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Weekly Update 1/16/2026: Earnings Seasons Begins

Insights
  • JP Morgan and Wells Fargo are first Core names to report
  • Consumer prices undershoot on core inflation
  • Existing home sales rebound
  • Alphabet partners with Apple and Walmart
  • ADP announces $6 billion buyback

Economic Releases

The Bureau of Labor Statistics (BLS) released the consumer price index (CPI) for December on Tuesday. It showed that the core figure, which excludes food and energy categories, rose 0.2% from November which was inline with the consensus in a survey of economists by Bloomberg. On an annual basis, it advanced 2.6%, matching a four-year low. There remains concern about the quality of the data given that the BLS couldn’t collect prices in October and November data was collected later than usual. But the milder-than-expected downside surprise in November’s CPI was somewhat validated by this month’s report.

Shelter costs and apparel prices climbed. Recreation costs rose by the most on record while airfares rose skyward. Grocery prices were up the most since August 2022. On the contrary, appliances and used cars and trucks fell. Vehicle repair costs declined by the most ever. One takeaway is that tariff pass-through to consumers has been milder than anticipated and may have peaked in October. The largest category within services—housing costs—played a big role in the figures as usual. Shelter prices rose 0.4% last month, the most since August. Excluding shelter, the core CPI rose only 0.1%. Primary rents and owners’ equivalent rents rose as well, and hotel stays rose the most since September 2023. The so-called “supercore” measure, which excludes housing and energy costs, rose 2.7% on an annual basis, far below the 4% recorded a year earlier. The Bloomberg economics team estimates that the one-, three- and six-month gains for core CPI are 2.9%, 1.6% and 2.6%, respectively.

 The producer price index (PPI) is a measure of how wholesale prices are working their way through the production chain. On Wednesday, the BLS reported that PPI rose 0.2% in November after climbing 0.1% in October. Excluding food and energy, the core PPI was unchanged. The cost of physician care and hospital services rose, but airline passenger services fell 2.6% for the month. Overall, services costs were flat after a 0.3% increase in October. Wholesale goods prices rose 0.9%, the most since February 2024, with 80% of the rise due to energy. Generally, this suggests that firms are not passing along higher tariffs and other costs for fear of harming sales and further eroding consumer confidence. With the closely watched personal consumption expenditure data to be released next week, investors can find comfort that inflation, though not at the Fed’s preferred 2.0% level, remains moderate and gives the Fed room for further rate cuts at some time in the future.

Meanwhile, new home sales data from the U.S. Census Bureau was released this week for the October time period. This report, among many others, was delayed due to the record-long federal shutdown near the end of last year. Home sales recorded an annual rate of 737,000 following a 3.8% September increase. The median projection of economists surveyed by Bloomberg was for a 715,000 annualized pace. Nevertheless, new home inventory was unchanged at 488,000 units in October from a month earlier, still near the highest since 2007. At the current pace, there’s enough inventory to satisfy 7.9 months’ worth of sales, which would categorize the current state of new homes as weak. In December, 67% of homebuilders used sales incentives while 40% reported cutting prices, according to a monthly survey by the National Association of Homes Builders and Wells Fargo report. Median home sales fell 8% in October from a year earlier to $392,300 the government report confirmed. That was the largest annual decline since August 2024 and the lowest level since mid-2021. As mortgage rates trend lower, sales may grow in the low-to-mid single digits, according to a Bloomberg Intelligence report.

On Wednesday, the National Association of Realtors (NAR) released data on previously-owned properties. Approximately 90% of residential transactions are for existing home sales. New home data is considered more timely because it is calculated when contracts close. An existing home transaction may not close until weeks or months after a deal is struck. The tradeoff becomes more current but more volatile data for new homes versus a deeper and more complete picture of the housing market with existing home info but on a less timely basis. The NAR showed that sales climbed in December at the fastest pace since 2023. Contract closings rose 5.1% to a 4.35 million annualized rate, which is a pace which exceeded all forecasts in a Bloomberg survey of economists. The median sales price rose 0.4% versus a year ago to $405,400. December pointed to hopeful signs of a turnaround for a market stuck near the 4 million mark for the past three years. Inventory rose 3.5% from a year ago to 1.18 million, which at the current sales pace is equal to 3.3 months’ supply. Mortgage rates fell to 6.2% last week, the lowest rate in more than a year which helps push buyers on the fence towards making deals. The all-important spring selling season is around the corner, so signs of a rebound would be welcome in the industry.  

Retail sales for November (another data point delayed due to the shutdown) rose by the most in July, according to the Commerce Department. Solid holiday shopping helped fuel the 0.6% rise after a downwardly revised 0.1% drop in October. Excluding autos, sales rose 0.5%. Ten out of 13 categories posted increases, including sporting goods and hobby stores, building materials retailers and clothing outlets. In a good sign for the auto industry, motor vehicle sales bounced back after the expiration of federal tax incentives on electric cars curtailed sales in October. The only service-sector category in the report, spending at retail and bars, rose 0.6% in November after falling the previous month. According to Bloomberg economists: “The underlying ‘K-shaped’ consumer dynamics—showing trajectories diverging by income—remain intact as wealthier shopper splurged on holiday purchases while lower-income households chased deals.” Discounts, especially online, are a contributing factor to the rebound. The boost in sales could also reflect federal workers, who recouped lost wages during the shutdown.  

Company Events

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