%, reflecting the rise in crude oil prices, which climbed to a seven-year high at the start of the year. On a month-over-month basis, electricity rates increased by a significant 4.2%.

BEVERAGES

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The Treasury Department released a 63-page document Friday taking out the alcohol sector for anti-competitive activities, which isn’t the most exciting way to do a roast.

For one thing, the Treasury stated that mergers and acquisitions should be investigated more thoroughly before receiving regulatory approval. According to the survey, Anheuser-Busch InBev and Molson Coors dominate around 65% of the beer market by revenue.

The Treasury Department also pointed out how Prohibition-era regulations impacted free-market pricing:

  • Alcohol companies are required to advertise their prices and hold them for a length of time ranging from seven days to a year under “post-and-hold” rules.
  • In many states, suppliers are required to sell through distributors rather than selling directly. Distributors, according to smaller sellers, prefer major brands for top-shelf placement.

Why does the Treasury have a problem? Due to a lack of competition, the price of your favorite nanobrewery’s IPA may rise. President Biden, also, is concerned about growing prices, having signed an executive order in July to combat “excess consolidation” in a variety of areas, from meatpacking to technology.

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