Coffee With Greta: Jobless Claims Fall to 54-Year Low
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DJIA Futures: -53 (-0.2%)
SPX Futures: -1 (-0.02%)
NASDAQ Futures: +10 (+0.1%)
Good morning friends!
Futures are flat following a two-day sell-off.
Let’s get right to it!
Weekly Jobless Claims Hit 54-Year Low
Weekly jobless claims fell to a fresh 54-year low last week.
The Labor Department reported 166,000 Americans filed initial claims for unemployment benefits.
That was down 5,000 from the week before and sharply beat expectations for claims to rise to 200,000.
It’s the lowest level of weekly jobless claims since 1968.
Continuing claims rose by 17,000 to 1.523 million vs 1.311 million expected in the week ending March 25.
The previous week of continuing claims was revised higher to 1.506 million from 1.302 million.
Swift Fed Balance Sheet Runoff
Traders finally got answers on the Fed’s plans to reduce its balance sheet.
The March meeting minutes show officials agreed to a three-month phase-in of that runoff, topping out at $95 billion per month.
There was no decision made on when that process will begin but several Fed officials have hinted this week to it starting at the May meeting.
The runoff includes $60 billion worth of Treasury securities and $35 billion worth of mortgage-backed securities per month.
The Fed will allow those securities to mature without purchasing new ones but officials did not agree to sell off securities in more aggressive action.
The bank’s last balance sheet runoff between 2017-2019 moved at a pace of $50 billion per month.
The minutes also showed more FOMC members are in favor of larger rate hikes.
The report said, “Many participants noted that— with inflation well above the Committee’s objective, inflationary risks to the upside, and the federal funds rate well below participants’ estimates of its longer-run level — they would have preferred a 50 basis point increase in the target range for the federal funds rate at this meeting.”
That prompted traders to raise their expectations for the May meeting.
CME Group’s FedWatch Tool now shows 81% of traders expect a 0.5% rate hike next month.
Oil Rebounds
Oil prices are rebounding today despite the announcement of a major global reserve release.
West Texas Intermediate crude futures are up 1.9% to over $98 per barrel with Brent crude futures rising 1.6% to over $102 per barrel.
The increase comes despite the International Energy Agency announcing member countries will release 60 million barrels from reserves.
That’s on top of the 180 million barrel release announced by the U.S. last week.
But supply still remains tight with those releases, the U.S. alone consumes about 20 million barrels of oil per day.
Nuclear deal talks between Iran and the U.S. remain stalled, delaying the potential for Iran to help alleviate some of the supply issues.
HP Soars on Warren Buffett Investment
HP Inc (HPQ) shares are jumping 11.7% in premarket trade Warren Buffett’s Berkshire Hathaway (BRK.A) unveiled a major stake in the company.
An SEC filing shows Berkshire purchased nearly 121 million HPQ shares.
That amounts to a stake of 11.4%.
Constellation Brands Tops Q4 Expectations
Constellation Brands (STZ) shares are up 0.9% ahead of the open after beating Q4 expectations.
The maker of Corona Beer reported adjusted earnings of $2.37 per share on $2.1 billion in revenue.
That beat analysts’ expectations for adjusted EPS of $2.09 on $2.02 billion in revenue.
Constellation Brands forecasted full-year 2022 adjusted earnings between $11.20 and $11.50 per share.
Wall Street was looking for guidance at $11.27 per share.
Levi Strauss Rallies on Strong Q1 Earnings
Levi Strauss (LEVI) shares are 1.7% higher in premarket trade after beating Q1 expectations.
The denim retailer reported earnings of $0.46 per share on $1.59 billion in revenue.
That topped analysts’ expectations for EPS of $0.42 on $1.55 billion in revenue.
Revenue rose 22% year-over-year but Levi said it lost about $60 million in sales due to supply chain issues.
Levi reaffirmed its fiscal 2022 outlook, forecasting revenue growth between 11% and 13% annually.
Costco Sales Surge in March
Costco (COST) shares are up 1.1% ahead of the open after reporting a strong month of sales in March.
The retailer reported $21.61 billion worth of sales in March, up 18.7% compared to March 2021.
Same-store sales across the U.S. surged 19.1% annually.
The March retail month included an extra shopping day, which boosted comparable-store sales by 1.5% to 2%.
In Case You Missed It
- Spirit Airlines (SAVE) shares fell 2.4% Wednesday after the discount airline said its board is considering a buyout offer from JetBlue (JBLU). JetBlue offered Spirit a $3.6 billion cash takeover deal late Monday. Spirit said the board will “pursue the course of action it determines to be in the best interests of Spirit and its stockholders.” Frontier (ULCC) shares plunged 11% as the offer threatens to kill its planned merger with Spirit.
- The Biden Administration extended the moratorium on federal student loans through August 31. This is the sixth time the program has been extended after it was implemented under the Trump Administration due to Covid. Federal student loan borrowers will have no payment due and no new interest will accrue until September 1.