💪 Inflation under control

and Home Depot announces earnings

Good morning investors! The latest inflation data pushed stocks and crypto in the right direction, making investors happy.

Today we cover:

  • Inflation getting beaten?

  • Home Depot earnings

  • Boeing versus Airbus

📊 Economy and News 

Wholesale inflation measure rose 0.1% in July, less than expected

The producer price index (PPI), which tracks wholesale inflation, rose by 0.1% in July, slightly below the 0.2% increase that had been forecast. When excluding food and energy, the PPI was unchanged for the month.

Year-over-year, headline PPI climbed 2.2%, down significantly from June's 2.7% reading.

Economists polled by Dow Jones had anticipated a 0.2% rise in both the overall PPI and the core PPI, which excludes food and energy.

Following the release, stock market futures increased, while Treasury yields declined with all major indexes jumping.

The PPI is seen as a leading indicator of inflation, reflecting price changes from the perspective of manufacturers and suppliers. Its counterpart, the consumer price index (CPI), which measures the prices consumers pay, is set to be released on Wednesday. Economists are expecting monthly increases of 0.2% for both the headline and core CPI.

The latest inflation figures come as markets have fully priced in an interest rate cut during the Federal Reserve’s September meeting.

Global hits:

Worth checking: Israel’s credit rating cut again as conflicts drag on.

📈 Stocks

S&P 500 5,434.43 (+1.68%)
DJIA 39,765.64 (+1.04%)
NASDAQ 17,187.61 (+2.43%)
BRENT CRUDE 80.82 (-1.80%)
* Prices as of Aug 14th, 12:20 AM UTC

Home Depot announces earnings

Home Depot on Tuesday topped quarterly expectations, but cautioned that sales will be weaker than expected in the back half of the year as high interest rates and consumer uncertainty dampen demand.

Here are the numbers:

  • Earnings per share: $4.60 vs. $4.49 per share expected

  • Revenue: $43.18 billion vs. $43.06 billion expected

Lower guidance: The home improvement retailer has revised its full-year forecast, now expecting comparable sales to decline by 3% to 4% compared to the previous fiscal year. Earlier, the company had anticipated a smaller decline of about 1% in this key metric, which excludes the effects of store openings, closures, and other one-time factors.

The company’s CFO noted that homeowners are delaying projects due to increased economic uncertainty.

Acquisitions: Home Depot’s total annual sales will benefit from its recent acquisition of SRS Distribution, a company that provides supplies to professionals in the landscaping, roofing, and pool industries.

With the inclusion of a 53rd week in the fiscal year and approximately $6.4 billion in sales from SRS, total sales are projected to increase by 2.5% to 3.5%. However, excluding the contribution from SRS, the new forecast would represent a reduction in revenue.

More earnings: As Home Depot reports its earnings, it sets the stage for other major retailers like Walmart and Target, whose upcoming results will be closely monitored by investors and economists for indications of consumer spending trends.

Worth checking: UAW files federal labor charges against Donald Trump and Elon Musk after threatening workers on X interview.

Surprising: Starbucks replaces CEO Laxman Narasimhan with Chipotle CEO Brian Niccol.

Boeing vs Airbus, the number game: In July, Boeing secured a rare victory over Airbus in new aircraft orders, but the company remains significantly behind its rival in overall orders for the year, with ongoing safety concerns continuing to damage its reputation.

Boeing announced gross orders for 72 new planes in July, outpacing Airbus, which reported 59 orders. The majority of Boeing's orders came from aircraft leasing companies for the 737 Max, a model that has faced significant challenges. Many of these orders were linked to the Farnborough Air Show, a major event for commercial jet sales.

Despite the July boost, Boeing's total gross orders for the year stand at just 228 commercial jets. After accounting for cancellations, net orders are down to 186 for the first seven months. This is less than half of the 579 gross orders Boeing received during the same period in 2023 and trails behind Airbus, which has logged 386 gross orders and 367 net orders so far this year.

Boeing also reported delivering 43 jets in July, matching its July 2023 total and slightly down from the 44 delivered in June. However, year-to-date deliveries have dropped 29% compared to 2023, with only 218 commercial jets delivered. In contrast, Airbus has delivered 400 jets in the first seven months of this year.

Deliveries are critical to Boeing’s efforts to return to profitability, as the company typically receives payment only upon delivery of a plane. Boeing has not turned a profit since 2019.

Boeing has lost $33 billion since 2019 – an eye-popping number that underscores how far the company has fallen from the days when its operations were a byword for American quality.

💵 Personal Finance

Cheapest US cities to live in

Big cities like New York and Los Angeles are expensive, but some US cities are still very affordable. Here’s a list of the 10 most affordable cities to live in the country:

  1. Fort Wayne, Ind.

  2. Huntsville, Ala.

  3. Wichita, Kan.

  4. Springfield, Mo.

  5. Davenport, Iowa

  6. Hickory, N.C.

  7. Montgomery, Ala.

  8. Green Bay, Wis.

  9. Little Rock, Ark.

  10. Oklahoma City, Okla.

Originally published by US News, this list is based on factors such as value, qualify of life, job market, and desirability.

Fort Wayne tops the list with a cost of living that is 1% lower than the state average and 9% lower than the national average.

As of July 2024, the average annual salary in Fort Wayne is $50,720 and most salaries in the city range between $34,342 to $65,478 annually.

The median rent for all bedroom counts in Fort Wayne is $1,200 while the average home value is $234,244, up 6.6% over the past year.

Second on the list is Huntsville, Alabama, with a homeownership rate of 70.46%, and a median home value of $292,700.

The city also had one of the lowest median rents — $863 a month for a one-bedroom apartment.

Huntsville’s cost of living is 8% lower than the national average and housing expenses are 25% lower.

Would you ever consider moving to another place to save money?

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Charlie Munger

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.