Coffee With Greta: Focus on Jackson Hole as Inflation Slows
DJIA Futures: +20 (+0.1%)
SPX Futures: -4 (-0.1%)
NASDAQ Futures: -17 (-0.1%)
Good morning friends!
Futures are flat as the market eyes the Fed Chair’s speech at Jackson Hole after new data shows inflation slowing.
Let’s get right to it!
Fed Chair to Speak at Jackson Hole
Fed Chair Jerome Powell is set to speak at the Jackson Hole Symposium at 10:00 a.m. ET.
The market is focused on that speech for more clarity about the bank’s future plans for rate hikes.
He’s expected to strike a hawkish tone on inflation and downplay expectations the Fed will begin rate cuts next year.
CME Group’s FedWatch Tool shows 56.5% of traders leaning toward another 0.75% rate hike at the September Fed meeting.
PCE Inflation Dips in July
The Fed’s preferred inflation gauge slowed more than expected in July.
The Bureau of Economic Analysis's personal consumption expenditures price index fell 0.1% monthly and slowed to a 6.3% annual pace.
That was a sharp slowdown from the 1% monthly and 6.8% annual gain in June.
The core PCE price index – which excludes food, energy, and trade services and is the Fed’s favorite inflation measure – rose 0.1% monthly and 4.6% year over year.
That was a slowdown from June and better than expectations for a 0.2% monthly and 4.8% annual gain.
Although the data shows inflation slowing, it is still running far above the Fed’s target.
Powell is expected to emphasize the bank’s commitment to lowering inflation to its target at Jackson Hole.
Gap Reports Unexpected Profit
Gap (GPS) shares are rallying 6.9% ahead of the open after reporting an unexpected fiscal Q2 profit.
The retailer reported adjusted earnings of $0.08 per share on $3.86 billion in revenue.
That was better than analysts’ expectations for an adjusted loss of $0.05 per share on $3.82 billion in revenue.
Same-store sales were down 10% year over year.
Gap withdrew its full-year outlook but said sales so far in fiscal Q3 have improved and the company is “cautiously optimistic” about the second half of the year.
Ulta Beats Q2 Expectations
Ulta Beauty (ULTA) shares are up 3.3% in premarket trade after topping fiscal Q2 expectations.
The beauty retailer reported earnings of $5.70 per share on $2.3 billion in revenue.
That topped analysts’ expectations for EPS of $4.99 on $2.2 billion in revenue.
Revenue was up 16.8% year over year while same-store sales jumped 14.4% vs 10.5% expected.
The strong results pushed Ulta to hike its full-year forecast.
The company now expects earnings between $20.70 and $21.20 per share this year, up from its prior outlook of $19.20 to $20.10.
Revenue is expected to range between $9.65 billion and $9.75 billion vs $9.35 billion to $9.55 billion previously.
Affirm Drops on Weak Outlook
Affirm Holdings (AFRM) shares are tumbling 10.7% ahead of the open despite beating fiscal Q4 revenue expectations as its outlook came up short.
The buy-now-pay-later company reported a loss of $0.65 per share on $364.1 million in revenue.
That was worse than analysts’ expectations for a loss of $0.58 per share but topped revenue estimates of $355 million.
Gross merchandise volume (GMV) surged 77% year over year to $4.4 billion vs $4.1 billion expected.
Affirm forecast fiscal Q1 GMV of $4.2 billion to $4.4 billion with revenue between $345 million and $365 million.
That missed analysts’ expectations for $4.55 billion in GMV and $386 million in revenue.
The company forecast full-year GMV between $20.5 billion and $22 billion with revenue from $1.625 billion to $1.725 billion.
Analysts were projecting $19.15 billion in GMV and $1.91 billion in revenue.
The CFO said, “In light of the uncertain macroeconomic backdrop, we are approaching our next fiscal year prudently while maintaining our focus on driving responsible growth and continuing to invest in strengthening our leadership position. We continue to expect to achieve a sustained profitability run rate, on an adjusted operating income basis, by the end of fiscal 2023.”
Oil Prices Slip
Oil prices are slipping today but on track for weekly gains.
West Texas Intermediate crude futures are down 0.4% at $92 bbl while Brent crude futures are down 0.2% at $99 bbl.
New economic data has lowered recession fears but the market remains on edge ahead of Powell’s Jackson Hole speech.
The UAE also became the latest OPEC+ country today to show support for a production cut in order to support prices.
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