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Coffee With Greta: Inflation Boosts Retail Sales


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DJIA Futures: -45 (-0.1%)

SPX Futures: -8 (-0.2%)

NASDAQ Futures: -38 (-0.3%)

Good morning friends!

Futures are flat as the market digests a strong retail sales report.

Let’s get right to it!

Retail Sales Surge Amid Hot Inflation

The Census Bureau reported retail sales rose 3.8% in January, beating expectations for a 2.1% increase. 

Core retail sales, which excludes auto and gas sales, jumped 3.3% vs expectations for 0.8%.

The beat comes despite inflation soaring to a 40-year high in January, when the CPI surged 7.5%.

Since the data is not adjusted for inflation, those surging prices helped boost the sales total to $649.8 billion, as Americans paid more for most goods.

Retail sales were 13% higher compared to January 2021

December's sales were revised lower to show a 2.5% drop from the previous 1.9% decline.

Roblox Tumbles on Earnings Miss

Roblox (RBLX) shares are dropping 17.2% ahead of the open after the online gaming company reported a steeper Q4 loss than expected.

Roblox reported an adjusted loss of $0.25 per share on $568.8 million in revenue.

But analysts had forecast a per share loss of just $0.12.

Roblox’s bookings also fell short at $770.1 million vs expectations for $772 million. 

The company defines bookings as “revenue plus the change in deferred revenue during the period and other non-cash adjustments.”

This is an important metric because Roblox games use the digital currency Robux for transactions between players, which may be considered “deferred revenue”.

The company did report strong user growth.

Average Daily Active Users jumped 33% year-over-year to 49.5 million in Q4.

In January, DAUs were already up to 54.7 million.

“With nearly 55 million daily active users, Roblox is increasingly an integral part of people’s lives,” said the CEO. “As we look ahead to 2022, we will continue to develop our technology to enable deeper forms of communication, immersion and expression on our platform.”

Airbnb Pops on Strong Guidance

Airbnb (ABNB) shares are up 2.9% in premarket trade after Q4 earnings and Q1 guidance both beat expectations.

The company reported earnings of $0.08 per share on $1.53 billion in revenue. 

That beat analysts’ expectations for EPS of $0.03 on $1.46 billion in revenue. 

Airbnb’s strong performance came as bookings continued to rebound from the pandemic. 

The company said average trip lengths have increased by 15% in the past two years, as remote work becomes more permanent for many in the U.S. 

Stays of more than seven days now represent nearly half of all gross bookings.

Airbnb expects Q1 2022 bookings to exceed Q1 2019 levels.

The company also forecast revenue between $1.41 billion and $1.48 billion this quarter, topping consensus estimates for $1.24 billion. 

High Lumber Prices May Weigh on Homebuilders

The National Association of Homebuilders releases its February sentiment index at 10:00 a.m. ET. 

That survey is expected to slip to 82 this month from 83 in January. 

Homebuilders have benefited from strong demand and short supply in the housing market. 

But high costs have weighed on their business.

And lumber prices are climbing again after cooling last summer. 

CNBC reported that lumber prices are three times higher than average pre-pandemic levels. 

The NAHB has estimated those high prices have added more than $18,600 to the price of a new single-family home.

Fed Minutes Ahead

The Federal Reserve releases the minutes of its January meeting at 2:00 p.m. ET today.

The market is eyeing this report to get more clarity on the Central Bank’s plans to tighten monetary policy. 

With the CPI hitting a 40-year high and the PPI remaining at a record high in January, many analysts have raised their rate hike expectations for the year. 

The market has priced in as many as seven rate hikes this year.

CME Group’s FedWatch Tool shows 57.9% of traders expect the March rate hike to be 0.5% instead of 0.25%. 

In Case You Missed It

  • President Biden expressed cautious optimism about Russia pulling troops back from the Ukraine border on Tuesday. In a speech at the White House, Biden said the U.S. is prepared to defend NATO members if needed. He reiterated America’s commitment to Ukraine’s sovereignty. Biden said he has made it clear to Russia that the U.S. “will respond” forcefully if Russia targets Americans or Ukraine.
  • Marriott International (MAR) shares closed at a new record $181.20 per share after strong Q4 earnings Tuesday. The hotel chain beat expectations on both the top and bottom line last quarter. Revenue more than doubled year-over-year as leisure bookings bounced back. Marriott said it expects business demand to continue rebounding as the economy recovers.

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