Coffee With Greta: More Inflation, More Problems
Editor's Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here.
********
DJIA Futures: -157 (-0.5%)
SPX Futures: -30 (-0.8%)
NASDAQ Futures: -177 (-1.5%)
Good morning friends!
Futures are falling as selling continues to wreak havoc on Wall Street.
Let’s get right to it!
Producer Inflation Surges
The Bureau of Labor Statistics' producer price index jumped 0.5% monthly in April and surged 11% year-over-year.
That was in line with economists’ expectations on a monthly basis and a slowdown from 11.5% annual inflation in March.
That’s the first decline in annual price changes since the pandemic started.
The core PPI, which excludes food, energy, and trade services, rose 0.6% monthly and 6.9% annually.
That was also in line with expectations.
Producer prices are leading indicator for consumer prices as the increases are passed down to shoppers.
The CPI also came in hotter than expected in April.
Consumer prices rose 0.3% monthly and 8.3% year-over-year last month vs expectations for 0.2% and 8.1% respectively.
The Core CPI jumped 0.6% monthly and 6.2% annually.
Weekly Jobless Claims Rise Unexpectedly
The Labor Department reported 203,000 Americans filed initial claims for unemployment benefits last week.
That was an increase of 1,000 from the previous week and missed economists’ expectations for claims to fall to 194,000.
The previous week was also revised higher to 202,000 from 181,000.
That was the biggest weekly increase since July 2021.
Continuing claims fell by 44,000 to 1.34 million in the week ending April 30, the lowest level since early 1970.
Oil Prices Fall, Gas Prices Hit Record
Oil prices are slipping today on fears of an impending recession in the U.S.
West Texas Intermediate crude futures are down 1.3% to $104 bbl with Brent crude futures falling 1.4% to $106 bbl.
The International Energy Agency also warned Thursday that soaring gas prices will hurt demand.
And U.S. gas prices just hit a new record high.
Data from AAA shows the national average for a gallon of regular is $4.418, this is the third record set just this week.
Diesel prices are also sitting at a record $5.557 per gallon.
Cryptocurrencies Collapse
More than $200 billion has been wiped off the global crypto market cap over the past day.
Bitcoin is down 8.4% in the past 24 hours, hovering around $28,000.
The coin plunged as low at $25,919 earlier this morning, which is the first time its dropped below $27,000 since December 2020.
Ethereum has lost 17.4% in the past 24 hours, falling under $2,000.
The global crypto market cap is down 14.8% to $1.26 trillion.
Investors have been fleeing crypto amid the intense selling on Wall Street.
Disney Shakes Off Earnings Miss, Rallies On Subscriber Growth
Walt Disney (DIS) shares are sliding 5.2% ahead of the open after missing fiscal Q2 expectations.
The company reported adjusted earnings of $1.08 per share on $19.25 billion in revenue.
That missed analysts’ expectations for adjusted EPS of $1.19 on $20.1 billion in revenue.
But Disney+ had 137.7 million total subscribers last quarter, beating expectations for 135 million.
That subscriber beat is pumping up the stock.
Disney’s theme parks business is also seeing a solid recovery from the pandemic.
Theme parks and product sales nearly doubled year-over-year to $6.65 billion, better than expectations for $6.3 billion.
Rivian Rallies On Outlook
Rivian Automotive (RIVN) shares are down 4.1% in premarket trade after missing Q1 expectations.
The electric automaker reported a loss of $1.77 per share and a $1.6 billion operating loss on $95 million in sales.
That was worse than analysts’ expectations for a loss of $1.45 per share and a $1.5 billion operating loss on $131 million in sales.
But the stock is up after Rivian maintained its previous 2022 production guidance.
The company still expects to deliver 25,000 vehicles this year after producing 2,553 in Q1.
Rivian said it had more than 90,000 reservations at the end of the quarter and nearly $17 billion in cash.
Beyond Meat Tumbles On Disappointing Q1 Results
Beyond Meat (BYND) shares are tumbling 23.6% ahead of the open after reporting a wider-than-expected first-quarter loss.
The alternative meat company reported an adjusted loss of $1.58 per share on $109.5 million in revenue.
That was worse than analysts’ expectations for a $1.01 per share loss on $112.3 million in revenue.
Beyond Meat executives warned of “near-term uncertainty” due to inflation, rising interest rates, and the supply chain.
The company forecast full-year revenue between $560 million and $620 million vs analysts’ expectations for $580.7 million.
WeWork Earnings
WeWork (WE) shares are up 2.9% in premarket trade after reporting a narrower Q1 loss than expected.
The office-sharing company reported a loss of $0.57 per share on $765 million in revenue.
That was better than analysts’ expectations for a loss of $0.72 per share on $768 million in revenue.
Revenue rose 28% year-over-year.
WeWork’s total expenses fell to $1.12 billion vs $2.1 billion a a year ago.
The company forecast Q2 revenue between $800 million and $825 million and full-year sales between $3.4 billion and $3.5 billion.
Instacart Files For IPO
Grocery delivery platform Instacart isn’t letting the tech rout scare it off.
The company announced it has filed a draft registration statement with the SEC, in its first step toward going public through an IPO.
Instacart previously raised $265 million and was valued at $39 billion in March 2021.
But the company cut its own valuation to $24 billion in March, citing the 2022 sell-off in tech stocks.
Record-High Federal Budget Surplus
The U.S. government ran a record-high budget surplus in April as tax revenue surged.
The Treasury Department reported a surplus of $308 billion last month.
Tax revenue nearly doubled year-over-year to a record-high $864 billion.
Part of that huge annual increase was because last year’s tax filing deadline was delayed to May.
Government spending fell to $555 billion, down $110 billion from a year ago.
Through the first seven months of fiscal 2022, the budget deficit totaled $360 billion vs $1.9 trillion at the same time a year ago.
In Case You Missed It
- The Dallas Fed appointed Lorie Logan as its new President Wednesday. Logan is currently an executive vice president at the New York Fed. She will take over the Dallas post when current president Robert Kaplan departs in late August. Fed Chair Jerome Powell said Logan is “a trusted colleague” with “remarkable skill”.
- Apple (AAPL) is no longer the world’s most valuable company Oil giant Saudi Aramco claimed the top spot from the tech giant Wednesday. Aramco’s valuation is just under $2.43 trillion while Apple is worth just $2.37 trillion. The iPhone maker’s market cap has fallen sharply since becoming the first company ever to hit $3 trillion on the first trading day of 2022.