All posts by Greta Wall
Alpha In This Market Is Under The Hood
David Prince says “there’s a lot of alpha under the hood” in this market. That means he’s trading less MAG7 names and focusing on themes. Two big themes lately have been FinTech, with stocks like Affirm (AFRM) and Upstart (UPST), and Chinese names like Alibaba (BABA). David joined an X Space with other traders to discuss the current market and what he’s doing, his comments start at 26:00 in: https://t.co/xPKRJDJhEU — Jake Wujastyk (@Jake__Wujastyk) October 15, 2024 He also discusses: Why he doesn’t subscribe to “black swan” events How he’s sizing big on good opportunities Expectations for XBI and IWM into the end of the year Want to trade with David? Apply to join the Inner Circle now!
Continue Reading -->Bank Earnings Prep
Second quarter earnings season is ramping up starting Friday. Some of the biggest banks in the U.S. are reporting before the market open: JPMorgan Chase (JPM) Wells Fargo (WFC) Citigroup (C) Here’s a look at how the stocks are looking heading into these reports and the consensus estimates for results. JPMorgan Chase (JPM) Expectations Adjusted Revenue: $46.66 billion Adjusted EPS: $4.51 Wells Fargo (WFC) Expectations Adjusted Revenue: $20.23 billion Adjusted EPS: $1.28 Citigroup (C) Expectations Adjusted Revenue: $20.09 billion Adjusted EPS: $1.39 And the earnings action will continue with more banks next week! Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS) are all set to report. There are several key questions for analysts when its comes to banks this earnings season. How are deposits faring? How is commercial lending holding up in the high rate environment? And, for the investment banks, are trading profits still at record highs? We’ll get those answers and more starting Friday morning!
Continue Reading -->Coffee With Greta: Hot Labor Market
Editor’s Note: Coffee With Greta will be on pause until mid-July as Greta takes maternity leave to bond with her new baby. DJIA Futures: +148 (+0.4%) SPX Futures: +26 (+0.5%) NASDAQ Futures: +103 (+0.6%) Good morning friends! Futures are holding onto gains despite the release of a hotter-than-expected jobs report. Let’s get right to it! Hot Job Growth The U.S. labor market is still running hot. The Labor Department reported the economy added 303,000 jobs in March vs 200,000 expected. But looking deeper into the report, the rest of the numbers are mostly in line with expectations. The unemployment rate dipped as expected to 3.8% from 3.9% from previously. Average hourly earnings, which are in focus as the Fed looks for signs of cooling inflation, rose 4.1% year over year. That was down from 4.3% in February and in line with estimates. The labor force participation rate rose to 62.7% from 62.5% in February vs 62.6% expected. February’s job growth was revised lower by 5,000 to 270,000 while January was revised higher by 27,000 to 256,000. Yields Pop Treasury yields are popping this morning after the release of that jobs data. The 10-year yield is up seven basis points to 4.39% while the 2-year yield is six basis points higher at 4.72%. CME Group’s FedWatch Tool shows traders starting to dial back rate cut expectations. Just 50.7% now say they expect the first cut at the June meeting, down from over 70% last week. Kashkari Spooks Market On Rates Minneapolis Fed President Neel Kashkari spooked markets on Thursday with comments about zero rate cuts in 2024. During an interview, Kashkari said, “If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all.” His comments come after several other Fed officials, including Chairman Jerome Powell, spoke this week and said more evidence is needed on cooling inflation. The next piece of important data after today’s jobs report will be the March CPI and PPI next week.
Continue Reading -->Coffee With Greta: Waiting For The Jobs Report
DJIA Futures: +189 (+0.5%) SPX Futures: +32 (+0.6%) NASDAQ Futures: +153 (+0.8%) Good morning friends! Futures are higher as traders await Friday’s jobs report. Let’s get right to it! Weekly Jobless Claims Climb Weekly jobless claims rose more than expected last week. The Labor Department reported 221,000 Americans filed initial claims for unemployment benefits. That was up by 9,000 from the week before and the highest total in nine weeks. Economists expected claims to rise to 213,000. Continuing jobless claims dropped by 19,000 to 1.79 million in the week ending March 23. Powell Emphasizes Need For More Data On Inflation Fed Chair Jerome Powell says the Central Bank is in no rush to start cutting interest rates. Speaking at Stanford University on Wednesday, Powell said, “On inflation, it is too soon to say whether the recent readings represent more than just a bump.” He said officials still need more data of inflation cooling in order to start cuts. Powell said, “We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent. Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy.” His comments came hours after Atlanta Fed President Raphael Bostic told CNBC he only expects one rate cut in 2024, in the fourth quarter. CME Group’s FedWatch Tool shows 61.5% of traders still anticipating the first rate cute at the Fed’s June meeting. Levi Rises On Strong Fiscal Q1 Levi Strauss (LEVI) shares are rallying 13.3% ahead of the open after beating fiscal Q1 expectations on the top and bottom line. Here’s how the denim company’s results compared to analysts’ estimates: Adjusted EPS: $0.26 vs $0.21 expected Revenue: $1.56 billion vs $1.55 billion expected Sales were down about 8% year over year, primarily due to a shift away from wholesale orders to retailers. Direct-to-consumer sales made up 48% of Levi’s overall sales, up from 42% a year ago and 25% two years ago. The company forecast full-year sales will rise between 1% and 3% with adjusted EPS between $1.17 and $1.27. Analysts were anticipating 2.4% full-year sales growth and EPS of $1.21. In Case You Missed It Growth in the U.S. services sector slowed in March. The Institute for Supply Management’s services PMI fell to 51.4% last month from 52.6% in February. That was lower than expectations for an increase to 52.7%. The business activity index rose 0.2% to 57.4%, new orders fell 1.7% to 54.4%, and the employment index rose 0.5% to 48.5%.
Continue Reading -->Coffee With Greta: Strong Labor Market
DJIA Futures: -33 (-0.1%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -56 (-0.3%) Good morning friends! Futures are falling after the release of strong jobs data. Let’s get right to it! Strong Private Job Growth The U.S. private sector added more jobs than expected in March. Payroll firm ADP reported private employers hired 184,000 workers last month vs 155,000 expected. That was the fastest pace of growth since July 2023. Wages also rose 5.1% year over year, the same rate as February. ADP’s chief economist said, “March was surprising not just for the pay gains, but the sectors that recorded them. Inflation has been cooling, but our data shows pay is heating up in both goods and services.” The leisure and hospitality sector led job gains last month, adding 63,000 workers. Construction added 33,000, trade, transportation, and utilities added 29,000, education and health services added 17,000, while professional and business services lost 8,000. This data comes ahead of the official March jobs report on Friday which is expected to show growth slowed to 200,000 jobs with the unemployment rate ticking lower to 3.8%. Yields Jump After Jobs Data Treasury yields are pushing higher this morning after the release of that hotter than expected jobs data. The 10-year yield is up four basis points at 4.40% while the 2-year yield is up three basis points at 4.74%. Continued strength in the labor market is not a good sign for traders who are hoping for three rate cuts in 2024. Fed Speakers Dampen Rate Cut Hopes Atlanta Fed President Raphael Bostic does not see any cuts happening this year until Q4. Speaking this morning, Bostic expressed concern about the continued pace of inflation and said he only anticipates one cut instead of three. This comes after several Fed officials have spoken so far this week. Cleveland Fed President Loretta Mester said on Tuesday that she still expects cuts this year but ruled out the first coming in May. Mester said, “I continue to think that the most likely scenario is that inflation will continue on its downward trajectory to 2 percent over time. But I need to see more data to raise my confidence.” She indicated the long-run path of inflation is higher than officials had previously thought. San Francisco Fed President Mary Daly echoed that need for more convincing data that inflation has been subdued. Daly said, “Three rate cuts is a projection, and a projection is not a promise. We’re getting there, but it’s not going to be tomorrow, but it’s not going to be forever.” Bostic, Mester, and Daly are all voting members of the Federal Open Market Committee this year. In Case You Missed It Tesla (TSLA) shares dropped 4.9% on Tuesday after reporting disappointing Q1 delivery numbers. The electric automaker delivered just 386,810 vehicles in the first quarter and produced 433,371. Production was down 1.7% year over year while deliveries tumbled 8.5%. Deliveries were well below consensus estimates for around 457,000 vehicles.
Continue Reading -->Coffee With Greta: Choppy Market
DJIA Futures: -312 (-0.8%) SPX Futures: -37 (-0.7%) NASDAQ Futures: -162 (-0.9%) Good morning friends! Futures are falling as the down start to Q2 continues. Let’s get right to it! Waiting On Jobs Data Key labor market data will begin today as traders look to assess the Fed’s plans for rate cuts. The Labor Department releases its February job opening and labor turnover survey (JOLTS) at 10:00 a.m. ET. That survey is expected to show the number of available jobs fell slightly to 8.8 million from 8.9 million in January. This comes ahead of ADP’s private employment report for March Wednesday morning and the official March jobs report on Friday. The jobs report is expected to show job growth slowed to 200,000 new jobs last month with the unemployment rate ticking down to 3.8% from 3.9%. Focus will be on wage growth in that report as the market looks for continued signs of slowing inflation. Rates Rise U.S. Treasury yields are rising this morning as traders dial back their expectations for the Fed to cut rates in June. The 10-year yield is up seven basis points at 4.39% while the 2-year yield is up two basis points at 4.73%. Stronger than expected data on the manufacturing sector seemed to spook traders on Monday. ISM’s manufacturing index rose to 50.3 in March from 47.8 in February vs 48.1 expected. It was the first reading to signal an expansion in the sector in 17 months. CME Group’s FedWatch Tool currently shows about 57% of traders expecting a June rate cut, down from about 70% a week ago. Oil Prices Climb Oil prices are trading at the highest level since October amid escalating tensions in the Middle East and between Ukraine and Russia. West Texas Intermediate crude futures are up 1.5% at just under $85 bbl while Brent crude futures are 1.3% higher at $88.50 bbl. Iran blamed Israel for an airstrike on Monday on its consulate in Damascus, Syria that reportedly killed seven of its officers and pledged to take revenge for that attack today. Ukraine meantime struck one of Russia’s largest oil refineries with a drone attack but the leader of the region said, “There is no serious damage, the technological process of the enterprises is not disrupted.” U.S. gas prices have been on the rise as oil prices jump. AAA shows the national average is at $3.535 per gallon as of today, up from $3.338 a month ago.
Continue Reading -->Coffee With Greta: Kicking Off A New Quarter
DJIA Futures: -8 (-0.02%) SPX Futures: +7 (+0.1%) NASDAQ Futures: +39 (+0.2%) Good morning friends! Futures are mostly higher as the second quarter begins. Let’s get right to it! New Quarter April and a new quarter of trade officially begin on Wall Street today. All three major indexes are coming off winning first quarters and approaching new records. The S&P 500 rose 10.2% in the first three months of the year, its best Q1 performance since 2019. The Dow rose 5.6% during the quarter and the Nasdaq jumped 9.1%. March was also the fifth consecutive winning month for the major indexes. The S&P rose 3.1%, the Dow added 2.1%, and the Nasdaq rose 1.8%. This will be an important week of data focused on the labor market. Data kicks off with the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. ADP then releases its private employment report on Wednesday morning and the official March jobs report will be released Friday morning. 3M Completes Healthcare Spinoff 3M (MMM) shares are up 2.6% ahead of the open after completing its spinoff of its healthcare business, Solventum (SOLV). In a statement, 3M’s chairman and CEO said, “Both companies are positioned to pursue their respective growth and tailored capital allocation plans, and I am excited to see both companies succeed as they innovate new solutions and create value for their respective stakeholders.” MMM shareholders received one SOLV share for every four shares of 3M common stock they held at the close on March 18, 2024. 3M also announced its $12.5 billion settlement agreement with U.S. public water suppliers received final approval from a U.S. District Court. The settlement is related to the company’s role in contaminated drinking water with PFAS. The CEO said, “The final approval of this settlement and continued progress toward exiting all PFAS manufacturing by the end of 2025 will further our efforts to reduce risk and uncertainty as we move forward.” Gold Prices Hit Record High Gold prices are extending the recent Fed-induced rally, hitting a fresh record high this morning. Spot gold added 0.6% to trade as high as $2,245.79 per ounce while U.S. gold futures are currently up more than 1.5% at $2.272.80 per ounce. The recent rally was spurred by Fed rate cut expectations following the dovish dot plot and Chairman’s press conference in March. The Fed’s preferred inflation gauge, the core PCE price index, rose 2.8% year over year in February. That data was released Friday while the market was closed for Good Friday but was in line with expectations.
Continue Reading -->Coffee With Greta: Closing Out Q1
DJIA Futures: +42 (+0.1%) SPX Futures: +1 (+0.01%) NASDAQ Futures: -2 (-0.1%) Good morning friends! Futures are flat as traders gear up for the final session of the first quarter. Let’s get right to it! Weekly Jobless Claims Fall Weekly jobless claims were lower than expected last week in a sign of continued tightness for the labor market. The Labor Department reported 210,000 Americans filed initial claims for unemployment benefits. That was down by 2,000 from the previous week and lower than 215,000 expected. Continuing claims rose by 24,000 to 1.82 million in the week ending March 16. Q4 GDP Revised Higher The U.S. economy expanded more than previously estimated in the fourth quarter. The Bureau of Economic Analysis’ second revision of Q4 GDP came in at 3.4%, up from 3.2% previously. BEA said, “The update primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment.” Full-year growth in 2023 remained at 2.5%. Walgreens Slips After Narrowing Outlook Walgreens Boots Alliance (WBA) shares are down 2.7% ahead of the open after topping fiscal Q2 expectations but lowering its full-year profit outlook. Here’s how the pharmacy chain’s results compared to analysts’ estimates: Adjusted EPS: $1.20 vs $0.82 expected Revenue: $37.05 billion vs $35.86 billion expected Revenue rose 6% year over year. Sales in the company’s U.S. health-care division jumped 33% from a year ago to $2.18 billion. The U.S. retail pharmacy segment saw sales rise 5% to $28.86 billion. And retail sales fell 4.5%. Walgreens now expects full-year adjusted EPS between $3.20 and $3.35 vs the previous outlook for $3.20 to $3.50 per share. Analysts are expecting full-year adjusted earnings of $3.24 per share. AMC Tumbles On Stock Sale Announcement AMC Entertainment (AMC) shares are dropping 14.3% in premarket trade after filing to sell up to $250 million of stock. In a filing this morning, the company said it plans to use the proceeds from that sale to bolster liquidity to repay, refinance, redeem, or repurchase its existing debt. AMC said, “Among other reasons, the offering is being conducted to enhance the Company’s liquidity in light of the low first quarter box office.”
Continue Reading -->Coffee With Greta: Can We Break The Losing Streak?
DJIA Futures: +170 (+0.4%) SPX Futures: +25 (+0.5%) NASDAQ Futures: +103 (+0.6%) Good morning friends! Futures are higher as the S&P 500 attempts to shake off a three-session losing streak. Let’s get right to it! Three-Day Losing Streak The S&P 500 has fallen from record highs over the past three sessions. The blue-chip index closed 0.3% lower on Tuesday, marking its third down day in a row. The major indexes are all still on track to end the month and quarter in the green. So far this month the S&P 500 is up 2.1%, the Nasdaq is 1.4% higher, and the Dow is up 0.7%. For the quarter, the S&P has rallied 9.1%, the Nasdaq is up 8.7%, and the Dow is 4.2% higher. This is a shortened trading week, with the stock market closed in observance of Good Friday. GameStop Plummets After Earnings GameStop (GME) shares are tumbling 16.2% ahead of the open after reporting a steep drop in Q4 revenue. Here’s how the video game retailer’s results compared to analysts’ estimates: Adjusted EPS: $0.22 vs $0.30 expected Revenue: $1.79 billion vs $2.05 billion expected Hardware and accessories sales dropped to $1.09 billion from $1.24 billion a year ago. Software sales plunged 31% to $465 million from $670 million. GameStop also said it cut an unspecified number of jobs throughout the quarter in order to cut costs. Mortgage Demand Stalls Mortgage demand was flat last week as high rates continue to put pressure on the spring housing market. The Mortgage Bankers Association reported total application volume fell 0.7%. Purchase applications decreased 0.2% weekly and 16% year over year. Refinance applications fell 2% weekly and 9% annually. The average 30-year fixed contract rate decreased to 6.93% from 6.97%. Mortgage News Daily shows rates have pulled back slightly so far this week to 6.91%. In Case You Missed It Consumer confidence fell to a four-month low in March. The Conference Board’s consumer confidence index dipped to 104.7 this month from the revised 104.8 in February. That was lower than expectations for 106.5. Confidence in current economic conditions rose to 151 from 147.6. But the six-month expectations index dropped to 73.8 from 76.3. Readings below 80 in the expectations index typically signal an approaching recession.
Continue Reading -->Coffee With Greta: Rally Resumes
DJIA Futures: +45 (+0.1%) SPX Futures: +12 (+0.2%) NASDAQ Futures: +55 (+0.3%) Good morning friends! Futures are higher as traders look to extend the record-setting rally. Let’s get right to it! Krispy Kreme Jumps On McDonald’s Partnership Krispy Kreme (DNUT) shares are rallying 17.6% ahead of the open after announcing a partnership with McDonald’s (MCD) this morning. McDonald’s has agreed to sell Krispy Kreme doughnuts at its restaurants nationwide by the end of 2026. The companies will begin the rollout in the second half of this year and Krispy Kreme will more than double its distribution to satisfy the partnership over the next 2.5 years. Krispy Kreme’s CEO said, “We think we can service about 6,000 restaurants with our existing infrastructure, mostly doughnut shops, which have excess capacity.” McDonald’s already sells Krispy Kreme at 160 restaurants across Louisville and Lexington, Kentucky. Trump Media Company Makes Trading Debut Trump Media & Technology Group (DJT) shares are surging 23.8% in premarket trade as former President Donald Trump’s social media company debuts on Wall Street. The debut is a SPAC deal that combined Trump’s company and the shell company Digital World Acquisition Corporation. A majority of DWAC shareholders voted last week to approve the merger. TMTG owns Trump’s social media platform, Truth Social. Trump himself owns 58% of the company and is barred from selling shares for six months. UPS Rises On Strong Revenue Targets United Parcel Service (UPS) shares are up 2.2% ahead of the open after releasing strong long-term revenue forecasts. The shipping giant said this morning it expects between $108 billion and $114 billion in adjusted revenue in 2026. That’s up sharply from the $91 billion the company reported in 2023. UPS also said it is expecting to hit an adjusted operating margin of over 13%. That margin is expected to hit at least 12% domestically and 18% to 19% internationally. In Case You Missed It New home sales fell unexpectedly in February as higher rates put pressure on buyers. The Census Bureau reported sales of newly built homes fell 0.3% to a seasonally adjusted annual rate of 662,000 units vs 675,000 expected. The drop came even as the median new home price fell 7.6% year over year to $400,500, the lowest since June 2021. Supply continued to rise with 463,000 new homes on the market at the end of February, representing an 8.4 month supply.
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