Month: September 2022

US Inflation Tops Forecasts, Cementing Odds of Big Fed Hike

The setting looked perfect:

• oil prices down and weakening;
• commodity prices down and weakening;
• supply chains mending;
• excess inventories requiring drastic cuts through discounting;
• house prices flattening out;
• airfares down;
• non-fuel import prices down for 3 consecutive months totaling -1.4% since May;
• the U.S. dollar strong and rising.

Yet, we got a surprisingly strong +0.6% core CPI inflation which, combined with July’s surprisingly low +0.3% print, keeps annualized core inflation in the 5-6% range.

What did the market get wrong?

1- Too much focus on goods when services inflation are the sticky part because of rising wages.

Services inflation was strong outside of airfares, which declined 4.6% (mom sa) on the back of lower oil prices. We would highlight the strength in cyclical and wage-sensitive services categories including shelter (rent +0.74%, OER +0.71%), food away from home (+0.9%), medical care (+0.8%), personal care (+0.7%), and education (+0.5%). Car insurance prices also rose 1.3%, similar to our expectations and reflecting higher replacement and repair costs. (Goldman Sachs)

Core Services rose 0.6% in August after +0.53% on average in the previous 3 months. They are up 6.1% YoY.

Services less rent of shelter: +0.6% after +0.57% on average in the previous 3 months. Unrelenting.

2- But core Goods inflation was also surprisingly strong at 0.5% after +0.2% in July which many thought was the beginning of several very soft, if not negative months given the setting described above.

Even after stripping 59% of the index, “All items less food, shelter, energy, and used cars and trucks” were up 0.5% last month, after +0.53% on average in the previous 3 months.

Betting on better goodsflation is not safe.

Betting on continued high Services inflation, 60% of the CPI and intimately tied to wages and energy, remains a good bet:

The Atlanta Fed’s Core Sticky-Price CPI is now up 6.0% YoY vs +3.5% last December:

The FOMC is far from “Mission Accomplished”.

ING offers some hope:

On the inflation side we feel that the weaker activity backdrop will dampen corporate pricing power and lead to a squeeze on profit margins. Indeed, the National Federation of Independent Businesses (NFIB) survey released [yesterday] morning suggests, in the small business sector, that inflation pressures are already softening with a clear drop in the proportion of companies looking to raise their prices further.

NFIB prices and price plans point to lower CPI readings ahead

Source: Macrobond, ING

With the outlook for the housing market deteriorating, we expect to see home prices move lower over the next 6-12 months, which will help to depress the rental components (that make up a third of the inflation basket). Meanwhile, supply chain improvements and lower used car prices will also be key factors that contribute to slower inflation next year. Add in weaker commodity prices, squeezed margins and the effects of dollar strength and we still see a strong chance that inflation hits 2% by the end of 2023.

ING omits services other than housing, still 36% of core CPI and up 7.4% YoY.

With wages rising 5-6%, service providers will keep raising prices until demand for services declines. That only happens in recessions.

Haver Analytics’ Joseph Carson:

At the start of the third quarter, there were 10 million job openings in the private sector, and seventy-five percent were in the service sector. The imbalance in the labor markets, especially for service workers, creates a nightmare scenario for the Federal Reserve. That’s because as it attempts to slow demand, dampen wage growth, and cool inflation, its monetary tools are much less effective in dealing with the less interest-rate sensitive service sector. (…)

Before the pandemic, the private sector service job growth was 1.5 to 2 million per year. So reducing the 7.5 million job openings in the service sector by half would take two years. But that would not mitigate wage pressures, the most significant source of service sector inflation.

The average wages for the private sector non-supervisory service sector workers are up 6.2% in the past year. Excluding the spike in wages in the early months after the pandemic, service sector wages are running at their fastest pace since the early 1980s. And, they are running roughly 100 basis points above the gains in the goods-producing industries.

Private service sector labor and price dynamics are the Fed’s most significant hurdles in its inflation fight. Creating slack in the labor market for service workers will require a much official rate and in place for an extended period than it would if inflation was only a goods sector phenomenon.

So Fed Powell’s warning that “a lengthy period of very restrictive monetary policy” will be needed to stem the inflation cycle is something investors should not ignore, as it signals a volatile market environment.

The only positive in the August CPI report is that my CPI-Essentials series was unchanged for the second consecutive month, thanks to the 5.0% MoM drop in CPI-Energy following -4.6% in July. It is still up 9.2% YoY, however vs headline CPI at +8.2% and core CPI at 6.3%.

CPI-Essentials vs CPI and Core CPI (YoY)

Some (rather small, perhaps only temporary) relief for the lower wage earners.

Some of them will be getting more relief, however, as the Economic Policy Institute told us last week. Twelve states and D.C. have policies that index their state’s minimum wage based on inflation. Most of those indexed increases are based on the August-to-August change in the Consumer Price Index [+8.3%].

The 12 states are: Alaska, Arizona, Colorado, Maine, Minnesota, Montana, New York, Ohio, Oregon, South Dakota, Vermont, Washington, and Washington D.C.. (Vermont and Minnesota cap increases to 5% and 2.5%, respectively). The raises will go into effect in January 2023.

Six other states (Connecticut, Florida, Missouri, Nevada, New Jersey, Virginia) also index yearly but in December.

• Amazon to Raise Pay for Delivery Drivers Amid Tight Labor Market The e-commerce giant will invest $450 million in increased wages and other benefits for drivers as it tries to ensure it has sufficient staffing for the peak holiday season. Other benefits as part of the new initiative include up to $5,250 a year for drivers to pay for educational programs, and financial support for a 401(k) investment plan for drivers.
• A UPS ad on Axios today boasts that “Full-time UPS delivery drivers average $95,000 per year, plus UPS contributes another $50,000 annually to health, welfare and pension benefits. After four years, a full-time UPS driver averages $42 an hour in wages.”

• NFIB: Pricing by firms continued to cool in August but remained quite elevated by historical standards. The percentage raising selling prices fell to 53% in August from 56% in July and 63% in June. This was the fourth monthly decline in the past five months. And the percentage expecting to raise selling prices in the next three months declined 5%-points to 32%, its lowest reading since January 2021, from 37% in July and 49% in June. Pressure on wages was mixed in August. A net 46% of firms were raising worker compensation in August, down from 48% in July. The series high is 50% reached in January.

Global Oil Demand Undermined by China Lockdowns Weaker demand for oil in China, as the economy faces stop-start Covid-19 lockdowns, is outweighing robust crude demand elsewhere in the world and will crimp oil demand growth this year, the International Energy Agency said.

In its oil-market report, the IEA lowered its forecasts for Chinese oil demand by 400,000 barrels a day this year to 15 million barrels a day, 420,000 barrels a day less than last year. For 2023, the Paris-based agency lowered its China demand forecasts by 300,000 barrels a day, but still expects demand to rise to 16 million barrels a day as Covid-19 pandemic restrictions are relaxed.

China’s economy, the world’s second-largest, is proving to be the global laggard in oil demand. Among other nations, oil demand has remained surprisingly robust despite high inflation, rising interest rates and slowing economic growth. Oil demand in the U.S. is proving stronger than expected, the IEA said, while Middle Eastern demand is also strong as hot temperatures prompt above-average demand for oil-fired electricity generation.

Meanwhile, in Europe, soaring gas prices—prompted by Russia’s halt to flows through the Nord Stream pipeline—are adding greater-than-expected levels of demand for oil as power plants switch to crude as a cheaper energy source. That trend should account for a 700,000 barrel a day boost for oil during the six months through March 2023, the IEA said, roughly 150,000 barrels a day more than it was expecting in last month’s report.

While most nations have all but removed their pandemic-era movement restrictions, China’s zero-Covid policy sees it continue to impose strict lockdowns in response to new cases, undermining economic growth and oil demand. China’s demand from domestic oil sources is suffering the most from the lockdowns, the IEA said, lowering its forecasts for the nation’s domestic demand by 890,000 barrels a day.

Still, China’s struggles are being countered by strong demand elsewhere and should have a limited impact on global oil balances, the IEA said. The agency lowered its global oil-demand growth forecasts for 2022 by a modest 100,000 barrels a day to 2 million barrels a day. The IEA expects total demand this year of 99.7 million barrels, in line with last month’s estimates.

The agency left its 2023 oil demand growth forecast unchanged at 2.1 million barrels a day and did the same with its total demand forecasts which stand at 101.8 million barrels a day. (…)

The drop in oil prices was also undermining Russia’s oil-export revenues, which fell by $1.2 billion in August, to $17.7 billion, the IEA said. (…)

In a report Tuesday, the Organization of the Petroleum Exporting Countries left its own global demand forecasts steady at roughly 100 million barrels a day this year and 103 million barrels a day in 2023.

OPEC’s own analysts have been less concerned about signs of flagging oil demand, despite such concerns driving sharp drops in oil prices. The cartel says demand concerns have been overblown and drops in oil prices heightened by market volatility and a lack of liquidity.

• Gas-to-Oil Switching (Bison Interests)

(…) Sufficient electricity generation is a major cause of concern for Europe. Faced with soaring natural gas prices and limited supply, European utilities may choose to burn refined oil products such as fuel oil, diesel and gasoline instead of natural gas for electricity generation. Doing so would be highly economic, as indicated by the price differential more than $250/barrel equivalent (boe) between Dutch TTF Natural Gas and Brent Crude:

(…) Asia is similarly affected by higher LNG prices, as gas has been drawn away from Asia to Europe by ultra-high prices. Asia and has the added benefit of existing oil burning power generators that had mostly been mothballed. Reactivating these and converting others to burning oil products will likely see a substantial uplift in oil consumption for power generation in Asia. (…)

Bison’s view is that the IEA and other analysts may be substantially underestimating the potential impact of gas-to-oil switching this winter.

We have conducted our own analysis of oil burning capacity among power facilities in Europe and Asia, and as a lower bound we estimate that there is approximately 810,000 boe/d of installed oil burning capacity in Europe and Asia alone that will come online before this winter—more than 2 times the IEA estimate:

As gas prices remain elevated and electricity remains in short supply in Europe and Asia, we expect installed oil and oil product burning capacity will be utilized near 100% this winter. There is an additional ∼8MM boe/d of upside to potential oil demand as non-operating plants are reactivated and operating plants are converted to burn oil. Even if only 10% of this capacity were to come online, it would imply a material 800,000 boe/d of surprise oil demand in addition to our 810,000 boe/d lower bound estimate. (…)

Based on our estimates, there is at least 450,000 boe/d of oil demand which will come online this winter not being considered by the IEA and other oil analysts. This is likely conservative, as our estimate does not consider countries outside of Europe & Asia that may see gas-to-oil switching activity upside as well. In addition to installed capacity demand, there is additional ∼8MM boe/d upside from reactivation of retired plants and the conversion of operating generators to have dual fuel capacity.

In the context of a very tight global oil market, 800,000 boe/d of oil demand at the low end is very material. This is particularly true as world oil markets remain in a structural deficit, which is projected to grow, and global inventories continue to be depleted as a result:

In 2021, global demand for oil was ∼97 million barrels per day. Our low-end estimate for gas-to-oil switching could rapidly increase global demand by 0.8, or almost 1% of total world demand. As the world oil demand continues to outpace production, supply deficits could widen further. In this scenario, small incremental changes in oil demand could have a disproportionately large effect on oil prices. (…)

As European gas prices remain elevated, we may see higher natural gas prices here in the US as new export capacity is added, bringing more gas into the higher priced global market. And as European and Asian utilities and industries continue to substitute oil for natural gas, we may see elevated oil prices—and higher profitability for oil and gas producers.

• Xinjiang Chafes at Covid Controls as China Readies for Party Congress Officials are aiming to keep a lid on outbreaks to avoid drawing criticism before the crucial twice-a-decade congress.

(…) That has led many to quickly impose Covid restrictions even with low case numbers and often without adequate planning to ensure sufficient supplies for residents. (…) Cities with districts under full or partial mobility restrictions climbed to 37% of gross domestic product as of Friday from less than 10% in June, according to Goldman Sachs Research. Nomura last week estimated that about 292 million people were affected by these measures, up from 161 million in late August. (…)

China hasn’t reported a Covid-related death in more than three months; Japan had more than 1,500 in the past seven days. Beijing says its policies reflect a greater respect for the value of human lives. (Sic!)

• Officials See Fading Prospects of Iran Nuclear-Deal Revival Soon Western officials are increasingly gloomy about the prospects of reviving the 2015 nuclear deal with Iran before the U.S. midterm elections.

US railroads are poised to stop shipments of key products as it braces for a possible labor strike.

Norfolk Southern will halt shipments of key crops from tomorrow, before potential industrial action on Friday. The railroad will stop accepting autos for transit later today and others may follow. A pause to movement of grains, fertilizer, fuel and other crucial items threatens to hobble the economy at a time of rampant inflation and fear of a prolonged global economic slump.
Food-supply chains are especially at risk as farmers gear up for harvest and need to get supplies to customers. Crops are in high demand due to shortages from the war in Ukraine and weather woes across the globe. (Bloomberg)

Gundlach Warns Fed May Overdo Rate Hike to Tackle Inflation Investor tells CNBC he prefers 25 basis points as market eyes bigger increase at next meeting.

The investor told CNBC that while he believes the Fed will likely do a 75 basis point rate hike at its next meeting, he prefers 25 basis points  because he is concerned the Fed might oversteer the economy and hasn’t paused long enough to see what effect the previous hikes have already had.

• Gundlach said he agrees with the calls, including from Guggenheim’s Scott Minerd, for a 20% decline in stocks by mid-October
• He has been relatively neutral on the S&P 500 for the last half year, and has been ultimately looking for a target of 3,000 on the index
• He would buy long-term Treasuries because the deflation risk is much higher today than it has been for the past two years
• He owns European stocks and would buy emerging markets once the US dollar breaks below its 200-DMA

Eurozone: sharp drop in industrial production July industrial production fell by 2.3%, reversing gains made in May and June.

JPMorgan warns of up to 50% drop in investment banking fees JPMorgan’s trading business is on track to be up about 5 per cent year on year in the current quarter. In the first six months of the year, trading revenue was up 4 per cent year on year.

August CPI: +0.1%, +8.3% YoY. Core CPI: +0.6%, +6.3% big surprise! Core Goods: +0.5%, +7.1%. Core Services: +0.6%, +6.1%. Peakflation not yet.

Strong job gains? Don’t count on it!

This is from Mish Shedlock, an advisor at SitkaPacific Capital Management.

I have been commenting on the jobs (Establishment Nonfarm Payrolls) vs employment (Household Survey) discrepancy for four months. The two surveys measure different things. A person is either employed or not, but someone can have multiple jobs.

Generally the numbers move in the same direction over time. The Household Survey is noisy, but 6 months is a reasonable time frame for discrepancies to resolve.

If you assume both surveys are correct, then the interpretation is that the strength in jobs since March is due to 1.6 to 2.0 million people taking extra part-time jobs.

The only other explanation is that one of the surveys is flat out wrong. (…)

A likely explanation for the divergences is boomer retirements coupled with approximately 2 million people taking extra part time jobs to make ends meet due to high inflation.

No matter what the explanation, if the Household and BLS Jobs reports are both reasonably accurate, the highly touted jobs boom is dramatically overstated in any practical sense, especially real consumer spending.

• J.P. Morgan’s job tracker also shows no jobs growth since the spring:

• Goldman Sachs’ Job Growth Tracker:

• David Rosenberg also questions the jobs data, based on Canadian data:

The consensus was shocked — shocked! — to learn that Canadian employment sank 40k in August. The consensus was closer to +15k, so a big miss. Not just that, but this represents the third decline in a row, during which employment has sagged a cumulative 113.5k or a -2.3% annual rate. In other words, the historical record suggests that recession odds have now been boosted to 90%. Even worse, full-time jobs plunged 77k, the steepest decline since April 2021, also down three straight months (-94k or 83% of the total slide). At the same time, the workweek was flat after a 0.6% contraction in July.

Something is amiss here because there is a historical 95% correlation between Canadian employment and U.S. employment. And here Canada, the 51st state but filled with nicer people (just kidding… sort of!), came in at -40k while the BLS tries to convince us that payrolls surged +315k the very same month. They both can’t be right. The two surveys don’t always have to mirror each other, but declines like this in Canada tend to coincide with a flattish payroll number. The data go back to 1966 and at no time in the past have we ever seen employment in Canada so weak in the same month that U.S. payrolls were so strong. In other words — something here is amiss.

Finally, aggregate hours worked were flat as a beavertail in August, and that came on the heels of a 0.5% decline in July. The “build-in” for Q3 is a microscopic +0.8% annual rate, which means that absent a productivity pick-up, the Canadian economy basically stagnated this quarter. Canadian dollar bearish, that is for sure. Considering that productivity has receded in six of the past seven quarters and is running at -1.6% on a YoY basis, so it is actually quite conceivable that Canadian real GDP contracted in Q3.

The correlation between GDPs is 99.77% since 1960, 99.74% since 1990 and 99.32% since 2000.

Covid-19 Illnesses Keep at Least 500,000 Workers Out of U.S. Labor Force, New Study Says The virus will weigh on the workforce if infection rates continue, authors predict.

(…) The labor force would have 500,000 more members if not for the people sickened by Covid, according to the study’s authors, economists Gopi Shah Goda of Stanford University and Evan J. Soltas, at the Massachusetts Institute of Technology. (…)

This estimate is conservative, however, in that it excludes anyone who wasn’t working at the survey’s outset but who would have become employed if not for illness, as well as those whose absences fell outside of the week during which the Census conducted its monthly survey. Accounting for these, the economists estimate the labor-force decrease would be around 750,000 people, equal to a reduction in participation of about 0.3 percentage point. The study also didn’t analyze outcomes for those missing work to care for family members sickened by Covid, nor those who missed less than a week of work due to health, nor those who died of Covid. (…)

“Excess retirement” is estimated at ~2M. Add 500-750k and you get the “missing workers”.

Thousands of Minnesota Nurses Go on Strike Over Retention, Staffing, Pay The strike is believed to be the largest-ever work stoppage by private-sector nurses in the U.S., according to the Minnesota Nurses Association

(…) The strike includes [15,000] nurses from 16 different hospitals and seven different hospital systems. (…) The nurses are requesting a 27% pay bump over three years, the union said. Essentia said it is offering a 10% wage increase over three years and an immediate 1% bonus. (…)

Employees at more than 1,400 workplaces filed petitions with the National Labor Relations Board to form unions in the first half of 2022. That rose 69% year over year and was the highest since 2015.

So far this year through August, 15 major strikes have begun, according to data from the BLS, which counts major work stoppages of at least 1,000 workers. By comparison, there were 16 major strikes last year.

• Over the weekend, negotiations continued between the country’s largest freight railroad companies — including Berkshire Hathaway’s BNSF, Union Pacific and CSX — and the majority of the unions representing around 115,000 workers. They’re racing to meet a Friday deadline when a “cooling off period” runs out and workers could strike.
• Meanwhile, port workers on the West Coast have been negotiating a new contract; the last one expired in June.

Holiday Sales Growth to Slow to 4% to 6% This Year, Deloitte Says

(…) “Retail sales are likely to be further affected by declining demand for durable consumer goods, which had been the centerpiece of pandemic spending,” Daniel Bachman, Deloitte’s US economic forecaster, said in a statement. “However, we anticipate more spending on consumer services, such as restaurants, as the effects of the pandemic continue to wane.” (…)

This year’s projected growth in dollar value is in-line with pre-pandemic trends, though at a reduced volume due to rising prices. (…)

• Mastercard: Holiday shoppers are expected to spend 7.1% more this year than they did in 2021, which would fall short of last year’s 8.5% increase. (…) “This holiday retail season is bound to be far more promotional than the last,” said Steve Sadove, senior adviser for Mastercard and former CEO of Saks, in a statement.
• How about the wealth effect?

JPMorgan Team Says Soft Landing Is More Likely Than Recession

Recent data pointing to moderating inflation and wage pressures, rebounding growth and stabilizing consumer confidence suggest the world will avoid a recession, a team including Marko Kolanovic and Nikolaos Panigirtzoglou wrote on Monday. Markets can benefit from fiscal stimulus in China, energy support plans in Europe and very low investor sentiment, they said.

“Economic data and investor positioning are more important factors for risky asset performance than central bank rhetoric,” the strategists wrote. “We maintain a pro-risk stance.” (…)

“We maintain that inflation will resolve on its own as distortions fade and that the Fed has over-reacted with 75bps hike,” the team wrote. “We will likely see a Fed pivot, which is positive for cyclical assets.” (…)

• Fiera Capital’s excellent team of strategists ditched its low odds soft landing scenario last July. Fiera now sees 50% probability of a “Deep U.S. Recession” (-2.0% GDP), 30% for a “Shallow Recession” (-1.0%) and 20% for “Stagflation” (+1.0% with 5.0% headline inflation).
• Goldman Sachs’ Current Activity Indicator:

• FIBER: Industrial Commodity Prices Continue Their Broad-Based Decline

Despite improvement in factory sector production during July, weakness in the Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) has persisted through early this month. The price index fell 5.0% during the last four weeks and stood 5.6% below its level last year.

Price declines in the Metals group led the weakness during the last four weeks with an 8.5% decline, and they’re off 17.6% y/y. Zinc prices fell 10.8% in four weeks, but they have risen 5.7% y/y. Zinc is used in the manufacture of batteries. Aluminum prices weakened 8.4% in four weeks and fell 18.4% y/y. Steel scrap prices declined 6.6% in four weeks (-17.6% y/y) and copper scrap weakened 2.5% (-17.0% y/y). Tin prices fell 11.7% in four weeks, down by more than one-third this past year. Lead prices declined 12.3% in four weeks and have weakened 19.5% y/y.

Prices in the Crude Oil & Benzene group fell 8.0% during the last four weeks but have risen 6.6% y/y. The cost of West Texas crude oil fell 6.7% in four weeks to $85.01 per barrel, but remained roughly one-quarter higher y/y. Prices for the petro-chemical benzene declined 25.6% in four weeks and declined 7.9% y/y. The FIBER price index excluding crude oil fell 4.9% during the last four weeks and was 7.1% lower y/y.

In the Miscellaneous group, prices weakened 4.2% (-6.6% y/y) during the last four weeks, led by a 12.5% decline in framing lumber prices. They have fallen 20.9% during the last year. Natural rubber prices weakened 11.7% in four weeks and were down 6.5% y/y. Hide prices held steady over four weeks, but fell by roughly one-quarter y/y.

Textile group prices slipped 0.3% in the last four weeks, but remained 2.7% higher y/y. Cotton prices eased 0.7% in four weeks but rose 18.9% y/y. The cost of burlap, used for sacks, bags and gardening, fell 1.4% in the last four weeks and slipped 0.7% y/y.

• China’s tumbling PPI will help ease global price pressures.

 Pantheon Macroeconomics via The Daily Shot

• Europe’s energy squeeze (BlackRock)

The European Union is now spending nearly 12% of its GDP on energy, making the crisis worse than the 1970s oil shocks. That’s not the case for the U.S, a net energy exporter. It’s hard to see any relief for Europe in the next couple of years, with rationing on the horizon, in our view. (…)

Energy burden as a share of GDP, 1970-2022

Sources: BlackRock Investment Institute and BP Statistical Review of World Energy 2021, with data from Haver Analytics. September 2022. Notes: The chart shows the cost of oil, gas and coal consumption in the European Union and U.S. as a share of GDP. We use regional energy prices and divide by GDP in U.S. dollars. Data for 2022 are based on IMF’s latest GDP forecasts and the year-to-date average of daily commodities prices.

The ECB is set to make things worse: Like the Federal Reserve, the ECB hasn’t acknowledged the damage it must do to growth to fight this inflation, even after it hiked a record 0.75% last week. The ECB is instead responding to the politics of energy-driven headline inflation, we think. Its new forecast for modest growth next year is already stale by not accounting for recent events like Russia cutting off gas supply. We see the ECB’s downside scenario of a -0.9% contraction as more likely. The euro sliding to 20-year lows against the U.S. dollar reflects deteriorating growth and terms of trade from higher energy prices, in our view.

• Yes, 5.3% is much better than 11.7%. But it is still worse than 2-4%.

• Global coal prices (Axios)

Data: FactSet; Chart: Axios Visuals

Finance Chiefs Struggle to Set Guidance as Economy Flashes Mixed Signals Dozens of large U.S. companies have revised their annual forecasts recently, citing rising inflation, the possibility of recession and international factors like the energy crisis in Europe

Finance chiefs are finding it harder to peg yearly guidance as they struggle for visibility on the direction of the economy, leading them to broaden their annual revenue ranges and revise spending plans more frequently. (…) Chief financial officers are adapting by factoring into their outlooks events once considered unlikely, widening the ranges for their revenue forecasts and revisiting spending plans more often.

In the second quarter, 129 S&P 500 companies revised their annual revenue or earnings per share forecasts, 50% more than did so in the same period last year, according to Calcbench Inc., a data provider. Fifty-six of those companies revised guidance up, fewer than the 63 that did so in the same period last year, while the remaining 73 either cut guidance, narrowed the range or provided mixed updates by revising revenue in one direction and EPS in the other. (…)

In recent months, other companies have revised their guidance downward. In the second quarter, 40 S&P 500 companies trimmed their outlooks, more than double the number in the prior-year period, Calcbench said. (…)

Dynatrace Inc., a Waltham, Mass., software-intelligence company, also trimmed its guidance. (…)

In the weeks leading up to its Aug. 3 earnings release, it became apparent that guidance for the fiscal year ending in March would have to be clipped as the company was struggling to bring in new customers, Mr. Burns said.

In a “handful of instances,” existing clients—which include retailers and financial services and travel companies—put a hold on plans to expand contracts into new areas. Dynatrace was also seeing a decline in new customers, down to around 135 from the 150 to 160 new accounts it had planned for in the quarter ended June 30, according to Mr. Burns. (…)

“This is the first time in the history of Dynatrace that we’ve actually had to reduce guidance,” Mr. Burns said. “But given the macro pressures, we definitely brought it down.”

New Cancer Drug Beats Chemotherapy in Study Amgen’s Lumakras targets a mutation called KRAS that is common among many cancers.