🥚 Why Egg Prices Are Cracking Wallets Again

Plus, how a hot producer inflation report may impact rate cuts, and more

December 13, 2024

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It’s Friday! Egg prices are soaring again, with November’s producer costs up 55.6% month-over-month, signaling potential profit boosts for producers like Cal-Maine and Vital Farms. Seasonal demand, supply constraints, and rising costs suggest further price hikes for consumers. Here’s how investors can capitalize on this inflationary trend. At the same time, rising producer inflation data has dampened enthusiasm for aggressive interest rate cuts next year.

—Josh Enomoto

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MARKET RECAP

Yesterday: Stocks closed lower as producer inflation rose above expectations, with large caps trailing mid-caps. Jobless claims ticked higher but remain consistent with a resilient labor market. Bond yields edged up, reflecting slower Fed rate-cut expectations.

On Our Radar: After dissecting the import price index earlier this morning, investors will turn to a slew of fresh economic reports next week, including U.S. retail sales and housing starts.

TOP STORY

Egg hyperinflation is back, with producer costs skyrocketing 55.6% in November, paving the way for higher grocery prices. Companies like Cal-Maine and Vital Farms are already reaping the rewards, with shares soaring this year.

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FIVE ZINGERS

Shots Fired: Following suggestions by President-elect Donald Trump of broad tariffs, Canada is considering export taxes on goods, including critical commodities. Read why investors need to pay close attention.

Blueprint Boom: Fixed-rate mortgages have steadily declined for three consecutive weeks. Discover one critical catalyst that could further bolster home sales.

Currency Counter: With the incoming Trump administration proposing a potential 60% tariff on Chinese imports, China’s policymakers may consider weakening the yuan. Learn why this action might be a double-edged sword.

Wholesale Win: Big-box retailer Costco reported its first-quarter financial results, beating on both the top and bottom lines. Here’s what the better-than-expected print may say about the consumer economy.

Yen Play: With the Bank of Japan meeting next week, investors are shifting back toward the “BoJ trade,” which involves going long Japanese stocks and shorting the yen and underlying bonds. However, traders should heed this warning first.

ONE FOR THE ROAD
The Stock Exchange

Risk sentiment soured on Thursday following hotter-than-expected producer inflation data, which dampened optimism for aggressive interest rate cuts in 2025. Adding to the uncertainty, an unexpected rise in jobless claims cast doubt on the resilience of the U.S. labor market.

Major U.S. stock indices were in the red during midday trading in New York. The Nasdaq 100 slipped 0.4%, retreating from its record highs reached in the previous session, while small caps underperformed as the iShares Russell 2000 ETF dropped 1%.

The Producer Price Index surged to 3% year-over-year in November, its highest level since February 2023, outpacing both forecasts and the upwardly revised 2.6% from October. On the labor front, weekly jobless claims rose by 17,000 to 242,000, exceeding consensus estimates of 220,000.

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