While in New York morning trade. We're digesting the latest producer price data. And this does come ahead of tomorrow's consumer price inflation figures. While Brant Crude Oil clearing 105 a barrel this morning and WTI is back above the $100 barrel level. We continue to monitor the conflict in the Middle East and here in the U.S., gas prices hitting a record $4.15 a gallon over the Labor Day weekend.
And we continue to see data from triple H showing the national average for a gallon of gas now standing around $4.28, and also adding Canadian tariffs to the mix. Corporate margins and consumer budgets are facing pressure from multiple fronts. And joining us live to break down what's moving markets this morning is Christine Short, head of research at TMX Wall Street.
Horizon. Christine, good morning. Thank you so much for joining us.
Thank you so much for having me, Remy.
Well, this morning we are looking at stock futures in negative territory and we're looking at that spike in oil. Yet once again. So given the fact that we saw producer prices this morning affected by energy, all of us are counting down to CPI tomorrow. So where do we stand right now.
Yeah you're right. So we know the fed is also watching very closely. And I think that's why you see futures trending away there. Because we all know after that stellar jobs report last Friday that the I was going to turn towards inflation. And so like you said we got producer price index this morning in line up 0.4% in August.
So that was in line with what economists expected. However, the annual number grew to four 5.4%. So that was a little bit higher than economists were expecting. And we know it's well above the 2% target that the fed is is looking for. Right. And so now that we've heard from the sellers now we're tomorrow going to hear from the buyers.
When we see what CPI is doing, how much our buyer is being impacted by price increases. And so I think that's really going to be the hammer. And we know again, Kevin Warsh is watching those numbers closely because we know that, you know, coming into this where we're not sure how this new fed was, were they going to be dumbest or were they going to be hawkish.
But it's very clear now that the focus is on inflation, both from his remarks at Jackson Hole. We saw the Beige Book last week. And then again with those employment numbers, it's clearly a stable a stable labor market. And so how do we with you know the pressure from oil over $100 a barrel. How do we get inflation down.
So um, you know, we're all anticipating a 25 basis point increase when FOMC remarks come out next week. We saw the ECB raising this morning. And so the ECB bumped up their rates by 25 basis points because of inflation and because of you know stagnating growth. And so I think you're going to see central banks around the world, um, you know dealing with these issues in a similar way.
Yeah. And Christine, we just got back from a holiday weekend here in the US. And for many Americans driving over the long holiday weekend, there was pain at the pump. So when it comes to what you're seeing with elevated energy prices, what are you seeing when it comes to behavior from both consumers and corporations?
Yeah. So as you mentioned, highest gas prices on Labor Day weekend, you know, ever. And that's even come up in the last couple of days for 28. I've heard some energy analysts and gas analysts say that 450 is really the threshold for consumers, right. A prolonged 450 a gallon at the pump is what really starts to weigh on consumers, because, as you know, we've spoken about the consumer still despite, you know.
Yes, it's a K shaped economy, but the consumers hung in there. Are they being held higher by higher income consumers and shoppers? Yes, that's that's true. And we've heard that from from the fed as well that, you know, on the one hand you've got those that are very cost sensitive. But on the higher end it's you know, buying is kind of the same as usual.
What I thought was interesting yesterday because I'm always looking for how can the consumer can continue. Charlie Scharf, CEO of Wells Fargo. They had their Wells Fargo Healthcare conference, and he said their savings are intact. Consumer savings are intact. Credit card delinquencies are actually trending lower.
And he actually sees a healthy US consumer. We heard this from a lot of the big banks that the consumer remains intact. But again, how much longer can that stay intact? If you have gas prices, you know, continually increasing. And that's what we don't know is is this a forever war? And when does inflation when do we get a handle on that.
Yeah. And speaking of the uncertainty out there, of course, we're continuing to monitor geopolitics, the conflict in the Middle East as well as what's happening between Ukraine and Russia when it comes to energy. But what about tariffs, especially given the tit for tat we're seeing between the US and Canada?
What are you concerned about right now.
Yeah. Look, Canada obviously is looking at retaliatory tariffs to the tune of 28 billion. That would affect things like every metal you can think of agricultural products Dairy. Electronics. Appliances. And does that impact the consumer? Of course. But its overall part of trade it is of small amount.
However it really impacts small and mid-sized businesses. Right. And that's not a good look going into the midterms to have oil over $100 a barrel pain at the pump and now you're targeting, or you have the retaliatory tariffs that are targeting small and mid-sized businesses. These are people that are going to vote.
Right. And so it doesn't look great for the current administration and certainly doesn't help the current situation for consumers.
And finally, Christine, before I let you go, of course, this is a midterm election year, as you mentioned. So there are a lot of things that we will continue to monitor when it comes to the macro front. But what are you hearing from corporations when it comes to guidance as we wrap up earnings season here?
I mean, it's been very puzzling because obviously corporations are doing very well. We saw that in the Q2 numbers. Looking forward to Q3. We still got a month until those numbers start to report. The big banks are around mid-October, but expectations are for 28% earnings per share growth for the S&P 500.
But we know inflation is pushing some of those leading sectors higher energy and materials. You know higher commodity prices. Those those year over year earnings growth rates for those two sectors are higher. And then we know the AI trade and the demand for AI hardware is pushing tech higher. So you've got a few things happening that are supporting the overall growth rate.
But even the other sectors, the eight other sectors, they're all you know, there's not one that's expecting year over year declines. So the corporate picture is still very much intact as well.
Well Christine, always great having you on the show. Thank you so much for joining us here at the New York Stock Exchange. And thank you so much for sharing all of your insights.
