Producer prices increased by 0.4% on a monthly basis, against 0.2% expected in a Bloomberg consensus, while they grew 8.5% year-on-year, versus 8.4% expected.

Wall Street indexes futures were struggling for direction this morning, and volatility is expected in the coming days until the dust settles and investors assess the situation. There are two teams, those that believe inflation is far from being tamed and that aggressive Fed rate hikes are far from being over. But then, there are other investors that are starting to believe that rate hikes are ineffective and that the Fed should ease its monetary policy.

In any case, the PPI data was just an appetizer before the announcement of inflation figures for the period, which will take place tomorrow.

In this context, investors are eagerly awaiting the minutes of the Federal Reserve's Federal Open Market Committee (FOMC) latest policy-making meeting, which will be released at 2pm ET.

Equity markets continue to suffer, waiting for a sufficiently significant event to reverse this downward spiral. Will salvation come from corporate earnings? A lull in inflation? Or perhaps a move by central banks?

The Bank of England finds itself at the center of the financial game in a way it hasn't been for ages. Perhaps even since the 19th century, if we disregard a few high-profile episodes such as George Soros' raid on the British pound in 1992. If the British central bank is under the spotlight, it is unwillingly and somewhat for the worse: it is fighting to protect its national pension funds, which are facing market tensions. Bank of England Governor Andrew Bailey said yesterday that the emergency measures announced earlier this month to help pension funds meet their margin calls will not go beyond Friday, the original deadline.

Well believe it or not, this statement derailed the mini-rebound that the US indices were trying to put together yesterday. The Dow Jones (+0.12% at the close) survived by relying on its old guard, but the Nasdaq floundered again (-1.24%), suffering a 5th session of decline in the process. For fans of stock market statistics, the technology index lost 20.2% between its high point on August 15 and its low point on October 11. A drop of 20% or more signals a "bear market". This is the second one of the year.

The negative market reaction to Bailey's statement is symptomatic of the times. The Governor of the Bank of England was simply reminding us of the framework that was in place. But investors had become addicts waiting for their central bank shot. They didn't want to hear "the support is going to stop no matter what" but rather "don't worry, we'll do what's necessary to make sure everything goes well". "The West no longer has a liberal economy, nor a socialist economy, but a bizarre and unbalanced hybrid economy, characterized by laissez faire on the upside and intervention on the downside," summarized in substance an American essayist whose quote I have kept but foolishly forgot to note the name earlier this month.



Economic highlights of the day:

European industrial production for August and US producer prices for September and the publication of the minutes of the last Fed meeting are today's main indicators. All the macro agenda is here. Earlier today, Japan announced a sharp decline in the machine tool order index in September.

The dollar is flat against the euro at EUR 1.0307 and down against the pound to GBP 0.9055. The ounce of gold is stabilizing at USD 1671. Oil retreated yesterday, with North Sea Brent crude at USD 93.82 a barrel and U.S. light crude WTI at USD 88.85. The yield on 10-year US debt is easing slightly to 3.93%. Bitcoin is trading around USD 19,000 per unit.


In corporate news:

* PepsiCo reported a higher-than expected rise in core earnings to $1.97 per share for the third quarter, up from $1.79 per share the previous year, and higher than the $1.85 expected by analysts.

* Intel gained 0.8 percent in premarket trading as the semiconductor giant planned to cut thousands of jobs amid slowing demand in the PC market, Bloomberg reported Tuesday, citing five sources with direct knowledge of the matter.

* Twitter is reviewing its terms for permanently banning a user from its platform and may also become more flexible in moderating content, a long-standing demand of Elon Musk, who has revived his plans to buy the social network, the Financial Times reported Wednesday.

* Apple on Wednesday announced plans to upgrade its iPhones by December to be compatible with 5G networks in India, as authorities urged phone makers to upgrade to the new standard.

* Microsoft has partnered with Mercedes-Benz to use its MO360 cloud platform to improve production at more than 30 of the automaker's factories around the world.

* Diamondback Energy - The oil and gas producer announced Tuesday that it has bought FireBird Energy for $1.6 billion in cash and stock.

* General Motors announced Tuesday that it plans to invest up to $69 million in Australian mining group Queensland Pacific Metals to secure its supply of nickel and cobalt, components used in batteries for electric vehicles.


Analyst recommendations:

  • AIG: Jefferies upgrades to buy from hold. PT up 33% to $64.
  • Citigroup: JPMorgan adjusts price target to $49 from $60, maintains neutral rating.
  • Fidelity National: Atlantic Equities downgrades to neutral from overweight. PT up 21% to $90.
  • Fiserv: Atlantic Equities downgrades to neutral from overweight. PT up 10% to $105.
  • International Business Machines: Evercore ISI adjusts price target to $125 from $140, maintains in-line rating.
  • Nasdaq: Citi reinstated coverage with a recommendation of neutral. PT up 6.7% to $62.
  • Nov: Citi raised its recommendation to buy from neutral. PT up 40% to $25.
  • PPG Industries: Jefferies adjusts price target to $120 from $138, reiterates hold rating.
  • Raymond James: Citi reinstated coverage with a recommendation of neutral. PT up 12% to $117.
  • Schwab: Citi reinstated coverage with a recommendation of neutral. PT up 16% from last price to $83.
  • SLM: Morgan Stanley initiated coverage with a recommendation of underweight. PT down 3% to $15.
  • Super Micro Computer: Wedbush initiated coverage with a recommendation of neutral. PT down 13% to $55.
  • S&P Global: UBS adjusts price target to $375 from $407, maintains buy rating
  • Tesco: AlphaValue remains Buy with a price target reduced from GBp 289 to GBp 265.
  • The Allstate Corp: Keefe, Bruyette & Woods upgrades to outperform from market perform. PT up 19% to $158.
  • The Cooper Co: Jefferies cuts to hold from buy, lowers price target to $295 from $400.