US Producer Prices Come In Hot On Heels Of Mysterious Energy Cost Surge

US wholesale inflation picked up slightly in November from a month earlier on a jump in energy costs, even as prices for services were unchanged.
The producer price index rose 0.2% after climbing 0.1% in the prior month, according to much-heralded BLS.

Source: Bloomberg

PPI Final demand goods:

• The index for final demand goods advanced 0.9 percent in November, the largest rise since moving up 0.9 percent in February 2024. Over 80 percent of the November increase can be traced to prices for final demand energy, which jumped 4.6 percent.

  • The index for final demand goods less foods and energy advanced 0.2 percent, while prices for final demand foods were unchanged.

Product detail:

• More than half of the November rise in the index for final demand goods is attributable to prices for gasoline, which moved up 10.5 percent.

• The indexes for electric power, diesel fuel, fresh fruits and melons, jet fuel, and light motor trucks also increased. (Most new-model-year passenger cars and light motor trucks were introduced into the PPI in October and November.

• In contrast, prices for residual fuels declined 8.6 percent. The indexes for beef and veal and for basic organic chemicals also decreased. (See table 2.)

PPI Final demand services:

• Prices for final demand services were unchanged in November following a 0.3 percent increase in October.

  • In November, the indexes for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services both advanced 0.3 percent.

  • Conversely, margins for final demand trade services fell 0.8 percent.

Product detail:

• Within final demand services in November, prices for bundled wired telecommunications access services rose 4.6 percent.

• The indexes for machinery and vehicle wholesaling, portfolio management, outpatient care (partial), and game software publishing also moved up.

• In contrast, margins for health, beauty, and optical goods retailing decreased 4.3 percent.

• The indexes for automobile retailing (partial), chemicals and allied products wholesaling, guestroom rental, and food and alcohol retailing also declined.

Excluding food and energy, the PPI was unchanged from the prior month and climbed 3% from November 2024.

Source: Bloomberg

Economists and investors closely track the PPI because several of its components feed into the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index.

Among those categories, portfolio management fees advanced 1.4% while costs of airline passenger services fell 2.6%. The costs of physican care and hospital inpatient care rose slightly, while hospital outpatient care saw a bigger increase.

However, we are not quite sure where the prices surge seen in PPI data is coming from, as oil prices were still plummeting when this data was 'created'...

Source: Bloomberg

Still, the lack of a PhD on our side means we are surely too dumb to comprehend this divergence.

Tyler Durden Wed, 01/14/2026 - 08:53

US Retail Sales Shrug Off 'K-Shaped' Economy With Upside Surprise In November

Having noted yesterday that holiday retail spending (December) was up significantly (via the NRF), today we get the official (US Census Bureau) look at Retail Sales from November... so don't get too excited.

But, amid the growing specter of the 'k-shaped' economy, expectations were for a sizable 0.5% MoM jump in retail sales (after October's 0.0% nothingburger)... but the headline print beat expectations with a 0.6% MoM surge... leaving sales up 3.3% YoY...

Source: Bloomberg

That was the strongest MoM jump in retail sales since July.

Additionally, Ex-Autos, and Ex-Autos and Gas also both beat expectations.

Ten out of 13 categories posted increases, including sporting goods and hobby stores as well as building materials retailers and clothing outlets. Motor vehicle sales bounced back after the expiration of federal tax incentives on electric cars restrained sales in the prior month. Higher receipts at gasoline stations also contributed to the overall gain.

General Merchandise stores saw sales decline in November (along with Furniture), while Motor Vehicles and Gas Station sales surged the most...

Real retail sales (a rough approximation against CPI) remained positive on a YoY basis...

Source: Bloomberg

Finally, things look even better for the broad economy as the Retail Sales Control Group (which excludes food services, auto dealers, building materials stores and gasoline stations) - which feeds into the GDP calc - jumped 0.4%% MoM - in line with expectations...

Source: Bloomberg

That MoM jump leaves sales up a strong 5.1% YoY and while the 'k-shaped' economy continues to weigh on market sentiment, it is not evident in the aggregate data and supports solid Q4 GDP growth.

"The consumer ended 2025 on a strong note might get stronger when tax refunds start hitting in the new year," said David Russell, Global Head of Market Strategy at TradeStation.

"Today’s retail sales report is consistent with accelerating GDP in Q4, which could push rate cuts further into the future. Whatever happens with Jerome Powell, the era of his relevance seems to be winding down. Further easing with be the concern of his successor."

The figures may have gotten an extra boost from federal workers, who recouped lost wages from the government shutdown.

Tyler Durden Wed, 01/14/2026 - 08:39

Bank of America Slides Despite Top, Bottom Line Beat As Underwriting, FICC Miss

After some rather soggy earnings from JPM yesterday, in which the largest US bank disappointed with declining underwriting fees, and spooked markets with a jump in loan loss reserves on its Apple credit card deal as well as downbeat commentary from Jamie Dimon on what a credit card cap would mean for the bank, moments ago Bank of America reported Q4 results which at first glance were stronger, and sent its stock higher premarket, but as analysts read between the lines and noticed the weak parts of the report (underwriting fees, FICC miss), BofA stock has since sunk 2% in the premarket.

Here are the highlights: BofA Q4 net interest income beat expectations; $15.75 bn versus $15.48 bn expected by Bloomberg consensus. In the Q4 earnings report, total revenue (net of interest expense) for Q4 was $28.4 bn, slightly lower than Q3's $29 bn but above Bloomberg expectations of $27.76 bn, similar to JPMorgan's strong markets beat, as BofA traders reaped the benefits of a volatile Q4 for markets. Revenue from equity trading rose 23% to $2.02 billion in the final three months of the year, beating estimates of $1.9 billion. That helped give Bank of America earnings of 98 cents a share, just barely topping analysts’ estimates of 96 cents. Net income for the fourth quarter was $7.6bn, up 12% YoY, but down 8% from the $8.3bn in Q3. That was the good news. The bad news was an unexpected miss in the bank's all important, high-margin FICC group, coupled with a miss across both debt and equity underwriting.

Here is a snapshot of what BofA reported in Q4:

• EPS $0.98, up 18% YoY from $0.83, beating estimates of $0.96
• Revenue net of interest expense $28.37 billion, up 7% YoY from $26.5 billion, beating estimate $27.78 billion; reflecting higher net interest income (NII), asset management fees, and sales and trading revenue
  • Net interest income $15.75 billion, beating estimate $15.48 billion 
    • Net interest income FTE $15.92 billion, +9.7% y/y, analysts had expected a 7.8% increase for NII
  • Trading revenue excluding DVA $4.53 billion, beating estimate $4.33 billion
  • FICC trading revenue excluding DVA $2.52 billion, missing estimate $2.62 billion
  • Equities trading revenue excluding DVA $2.02 billion, beating estimate $1.89 billion
  • Investment banking revenue $1.67 billion, beating estimate $1.66 billion
    • Advisory fees $590 million, beating estimate $495.3 million
    • Debt underwriting rev. $810 million, missing estimate $864 million
    • Equity underwriting rev. $297 million, missing estimate $301 million
  • Wealth & investment management total revenue $6.62 billion, beating estimate $6.45 billion

Here are the highlights visually:

BofA's provision for credit losses of $1.3B in 4Q25 vs. $1.3B in 3Q25 and $1.5B in 4Q24, and below estimates of $1.48BN 

• Net charge-offs (NCOs) of $1.29B declined $0.1B from 3Q25 and $0.2B from 4Q24 and below estimates of $1.44BN

“With consumers and businesses proving resilient, as well as the regulatory environment and tax and trade policies coming into sharper focus, we expect further economic growth in the year ahead,” CEO Brian Moynihan said in the press release. “While any number of risks continue, we are bullish on the US economy in 2026.”

The bank's all important net interest income rose $0.5BN from Q3 to $15.9BN, "driven by higher NII related to Global Markets (GM) activity, higher deposit and loan balances, and fixed-rate asset repricing, partially offset by the impact of lower interest rates." The Net Interest yield of 2.08% rose 7bps sequentially, beating estimates of 2.04%, and was the highest in years. Blended cash and securities yield of 3.04% vs. total deposit rate paid of 1.63%.

BofA's Q3 efficiency ratio was 61.5% down from 63.4% y/y as noninterest expenses rose to $17.44 billion, but was below estimates of $17.47 billion. Compensation expenses $10.60 billion, estimate $10.55 billion

Taking a closer look at the bank's balance sheet, we find ample liquidity: 

• Average Global Liquidity Sources of $975B
• CET1 capital of $201B decreased $1B from 3Q25
• CET1 ratio of 11.4%4 vs. 11.6% in 3Q25; well above regulatory minimum
• Efficiency ratio 61.5% vs. 63.4% y/y
• Paid $2.1B in common dividends and repurchased $6.3B of common stock
• Basel III common equity Tier 1 ratio fully phased-in, advanced approach 12.8%, estimate 13%
  • Standardized CET1 ratio 11.4%, estimate 11.5%

Total deposits of $2.02TN increased $55B, or 3%, below estimates of $2.03TN

Total loans and leases of $1.19T increased $90B, or 8%, above estimates of $1.18TN

Turning to the all important Markets/Banking division, we find that just like JPM, markets revenue was ok, with Equities beating/FICC missedm while investment banking also saw underwriting weakness. Here are the details:

• Total Markets Revenue of $5.3B increased 10% YoY, driven by higher sales and trading revenue
  • Trading revenue excluding DVA $4.53 billion, beating estimate $4.33 billion
  • FICC trading revenue excluding DVA $2.52 billion, missing estimate $2.62 billion, and was "driven by improved performance in macro products"
  • Equities trading revenue excluding DVA $2.02 billion, beating estimate $1.89 billion, and was "driven by increased client activity"
• Noninterest expense of $3.9B increased 11% vs. 4Q24, driven by higher revenue-related expenses and investments in the business, including people and technology

But while Markets was ok, the same weakness JPM observed in Investment Banking was also palpable at BofA, where advisory fees came in strong, but were offset by very poor debt and equity underwriting environment.

• Investment banking revenue $1.67 billion, beating estimate $1.66 billion
  • Advisory fees $590 million, beating estimate $495.3 million
  • Debt underwriting rev. $810 million, missing estimate $864 million
  • Equity underwriting rev. $297 million, missing estimate $301 million
• Noninterest expense of $3.1B increased 6% vs. 4Q, driven by investments in the business, including people and technology

Looking ahead, the bank's 2026 outlook was solid, just like JPM, with the bank expecting NII to grow 5-7%, a solid increase but a slowdown from the 10% YoY increase in Q4. The bank also expects to deliver 200bps of operating leverage in 2026, although costs will be elevated in Q1. 

Bank of America’s results offer a further look at how the biggest US banks fared during the first year of Trump’s return to office. On Tuesday, JPMorgan reported earnings that beat analysts’ estimates, with trading activity boosting results, despite an unexpected decline in investment-banking fees, similar to BofA. The market was not impressed and the stock tumbled 4%, its worst post-earnings reaction since Q1 2024. 

That said, execs expect deals to pick up in 2026, with a strong pipeline and corporate clients who pushed off activity coming back to the market. 

Shares of Charlotte, North Carolina-based Bank of America, slumped 1% in premarket trading as algos realized read the fine print below the superficial beat. BofA had gained 19% in the 12 months through Tuesday, more than the 12% increase in the S&P 500 Financials Index.

BofA's full investor presentation can be found here: pdf link.

Tyler Durden Wed, 01/14/2026 - 08:26

DOGE Cancels Or 'Descopes' Contracts Worth $1.5 Billion Over A 5-Day Period

The demise of DOGE has been greatly exaggerated. 

The Department of Government Efficiency (DOGE) website is displayed on a phone, in this photo illustration. Oleksii Pydsosonnii/The Epoch Times

Over the weekend, the Department of Government Efficiency announced that agencies have terminated and descoped '42 wasteful contracts with a ceiling value of $1.5B and savings of $269M, including a $1.2M Millennium Challenge Corp. DEI professional services contract for a “DCO Gender and Social Inclusion Director Full Time”."

Contracts Update!

Over the last 5 days, agencies terminated and descoped 42 wasteful contracts with a ceiling value of $1.5B and savings of $269M, including a $1.2M Millennium Challenge Corp. DEI professional services contract for a “DCO Gender and Social Inclusion Director… pic.twitter.com/RDnmCxSaKq

— Department of Government Efficiency (@DOGE) January 10, 2026

The post came roughly a week after DOGE announced that over a three-day period, federal agencies had similarly terminated and descoped 55 "wasteful" contracts with a ceiling value of $1.6 billion, resulting in $542 million in savings. Included in those was a $47 million State Department contract for "Africa/Djibouti, Somalia armored personnel carriers and Somalia National Army crew."

Contracts Update!

Over the last 3 days, agencies terminated and descoped 55 wasteful contracts with a ceiling value of $1.6B and savings of $542M, including a $47M State Dept. program support contract for “Africa / Djibouti, Somalia armored personnel carriers and Somalia… pic.twitter.com/JgF8YR6ht4

— Department of Government Efficiency (@DOGE) January 3, 2026

As the Epoch Times notes further, as of Jan. 1, DOGE had saved approximately $215 billion through contract, grant, and lease cancellations, according to the department. Among an estimated 161 million individual federal taxpayers, DOGE has saved $1,335.40 per taxpayer.

Based on data displayed on its leadership board, the U.S. agencies that accounted for most of the savings are the Department of Health and Human Services, the General Services Administration, the Social Security Administration, the Office of Personnel Management, and the Small Business Administration.

Regarding contracts, the top amounts terminated are $12.5 billion and more than $5.7 billion from the Department of Defense (DOD), nearly $4 billion from the Department of the Air Force, and $3.75 billion again from the DOD, now known as the Department of War.

As for grants, the highest value amounts canceled are $4 billion and $2.6 billion from the now-defunct United States Agency for International Development (USAID). USAID was dismantled by the Trump Administration on July 1, 2025.

Fraud Alleged in States

DOGE’s latest announcement comes in the wake of large-scale government benefit fraud discovered in Minnesota, resulting in the waste of billions of taxpayer dollars, according to a Jan. 9 statement from the Department of the Treasury.

“Under Democratic Governor Tim Walz, welfare fraud has spiraled out of control,” said Treasury Secretary Scott Bessent. “Billions of dollars intended for feeding hungry children, housing disabled seniors, and providing services for children in need were diverted to benefit Somali fraud rings.”

Complex fraud rings in Minnesota have allegedly stolen billions of dollars from taxpayer-funded state programs, with criminals using the money to purchase residential and commercial real estate, luxury goods, vehicles, planes, international flights, and other luxury expenses, the statement said.

On Jan. 6, President Donald Trump also announced a fraud investigation targeting California.

Also, after the incidents in Minnesota, Texas Gov. Greg Abbott has directed state agencies to investigate social services for potential fraud.

Tyler Durden Wed, 01/14/2026 - 07:45

US Military Opens New Air Defense Coordination Cell In Qatar

Authored by Ryan Morgan via The Epoch Times (emphasis ours),

The U.S. Central Command (CENTCOM), on Jan. 13, announced the launch of a new air defense coordination cell in Qatar.

A U.S. soldier assigned to the 1-62 Delta Battery Air Defense Artillery Regiment Patriot at a Patriot launcher at at Al Udeid Air Base, Qatar, on March 4, 2015. Tech. Sgt. James Hodgman/U.S. Air Force via DVIDS

CENTCOM, the U.S. military command that oversees operations in the Middle East, said the new unit is located at the Al Udeid Air Base and will be operated by personnel from the United States and other regional partners.

Called the Middle Eastern Air Defense—Combined Defense Operations Cell, the center is situated within the existing Combined Air Operations Center at Al Udeid Air Base.

Over the past 20 years, representatives from 17 nations have helped to coordinate air operations from the Combined Air Operations Center.

“This is a significant step forward in strengthening regional defense cooperation,” Adm. Brad Cooper, the commander of CENTCOM, said in a statement on Tuesday.

“This cell will improve how regional forces coordinate and share air and missile defense responsibilities across the Middle East.”

CENTCOM and its regional partners have contended with long-range missile and drone attacks in recent years.

In April 2024, Iran launched a wave of one-way attack drones and missiles at Israel in response to an apparent Israeli strike on an Iranian diplomatic compound in Syria.

U.S. forces helped blunt that Iranian barrage, with CENTCOM reporting it intercepted 80 drones and six ballistic missiles.

American forces in the region again helped intercept Iranian ballistic missiles bound for Israel in October 2024.

As Israel and Iran came to blows in June 2025, U.S. forces again helped intercept Iranian attacks targeting Israel.

After U.S. forces struck Iran on June 22, Al Udeid Air Base came under direct retaliatory attack from Iran, and U.S. and Qatari air defense forces arrayed around the base defended against multiple missiles.

Lt. Gen Derek France, who leads the U.S. Air Force’s CENTCOM component, said the new air defense cell at Al Udeid Air Base “creates a consistent venue to share expertise and collectively create new solutions together with our regional partners.”

Qatar has been a key regional partner of the United States for years.

In addition to providing one of the largest bases for U.S. forces in the region at Al Udeid, Qatar has also played an intermediary role in negotiations for a cease-fire in the Israel–Hamas conflict in Gaza.

President Donald Trump has taken steps to expand the U.S.–Qatari partnership.

In September, Trump signed an executive order stating it is the policy of the United States “to guarantee the security and territorial integrity of the State of Qatar against external attack.”

In October, the Pentagon announced it had approved the creation of a new facility at Mountain Home Air Force Base in Idaho that will be dedicated to training members of the Qatar Armed Forces.

Tyler Durden Wed, 01/14/2026 - 07:20