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Coffee With Greta: Inflation Party 2.0


DJIA Futures: +348 (+1%)

SPX Futures: +73 (+1.8%)

NASDAQ Futures: +331 (+2.8%)

Good morning friends!

Futures are rallying after another inflation report shows price pressures are cooling. 

Let’s get right to it!

Wholesale Inflation Cools More Than Expected

Wholesale inflation pressures cooled more than expected in October. 

The Bureau of Labor Statistics’ producer price index rose 0.2% monthly vs 0.4% expected. 

The PPI rose 8% annually vs expectations for an 8.4% increase.

The Core PPI – which excludes food, energy, and trade services – rose 0.2% monthly and 5.4% year over year. 

PPI is considered a leading indicator for CPI as prices are passed down to consumers. 

This data is another sign the Fed’s rate hikes are working to cool inflation. 

CME Group’s FedWatch Tool shows 83% of traders expecting the bank to approve a 50bps rate hike in December.

Walmart Beats Fiscal Q3 Estimates, Hikes Outlook

Walmart (WMT) shares are up 7.7% ahead of the open after beating fiscal Q3 expectations and raising its outlook.

Here’s how the retailer’s results compared to analysts’ expectations:

  • Adjusted EPS: $1.50 vs $1.32 expected
  • Revenue: $152.81 billion vs $147.75 billion expected

Walmart’s CFO said consumers have shifted their spending to less-expensive options as “pocketbooks are stretched”. 

The company also made progress on clearing excess inventory during the quarter. 

Walmart’s inventory was up 13% year over year last quarter, down from 25% in Q2 and 32% in Q1. 

Comparable sales rose 8.2% year over year vs 3.6% expected while Sam’s Club comparable sales jumped 10% vs 8.7% expected. 

The company expects that growth to slow to 3% in Q4 vs analysts’ expectations for 3.5%. 

Walmart also forecast adjusted EPS will drop by 3% to 5% in Q4 due to the impact of currency fluctuations.

Home Depot Slips Despite Earnings Beat

Home Depot (HD) shares are slipping 0.8% in premarket trade despite topping Q3 expectations. 

Here’s how the home improvement retailer’s results compared to analysts’ expectations:

  • EPS: $4.24 vs $4.12 expected
  • Revenue: $38.87 billion vs $37.96 billion expected

Revenue was up 6% year over year.

Home Depot reiterated its full-year guidance, expecting EPS growth in the mid-single digits next quarter. 

The company said customer transactions fell about 4% but average ticket prices rose 9% as shoppers paid higher prices.

Empire State Manufacturing Index Turns Positive

The New York Fed’s factory gauge jumped more than expected this month. 

The Empire State Manufacturing Index rose 13.6 points to 4.5, the first positive reading since July. 

That beat economists’ expectations for a reading of -6. 

That jump came as the shipments index rose 8.3 points to 8. 

Unfilled orders also slipped 3.1% to -6.8, in a sign that metric is improving. 

Labor market conditions rose solidly and the price indices were flat. 

But manufacturers were more pessimistic about the next 6 months with the future business conditions index falling 4 points to -6.1.

This index is considered a barometer for the broader U.S. manufacturing sector. 

Lucid Unveils Lower-Cost Car

Lucid (LCID) shares are up 3.7% ahead of the open after the electric automaker unveiled new Air sedan models, including a new lower-cost option. 

The CEO told CNBC the new Lucid Air Pure will start at $87,400.

An all-wheel-drive version with a 410-mile range is expected to ship by the end of this year with the rear-wheel-drive version arriving in 2023. 

Lucid also unveiled a new Air Touring model with all-wheel-drive, 620 horsepower, and a 425 mile range. 

That model will start at $107,400 with deliveries beginning shortly. 

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