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Coffee With Greta: Inflation Is Still Hot, Hot, Hot


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DJIA Futures: -427 (-1.3%)

SPX Futures: -60 (-1.5%)

NASDAQ Futures: -213 (-1.7%)

Good morning friends!

Futures are falling after a hotter-than-expected inflation report. 

Let’s get right to it!

Inflation Surges Higher

U.S. inflation pressures surged more than expected in May.

The Bureau of Labor Statistics consumer price index jumped 1% monthly and skyrocketed 8.6% annually. 

That’s the highest pace of annual inflation since 1981.

It was also an increase from 8.3% inflation in April and higher than analysts’ expectations for that to be unchanged.

The increase was led by soaring rent, food, and gas prices. 

Grocery prices jumped 11.9% annually, gas prices were up 50.3%, and shelter prices rose 5.5%.

The CPI also shows oil prices surged 106.7% from a year ago.

The core CPI, which excludes food and energy prices, rose 0.6% monthly and 6% annually. 

That was also higher than analysts’ expectations but a slight cooldown from 6.2% annual inflation in April.  

Short-term Treasury Yields Surge After CPI

Short-term Treasury yields are rallying after the release of that hot inflation data. 

The 2-year yield is up 12 basis points to 2.92%, the highest level since 2018. 

Short-term yields are more sensitive to the Fed’s rate hikes.

The 10-year yield is flat at 3.06%.

Stitch Fix Drops On Widening Loss, Layoff Announcement

Stitch Fix (SFIX) shares are tumbling 15.8% ahead of the open after the company announced wider losses in Q3 and layoffs. 

The online personal styling service reported a loss of $0.72 per share on $492.9 million in revenue. 

That was steeper than the $0.18 per share loss on $535.6 million in revenue a year ago.

Stitch Fix forecast Q4 revenue between $485 million and $495 million.

That would be lower than $571.2 million last year.

The disappointing quarterly results come after CEO Elizabeth Spaulding announced Stitch Fix is laying off 15% of its salaried employees in a memo on Thursday.

Roughly 330 employees were notified of layoffs, representing about 4% of the company’s total workforce.

Spaulding said, “We’ve taken a renewed look at our business and what is required to build our future. While this was an incredibly difficult decision, it was one needed to make to position ourselves for profitable growth.”

Stitch Fix said it “expects annual cost savings of $40 million to $60 million in fiscal year 2023,” as a result of the layoffs.

Rent the Runway Rallies On Q1 Sales Beat

Rent the Runway (RENT) shares are rising 7.4% in premarket trade after beating its own Q1 forecast. 

The clothing rental service reported a Q1 loss of $0.67 per share on $67.1 million in revenue. 

That topped the company’s forecast for revenue between $63.5 million and $64.5 million. 

It was also an improvement from the $3.75 per share loss on $33.5 million in revenue a year ago.

Rent the Runway forecast Q2 revenue between $72 million to $74 million. 

DocuSign Plummets On Q1 Miss

DocuSign (DOCU) shares are plunging 25.4% ahead of the open after missing Q1 expectations. 

The electronic-documents company reported adjusted earnings of $0.38 per share on $588.7 million. 

That missed analysts’ expectations for adjusted EPS of $0.46 but beat estimates for $583 million in revenue. 

The CEO announced DocuSign is moderating its hiring plan “to appropriately balance growth and profitability.”

The company forecast Q2 revenue between $600 million and $604 million vs analysts’ expectations for $601 million. 

DocuSign expects full-year revenue between $2.47 billion and $2.48 billion vs analysts’ estimates for $2.479 billion.

Average U.S. Gas Price Still Approaching $5

The national average for a gallon of regular gas is still inching closer to $5.

AAA shows that price rose to $4.986/gal today. 

That’s up more than 60 cents from a month ago and more than $1.91 from a year ago. 

Gas price tracking site GasBuddy.com showed the national average spiked above $5 on Thursday.

Oil Prices Hover Around 3-Month Highs

Oil prices are still hovering around 3-month highs as the market weighs new Covid restrictions in Shanghai and Beijing. 

West Texas Intermediate crude futures are up 0.7% at over $122 bbl while Brent crude futures are up 0.6% at nearly $124 bbl. 

WTI is on track for its seventh straight weekly gain and Brent is set to rise for the 4th week in a row. 

Consumer Sentiment Expected To Bounce

The University of Michigan releases the preliminary reading of its June consumer sentiment index at 10:00 a.m. ET.

That survey is expected to improve to 59 from 58.4 at the end of May. 

The index also includes consumer expectations for inflation over the next 12-months and 5-years. 

In Case You Missed It

  • CNBC’s Q2 CFO Council Survey shows American CFOs are worried about inflation and a recession. 40% of respondents cited inflation as the #1 external risk to their business. 100% said they expect a recession, with 68% expecting one in the first half of 2023. 77% expect the DJIA to fall below 30,000. 
  • Freddie Mac reported Thursday its average 30-year mortgage rate rose to 5.23% last week. That was up 14 basis points from the prior week. The average 15-year rate rose 6 basis points to 4.38%. The chief economist at Freddie Mac said, “The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back.”


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