All posts by Greta Wall
Coffee With Greta: Traders Await Powell
DJIA Futures: -114 (-0.3%) SPX Futures: -7 (-0.2%) NASDAQ Futures: -1 (-0.01%) Good morning friends! Futures are mostly lower as traders await a speech by Fed Chair Jerome Powell. Let’s get right to it! Powell On Deck Fed Chair Jerome Powell is scheduled to speak at an event at the Economic Club of Washington today. Powell’s speech is expected to begin around 12:40 p.m. ET. The market is monitoring this speech after the chairman struck a more dovish tone after last week’s rate hike. But after the January jobs report came in hot on Friday, Powell’s tone may shift back to be more hawkish. Minneapolis Fed President Neel Kashkari maintained his hawkish stance in an interview with CNBC this morning. Kashkari said, “We have a job to do. We know that raising rates can put a lid on inflation. We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.” He sees the federal funds rate peaking at 5.4% later this year, from the current range of 4.5% to 4.75%. But other Fed officials see the terminal rate around 5.1%. Kashkari highlighted the continued strength in the labor market as an issue. He said that data “tells me that so far we’re not seeing much of an imprint of our tightening to date on the labor market.” Pinterest Slips On Q4 Revenue Miss, Weak Outlook Pinterest (PINS) shares are falling 1% ahead of the open after missing Q4 sales expectations and issuing weak guidance. Here’s how the social media company’s results compared to analysts’ estimates: EPS: $0.29 vs $0.27 expected Revenue: $877 million vs $886.3 million expected Q4 revenue was up 4% year over year while overall sales for the year rose 9%. For the full-year, Pinterest logged a net loss of $96 million. The company forecast Q1 sales growth in the “low single digits” vs analysts’ expectations of 6.9% growth. But the CEO remains optimistic about the turnaround. He said, “While the industry as a whole is facing headwinds, we are adapting quickly to a changing macro environment and are committed to creating a more positive online experience for our users and advertisers.” Bed Bath & Beyond Collapses Bed Bath & Beyond (BBBY) shares are plummeting 37.5% in premarket trade after the company announced a new public offering to raise more than $1 billion. The company will be offering shares of Series A convertible preferred stock, warrants to purchase Series A shares, and warrants to buy the common stock. Analysts see this as a last ditch effort to raise cash before a bankruptcy filing. Wedbush analysts lowered their price target on the stock to $0 after the announcement. Oak Street Health Rallies On CVS Acquisition News Oak Street Health (OSH) shares are surging 34.6% ahead of the open on news CVS (CVS) is nearing a deal to buy the company. The Wall Street Journal reported today that CVS is close to an agreement to acquire Oak Street for about $10.5 billion including debt. That would price the company around $39 per share, the stock closed at $25.96 on Monday. Oak Street operates more than 160 primary-care centers across 21 states and focuses on patients enrolled in Medicare. Annual Trade Deficit Hits Record The U.S. trade deficit widened less than expected in December but the annual gap hit a record-high. The Commerce Department reported that gap increased 10% to $67.4 billion at the end of 2022. That was better than economists’ expectations of $68.5 billion. Meantime, the annual deficit jumped 12.2% to $948 billion in 2022. Exports rose 17.7% last year to $3 trillion while imports rose 16.3% to $4 trillion.
Continue Reading -->Coffee With Greta: New Week Kicks Off
DJIA Futures: -197 (-0.6%) SPX Futures: -35 (-0.8%) NASDAQ Futures: -142 (-1.1%) Good morning friends! Futures are falling as traders look ahead to a busy week of earnings and an upcoming speech by Fed Chair Jerome Powell. Let’s get right to it! Tyson Shares Slides As Earnings Miss Tyson Foods (TSN) shares are falling 4.8% ahead of the open after missing fiscal Q1 expectations on the top and bottom line. Here’s how the meat processing company’s results compared to analysts’ expectations: Adjusted EPS $0.85 vs $1.31 expected Revenue: $12.93 billion vs $13.52 billion expected The CEO said, “We faced some challenges in the first quarter. Market dynamics and some operational inefficiencies impacted our profitability.” Beef sales dropped to $4.72 billion from $5 billion a year ago while pork sales fell to $1.53 billion from $1.63 billion. Tyson expects those sales declines to continue into the full year. The company said, “For fiscal 2023, the United States Department of Agriculture (USDA) indicates domestic protein production (beef, pork, chicken and turkey) should be relatively flat compared to fiscal 2022 level.” Tyson forecast fiscal 2023 sales to total between $55 billion and $57 billion vs analysts’ estimates of $55.19 billion. Dell Announces Layoffs Dell Technologies (DELL) shares are up 1.9% in premarket trade after announcing layoffs this morning. A new SEC filing shows the PC company plans to layoff 5% of its workforce. That would impact about 6,650 employees. In a memo to employees, the company’s co-COO said, “There is no tougher decision, but one we had to make for our long-term health and success.” Earnings In Focus This will be a quieter week of economic data with the market’s main focus being on earnings. Here’s a look at some of the companies scheduled to report this week: Monday PM: Activision Blizzer (ATVI), Pinterest (PINS), Spirit Airlines (SAVE) Tuesday PM: Chipotle (CMG) Wednesday AM: CVS (CVS), Uber (UBER) Wednesday PM: Walt Disney (DIS), Robinhood (HOOD) Thursday AM: Pepsico (PEP), Kellogg (K) Thursday PM: PayPal (PYPL), Lyft (LYFT) Fed Speakers Hit The Circuit The Fed also remains in focus this week with several central bank officials set to give speeches over the next two days. Fed Chair Jerome Powell is scheduled to speak at the Economic Club of Washington at 12:40 p.m. EST on Tuesday. Vice Chair Michael Barr will also give a speech Tuesday afternoon. Then on Wednesday several officials are scheduled to speak throughout the day: New York Fed President John Williams Fed Governor Lisa Cook Vice Chair Michael Atlanta Fed President Raphael Bostic Minneapolis Fed President Neel Kashkari Fed Governor Christopher Waller Traders are monitoring these speeches for more hints about the bank’s future plans for rate hikes. After last week’s Fed meeting, Powell struck a more dovish tone saying for the first time that the “disinflationary process has started. The Fed has penciled in two more rate hikes this year followed by a pause with no cuts until 2024. But CME Group’s FedWatch Tool shows the market pricing in as many as two rate cuts before the end of 2023.
Continue Reading -->Coffee With Greta: Piping Hot Jobs Report
DJIA Futures: -189 (-0.6%) SPX Futures: -45 (-1.1%) NASDAQ Futures: -224 (-1.7%) Good morning friends! Futures are tumbling after the release of a piping-hot January jobs report. Let’s get right to it! Job Growth Surges U.S. job growth surged past expectations in January. The Labor Department reported the U.S. economy added 517,000 jobs last month with the unemployment rate falling to 3.4%. That was sharply higher than expectations for 187,000 jobs and the unemployment rate to tick up to 3.6%. It was the strongest monthly gain since July 2022 and the lowest unemployment rate since May 1969. The leisure and hospitality sector continued to lead the monthly gains, adding 128,000 jobs. While job creation surged, wages also posted solid gains. Average hourly earnings rose 0.3% monthly and 4.4% year over year. The data is bad news for traders who are betting the Fed will pause rate hikes after March and approve two rate cuts at the end of the year. The central bank has said it needs to see a weakening in the labor market to make a real difference on inflation. Treasury Yields Surge After Hot Jobs Report U.S. Treasury yields are rallying this morning after the release of that hot jobs report. The 2-year yield is up 14 basis points to 3.42% while the 10-year yield is up 9 basis points to 3.5%. The new data underscored the strength of the U.S. labor market even in the face of the Fed’s aggressive monetary policy. Apple Drops On Big Earnings Miss Apple (AAPL) shares are falling 1.9% ahead of the open after reporting its largest quarterly revenue decline since 2016. Here’s how the iPhone maker’s fiscal Q1 results compared to analysts’ expectations: EPS: $1.88 vs $1.94 expected Revenue: $117.15 billion vs $121.10 billion expected That was Apple’s first EPS miss vs expectations in nearly seven years. Sales in the key holiday quarter dropped 5.5% from a year ago, the first year-over-year decline since 2019. Apple CEO Tim Cook blamed the weak results on the strong dollar, production issues in China for the iPhone 14 Pro and Pro Max, and the overall macroeconomic environment. The company did not provide fiscal Q2 guidance. Amazon Falls On Light Guidance Amazon (AMZN) shares are dropping 5.8% in premarket trade as light guidance overshadows a Q4 revenue beat. Here’s how the tech giant’s results compared to analysts’ expectations: EPS: $0.03, not comparable to estimates because of a $2.3 billion pre-tax non-cash loss on the value of the company’s stake in Rivian Revenue: $149.2 billion vs $145.42 billion expected Amazon Web Services Revenue: $21.4 billion vs $21.87 billion expected Advertising Revenue: $11.56 billion vs $11.38 billion expected Amazon’s Q4 sales were higher than its own prior guidance while its $2.7 billion in operating income was in line with estimates. The company’s full-year 202 sales totaled $514 billion, up 9% year over year. Amazon lost $2.7 billion last year, including a $12.7 billion loss from its position in Rivian (RIVN). The company expects Q1 revenue to range between $121 billion and $126 billion, sharply missing analysts’ estimates of $139.2 billion. CEO Andy Jassy said, “In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon.” Alphabet Misses Q4 Expectations Alphabet (GOOGL) shares are 4% lower ahead of the open after missing Q4 expectations on the top and bottom line. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $1.05 vs $1.18 expected Revenue $76.05 billion vs $76.53 billion YouTube ad revenue was the biggest drag on overall sales, coming in at $7.96 billion vs $8.25 billion expected and down from $8.63 billion the year before. Alphabet said it will incur a charge of between $1.9 billion and $2.3 billion, mostly in the current quarter, related to the layoffs it announced in January. Ford Misses Q4 Profit Expectations, Reports Full-Year Loss Ford (F) shares falling 7.6% in premarket trade after missing Q4 profit expectations and reporting a net loss for the full-year. Here’s how the automaker’s results compared to analysts’ expectations: Adjusted EPS: $0.51 vs $0.62 expected Automotive revenue: $41.8 billion vs $40.37 billion expected Ford’s profits were $11 billion lower than Q4 2021. For the full year, the company lost $2 billion. CEO Jim Farley said, “We should have done much better last year. We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.” CFO John Lawler said the disappointing earnings were mainly due to execution and supply chain management issues. He said, “Our cost structure is not competitive. Our quality is not where it needs to be. And we will take the actions and be more aggressive about making sure that we’re making progress on both of those key areas for us in 2023.” Ford said it expects to earn between $9 billion and $10 billion in adjusted ebitda this year. Starbucks Drops After Fiscal Q1 Miss Starbucks (SBUX) shares are down 2.2% ahead of the open after missing fiscal Q1 expectations. Here’s how the coffee giant’s results compared to analysts’ estimates: Adjusted EPS: $0.75 vs $0.77 expected Revenue: $8.71 billion vs $8.78 billion expected The miss was mainly due to lower sales in China, the company’s second-largest market. Same-store sales in China plunged 28% last quarter while same-store sales in the U.S. rose 10%. Starbucks expects 10% to 12% revenue growth this year and adjusted EPS growth of 15% to 20%. In Case You Missed It Coinbase (COIN) shares surged 24% on Thursday after a federal securities suit was dismissed. A federal judge dismissed the class-action suit against the company Wednesday. The complaint claimed that Coinbase had engaged in the unregistered sale and offering of securities and failed to register as a New York state broker-dealer. The suit was dismissed with prejudice which means the plaintiffs cannot refile the same case.
Continue Reading -->Coffee With Greta: Meta Bets Big On Its Future
DJIA Futures: -27 (-0.1%) SPX Futures: +30 (+0.7%) NASDAQ Futures: +213 (+1.7%) Good morning friends! Futures are mixed with tech stocks rallying after a big stock buyback announcement from Meta. Let’s get right to it! Meta Surges Meta Platforms (META) shares are surging 19.5% ahead of the open after beating Q4 revenue expectations. Here’s how the social media giant’s results compared to analysts’ expectations: EPS: $1.76 vs $2.26 expected Revenue: $32.17 billion vs $31.53 billion expected Daily Active Users (DAUs): 2 billion vs 1.99 billion expected Monthly Active Users (MAUs): 2.96 billion vs 2.98 billion expected Average Revenue per User (ARPU): $10.86 vs $10.63 expected The market shook off the profit miss after the company also announced a $40 billion stock buyback. That was a signal the company is feeling good about its future. Meta forecast Q1 revenue between $26 billion and $28.5 billion, in line with analysts’ estimates of $27.1 billion. CEO Mark Zuckerberg said, “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.” The company expects its total expenses in 2023 to range between $89 billion and $95 billion, lower than the previous outlook of $94 billion to $100 billion. Meta’s bet on the metaverse continued to cost it money though. The company’s Reality Labs unit lost $4.28 billion in Q4 and $13.72 billion in all of 2022. Meta said, “Reality Labs operating losses in 2023 will grow significantly year-over-year.” FedEx Laying Off Officers, Directors FedEx (FDX) shares are up 3.1% in premarket trade after announcing it will lay off 10% of its officers and directors. The corporate job cuts are part of efforts to cut costs as consumer demand falls. The CEO said, “this was a necessary action to become a more efficient, agile organization.” The cuts come on top of FedEx’s previously announced plan to slash $1 billion in costs by parking planes and shutting down some offices. The company is aiming to cut about $3.7 billion total this fiscal year. Tesla Expected To Increase Shanghai Output Tesla (TSLA) shares are rising 2.6% ahead of the open following a Reuters report the automaker is planning to raise output at its Shanghai factory. The EV maker has reportedly seen increased demand following price cuts it announced in early January. A memo seen by Reuters said Tesla plans to produce a weekly average of nearly 20,000 units at the Shanghai location in February and March. The move to increase production comes after the company cut output in December by about a third from November as it faced lower demand. Weekly Jobless Claims Fall Weekly jobless claims fell unexpectedly at the end of January. The Labor Department reported 183,000 Americans filed initial claims for unemployment benefits last week. That was down by 3,000 from the week before and lower than 195,000 expected. It was the lowest level of claims since April 2022. Continuing claims also fell by 10,000 to 1.66 million in the week ending January 21. ECB Hikes Rates By 50bp The European Central Bank voted in favor of another 50 basis point rate hike today. In a statement, the bank vowed to “stay the course in raising interest rates significantly at a steady pace.” The ECB said it plans to hike by another 50bp in March and then future decisions will be data-dependent. Today’s hike put the eurozone’s key rate at 2.5%. Although eurozone inflation fell for the third straight month in January, headline inflation remains at 8.5% as high energy prices squeeze consumers. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Apple (AAPL) Amazon (AMZN) Alphabet (GOOGL) Ford (F) In Case You Missed It The Fed hiked rates as expected by 25bp on Wednesday. The FOMC voted unanimously for that hike and said more hikes are still appropriate. But stocks rallied after the Fed chair struck a more dovish tone during his press conference. Jerome Powell told reporters, “we can now say for the first time that the disinflationary process has started.” The market is betting on 2 rate cuts at the end of this year but Powell said, “Given our outlook, I don’t see us cutting rates this year, if our outlook comes true.”
Continue Reading -->Coffee With Greta: Traders Wait For The Fed
DJIA Futures: -136 (-0.4%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -7 (-0.1%) Good morning friends! Futures are lower as traders wait for the Fed. Let’s get right to it! Private Job Growth Slows Sharply Private sector job growth slowed more than expected at the beginning of 2023. Payroll firm ADP reported U.S. private employers added 106,000 jobs in January. That was lower than economists’ expectations for 190,000 and down from 253,000 in December. The hospitality industry continued to see the largest gains, adding 95,000 workers. Financial activities sector added 30,000, manufacturing added 23,000, and education and health services added 12,000. But the trade, transportation, and utilities sector lost 41,000 jobs, construction lost 24,000, and natural resources and mining fell by 3,000. Pay rose 7.3% year over year, relatively unchanged from December. But ADP’s chief economist said severe weather impacted the numbers and job growth may not have been as weak as this report indicates. The Fed has been looking for the labor market to weaken as it hikes interest rates to slow inflation. Today’s data comes ahead of the official January jobs report on Friday which is expected to show the U.S. economy added 187,000 jobs and the unemployment rate ticked higher to 3.6%. AMD Tops Q4 Estimates Advanced Micro Devices (AMD) shares are up 3.2% ahead of the open after beating Q4 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $0.69 vs $0.67 expected Revenue: $5.6 billion vs $5.5 billion expected The company continued to see slowing sales of its PC chips and graphics processors. But data center sales jumped 42% year over year while its embedded segment saw sales skyrocket 1,868% due to its purchase of chip manufacturer Xilinx. AMD forecast $5.3 billion in Q1 sales, which would be a 10% decline year over year and missed analysts’ estimate of $5.47 billion. Snap Tumbles On Revenue Miss Snap (SNAP) shares are falling 13% in premarket trade after its Q4 sales came up short. Here’s how the social media giant’s results compared to analysts’ expectations: Adjusted EPS: $0.14 vs $0.11 expected Revenue: $1.30 billion vs $1.31 billion expected Global daily active users: 375 million vs 375.3 million expected Average revenue per user: $3.47 vs $3.49 expected In a letter to investors, Snap called 2022 a “challenging year” marked by “macroeconomic headwinds, platform policy changes, and increased competition.” Sales rose 12% for the full year to $4.6 billion but the company declined to provide guidance for Q1. Snap said, “On the monetization side, we anticipate that the operating environment will remain challenging, as we expect the headwinds we have faced over the past year to persist throughout Q1.” Peloton Rises On Strong Fiscal Q2 Revenue, Narrowing Loss Peloton (PTON) shares are up 6.1% ahead of the open after reporting better-than-expected fiscal Q2 revenue. Here’s how the fitness equipment maker’s results compared to analysts’ expectations: Loss per share: $0.98 vs $0.64 expected Revenue: $792.7 million vs $710 million expected Although that loss was steeper than estimates, it was down from a loss of $1.39 per share a year earlier. It was the eighth quarterly loss in a row for the company. Peloton’s CEO called the results a possible “turning point” for the business as he focuses on an aggressive turnaround strategy. The company’s subscription revenue was higher than sales of its equipment for the third quarter in a row. Peloton’s connected fitness product sales dropped 52% year over year while subscription revenue jumped 22%. The company forecast sales will fall in the current quarter to a range of $690 million to $715 million. That was in line with analysts’ estimates for $692.1 million. Mortgage Demand Pulls Back Mortgage demand fell last week despite rates continuing to fall. The Mortgage Bankers Association reported total application volume fell 9% weekly. Purchase applications fell 10% weekly and were 41% lower year over year. Refinance applications dropped 7% weekly and 80% annually. The drop came despite the average 30-year fixed contract rate falling to 6.19% from 6.2%. MBA’s chief economist said buyers are still struggling with tight supply but activity is expected to increase soon. He said, “Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth.” Coming Up: JOLTS and Fed Decision The Labor Department releases its December job openings and labor turnover survey (JOLTS) at 10:00 a.m. ET. That survey is expected to show the number of vacant jobs fell to 10.3 million at the end of 2022 from 10.5 million in November. The Fed then releases its first rate decision of the year at 2:00 p.m. ET followed by Chairman Jerome Powell’s press conference at 2:30. CME Group’s FedWatch Tool shows over 99% of traders expect the bank to raise the federal funds rate by 25 basis points. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Meta Platforms (META) In Case You Missed It Consumer confidence fell unexpectedly at the beginning of the year as Americans grew wearier of an impending recession. The Conference Board’s consumer confidence index fell to 107.1 in January from a revised 109 in December. That missed economists’ expectations for an increase to 109.5. The drop was mainly due to a decline in the expectations index which fell to 77.8 from 83.4. Any reading below 80 typically signals a recession within the next year. PayPal (PYPL) announced plans to lay off 2,000 employees on Tuesday. Those cuts represent about 7% of the company’s workforce. PayPal’s president and CEO said the company is working to address the “challenging macroeconomic environment.”
Continue Reading -->Coffee With Greta: Earnings Ramp Up
DJIA Futures: +75 (+0.2%) SPX Futures: +11 (+0.3%) NASDAQ Futures: +31 (+0.3%) Good morning friends! Futures are rising as traders digest the latest batch of Q4 earnings and the Fed meeting is set to begin today. Let’s get right to it! General Motors Rallies After Smashing Q4 Expectations General Motors (GM) are jumping 4.7% ahead of the open after sharply beating Q4 expectations. Here’s how the automaker’s results compared to analysts’ expectations: Adjusted EPS: $2.12 vs $1.69 expected Revenue: $43.11 billion vs $40.65 billion expected GM’s full-year revenue came in at $156.7 billion with adjusted earnings before interest and tax hitting a record $14.5 billion. But profit margins are shrinking, the company’s adjusted profit margin fell to 9.2% in 2022, down 2.1% from the previous year. GM forecast 2023 adjusted EPS will be between $6 and $7. Although that would be lower than 2022, the outlook was above analysts’ expectations for adjusted EPS of $5.73 this year. Exxon Slips On Weak Q4 Revenue Exxon Mobil (XOM) shares are slipping 0.8% in premarket trade after reporting mixed Q4 results. Here’s how the oil giant’s results compared to analysts’ expectations: Adjusted EPS: $3.40 vs $3.29 expected Revenue: $95.43 billion vs $97.3 billion expected The company raked in a record $56 billion profit for all of 2022. But analysts expect Exxon’s profit may have already peaked, forecasting EPS will not be higher than $3 in any quarter this year or next. Pfizer Falls On Downbeat Guidance Pfizer (PFE) shares are falling 2.8% ahead of the open as weak guidance overshadows a Q4 earnings beat. Here’s how the pharmaceutical giant’s results compared to analysts’ expectations: Adjusted EPS: $1.14 vs $1.05 expected Revenue: $24.3 billion vs $24.28 billion expected The company brought in a record $100.3 billion profit in 2022, driven by more than $50 billion in Covid vaccine and antiviral sales. But Pfizer expects sales to fall sharply this year. The company forecast revenue will decline up to 33% year over year as Covid vaccine sales slow. Pfizer forecast 2023 EPS of $3.25 to $3.45, down by as much as 50% from the record $6.58 last year. McDonald’s Drops Despite Q4 Earnings Beat McDonald’s (MCD) shares are falling 1.8% in premarket trade despite beating Q4 expectations on the top and bottom line. Here’s how the fast food giant’s results compared to analysts’ expectations: EPS: $2.59 vs $2.45 expected Revenue: $5.93 billion vs $5.68 billion expected McDonald’s same-store sales in the U.S. jumped 10.3% beating estimates of 8.1%, as demand jumped and customers paid higher prices. But the CEO warned the company is expecting short-term inflation pressures to continue in 2023. The company expects to open 1,900 new restaurants globally this year, including more than 400 in the U.S. UPS Jumps On Q4 Earnings Beat UPS (UPS) shares are rising 1.9% ahead of the open after beating Q4 profit expectations. Here’s how the shipping giant’s results compared to analysts’ expectations: Adjusted EPS: $3.62 vs $3.59 expected Revenue: $27.03 billion vs $28.09 billion expected Even as shipping volumes have decreased and costs rise, UPS has benefited from elevated prices. The company raised shipping rates by 6.9% at the end of 2022. But UPS offered full-year 2023 guidance that was below analysts’ estimates. The company expects between $97 billion and $99.4 billion in revenue this year vs analysts’ expectations of $99.98 billion. Consumer Confidence Expected To Rise The Conference Board releases its January consumer confidence index at 10:00 a.m. ET. That survey is expected to rise to 109.5 from 108.4 in December. Last month’s figure was the highest since April 2022 as inflation has started to cool. But consumers are still expecting a recession to hit the U.S. economy in the months ahead. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Advanced Micro Devices (AMD) Snap (SNAP)
Continue Reading -->Coffee With Greta: Traders Brace For Big Week
DJIA Futures: -145 (-0.4%) SPX Futures: -33 (-0.8%) NASDAQ Futures: -138 (-1.1%) Good morning friends! Futures are lower as traders gear up for a big week of earnings, the Fed decision, and new jobs data. Let’s get right to it! Big Week For Traders Wall Street may be in for a wild ride this week as earnings season picks up and the Fed meets. The Fed meeting kicks off on Tuesday with the rate hike decision set to be released Wednesday. CME Group’s FedWatch Tool shows 98.1% of traders expect a 25 basis point hike. That survey shows the market pricing in one more 25 basis point move at the next meeting and then traders are split on if the central bank will pause rate hikes after that. This week also includes key jobs data, something the Fed has been watching closely. The official January jobs report comes out Friday morning, with ADP’s private employment report on Wednesday morning. And it will be the busiest week of earnings yet starting with results from Exxon Mobil (XOM), Pfizer (PFE), UPS (UPS), McDonald’s (MCD), Caterpillar (CAT), and General Motors (GM) Tuesday morning. Yields Rise Ahead Of Fed Meeting Treasury yields are rising today as traders sell off bonds ahead of the Fed meeting. The 2-year yield is up 5 basis points to 4.25% while the 10-year yield is up 3 basis points to 3.55%. The market is anticipating the smallest rate hike from the Fed since it began the current tightening cycle last May. But concern is rising on Wall Street that the bank will over-tighten and plunge the economy into a recession. The latest inflation data has shown the Fed’s rate hikes having an impact on prices. But Fed officials have maintained the bank’s stance that rates still need to rise further before pausing. Ford Cuts Mustang Mach-E Prices Ford (F) shares are slipping 2.4% ahead of the open after announcing it will increase production and cut prices of its electric Mustang Mach-E. The automaker said this morning that the price cuts will range from $600 to $5,000 depending on the model. The Mach-E starting price will now range from $46,000 to $64,000. The move follows Tesla’s (TSLA) decision to cut prices on its Model Y earlier this month. The chief customer officer of Ford’s EV business said, “We are responding to changes in the marketplace. As we look and want to stay competitive in the marketplace, we’re having to respond.” But the cuts mean some models of the Mach-E will not be profitable on a per-unit basis. The company will also increase production to 130,000 units annually from 78,000 currently. Philips Cuts 6,000 Jobs Philips (PHG) shares are rallying 5.7% in premarket trade after announcing job cuts. The Dutch health technology company said today it will lay off 6,000 employees. The move is meant to lower costs and restore its profitability after a recall of respiratory devices knocked 70% off of its market value. Half of those cuts will be made this year with the other half by 2025. The company’s new CEO said the cuts are a “necessary intervention to help us to become competitive and lean in the way we go forward in the market.” The latest move comes on top of Philips’ announcement to cut 4,000 jobs last October. In Case You Missed It Lucid Group (LCID) shares skyrocketed 43% on Friday amid takeover rumors. The stock was halted several times throughout the session as trading volume jumped to nearly eight times the average. A stock research blog speculated that Saudi Arabia Public Investment Fund would acquire the electric automaker. LCID shares are up 0.9% ahead of the open today.
Continue Reading -->Coffee With Greta: PCE Inflation Cools
DJIA Futures: -24 (-0.1%) SPX Futures: -16 (-0.4%) NASDAQ Futures: -69 (-0.6%) Good morning friends! Futures are slipping despite new data showing inflation pressures continued to cool at the end of 2022 as disappointing earnings weigh on the market. Let’s get right to it! PCE Inflation Cools The Fed’s favorite inflation gauge continued to cool in December. The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.1% monthly and 5% year over year. That was down from the 5.5% annual gain in November. The core PCE price index, which excludes food, energy, and trade services, rose 0.3% monthly and 4.4% year over year. That was also down from the 4.7% annual gain in November and in line with economists’ expectations. Intel Tumbles After Earnings Miss, Weak Guidance Intel (INTC) shares are tumbling 9.8% ahead of the open after missing Q4 expectations and issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted EPS: $0.10 vs $0.21 expected Revenue: $14.04 billion vs $14.49 billion expected Intel missed its own prior forecast of EPS of $0.20 on $14 billion to $15 billion in revenue. The tech company forecast an adjusted loss of $0.15 per share on revenue of about $10.5 billion to $11.5 billion in Q1. Intel also expects gross margins of just 34.1% in the current quarter, far off from the 51% to 53% goal the company set last year and down from 55.1% in Q1 2022. The company blamed an inventory glut for the expected struggles this quarter as customers work through an oversupply of chips. The CEO told investors, “While we know this dynamic will reverse, predicting when is difficult.” Chevron Slips As Earnings Come Up Short Chevron (CVX) shares are down 1.4% in premarket trade after missing Q4 profit expectations. Here’s how the oil giant’s results compared to analysts’ expectations: Adjusted EPS: $4.09 vs $4.33 expected Revenue: $56.47 billion vs $52.68 billion expected For the full year, Chevron earned a record $36.5 billion in profit. That was about $10 billion higher than its previous record set in 2011. The CEO said, “We delivered record earnings and cash flow in 2022, while increasing investments and growing U.S. production to a company record.” Bed Bath & Beyond Defaults On Credit Line Bed Bath & Beyond (BBBY) shares are up 1.5% ahead of the open as potential bankruptcy hopes rise after the retailer defaulted on its credit line with JPMorgan. In an SEC filing, Bed Bath said it “does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.” The company’s debt load includes a $550 million asset-backed loan with JPMorgan, $375 million with lender Sixth Street, and nearly $1.2 billion in unsecured Treasury notes. In a separate filing today, Bed Bath said its Board has named restructuring expert Carol Flaton as an independent director. Key Earnings Next Week Earnings season continues to pick up steam next week. Here’s some of the major companies set to report: SoFi (SOFI) Exxon Mobil (XOM) Pfizer (PFE) McDonald’s (MCD) UPS (UPS) Caterpillar (CAT) Advanced Micro Devices (AMD) General Motors (GM) Spotify (SPOT) Snap (SNAP) Meta Platforms (META) Apple (AAPL) Alphabet (GOOGL) Amazon (AMZN) Ford (F)
Continue Reading -->Coffee With Greta: Stocks Rise As GDP Beats
DJIA Futures: +87 (+0.3%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +116 (+1.0%) Good morning friends! Futures are higher as traders digest strong Q4 GDP data and an earnings beat from Tesla. Let’s get right to it! U.S. Economy Expands More Than Expected The U.S. economy grew more than expected at the end of 2022. The Commerce Department’s first estimate shows GDP rose at a 2.9% annualized pace in Q4. That was better than economists’ expectations for 2.8% but still down from 3.2% growth in Q3. The data showed consumer spending remained strong at the end of the year, up 2.1% on a quarterly basis. Inflation pressures also cooled with the personal consumption expenditures price index increasing 3.2%, down from 4.8% in Q3. The slowdown in GDP growth from Q3 to Q4 was largely driven by lower residential fixed investment which plunged 26.7% as the housing market slowed. Exports also declined 1.3% in the quarter. Tesla Beats Q4 Expectations Tesla (TSLA) shares are rallying 8.8% ahead of the open after reporting record revenue in Q4 and beating earnings expectations. Here’s how the electric automaker’s results compared to analysts’ estimates: Adjusted EPS: $1.19 vs $1.13 expected Revenue: $24.32 billion vs $24.16 billion expected Automotive revenue jumped 33% year over year but gross margins came in at 25.9%, the lowest figure in five years. Tesla blamed those smaller margins on lower sales prices, saying average sales prices have “generally been on a downward trajectory for many years”. The company most recently cut prices on its cars in the U.S. and China in late 2022. IBM Sales Top Estimates IBM (IBM) shares are slipping 2.2% in premarket trade despite reporting better-than-expected sales in the fourth quarter. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $3.60 as expected Revenue: $16.69 billion vs $16.4 billion expected IBM’s total revenue was flat year over year, beating expectations for the first decline in two years. For the full year, the company’s revenue jumped 6% to $60.5 billion. IBM reiterated its previous forecast for 2023 revenue growth in the mid-single digits, suggesting a total of about $63.5 billion vs $60.8 billion expected. The company is projecting $10.5 billion in free cash flow this year vs $11.1 billion expected. American Airlines Beats Earnings Estimates American Airlines (AAL) shares are up 1.9% ahead of the open after beating Q4 earnings estimates. Here’s how the airline’s results compared to analysts’ expectations: Adjusted EPS: $1.17 vs $1.14 expected Revenue: $13.19 billion vs $13.20 billion expected Revenue jumped 16.6% compared to the same quarter in 2019 as travelers paid higher fare prices. That revenue total was a new record for the company despite operating 6.1% less capacity than Q4 2019. American brought in $127 million in net income for all of 2022, its first full-year profit since 2019. The carrier forecast Q1 capacity will be 8% to 10% higher year over year. Southwest Reports Worse-Than-Expected Q4 Loss Southwest Airlines (LUV) shares are dropping 2.6% in premarket trade after reporting a steeper Q4 loss than expected. Here’s how the carrier’s results compared to analysts’ estimates: Adjusted loss per share: $0.38 vs $0.12 expected Revenue: $6.17 billion vs $6.16 billion expected That loss was driven by the mass cancellation of about 16,700 Southwest flights between December 21 and December 31. The company said it expects that meltdown to continue weighing on its bottom line in Q1. Southwest said it expects to post another loss in Q1, sharply missing analysts’ expectations for a profit of $0.19 per share. The airline reported a $529 million profit for the full-year 2022, down 45% from a year earlier. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Intel (INTC) Visa (V)
Continue Reading -->Coffee With Greta: Microsoft’s Gloomy Outlook Weighs On Tech
DJIA Futures: -273 (-0.8%) SPX Futures: -42 (-1.0%) NASDAQ Futures: -194 (-1.6%) Good morning friends! Futures are falling as Microsoft’s gloomy forecast drags down the tech sector. Let’s get right to it! Microsoft Drops On Weak Forecast Microsoft (MSFT) shares are falling 3% ahead of the open after weak guidance overshadows a fiscal Q2 earnings beat. Here’s how the tech giant’s results compared to analysts’ estimates: Adjusted EPS: $2.32 vs $2.29 expected Revenue: $52.75 billion vs $52.94 billion expected Total revenue rose just 2% year over year which was the slowest rate since 2016. Microsoft’s Intelligent Cloud segment brought in $21.51 billion in revenue, up 18% from a year ago and better than analysts’ expectations of $21.44 billion. But executives told analysts on the conference call that they expect the weakening tech environment to continue. Microsoft said it expects $50.5 billion to $51.5 billion in fiscal Q3 revenue, falling short of estimates for $52.43 billion. Boeing Slips After Surprise Q4 Loss Boeing (BA) shares are down 2.6% in premarket trade after reporting an unexpected Q4 loss. Here’s how the plane maker’s results compared to analysts’ expectations: Adjusted loss per share: $1.26 vs $0.26 EPS expected Revenue: $19.98 billion vs $20.38 billion expected The profit loss was caused by supply chain issues which caused higher costs. Boeing’s commercial aircraft unit generated $9.2 billion in Q4 sales, up 94% year over year. The company generated $3.1 billion in free-cash flow last quarter, better than expected. It had $2.3 billion in cash flow for the full-year, the best since 2018. Boeing reiterated its forecast to generate between $3 billion and $5 billion in free-cash flow this year. Kimberly-Clark Falls After Q4 Sales Miss Kimberly-Clark (KMB) shares are down 4% ahead of the open after reporting mixed Q4 results. Here’s how the consumer goods giant’s results compared to analysts’ expectations: Adjusted EPS: $1.54 vs $1.51 expected Revenue: $4.96 billion vs $4.99 billion expected The drop in revenue came as sales volume declined 7% but pricing rose 10%. Kimberly-Clark forecast sales will be flat to up 2% in 2023 vs analysts’ expectations for 1% growth. AT&T Jumps On Earnings Beat AT&T (T) shares are up 2.4% in premarket trade after beating Q4 profit expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $0.61 vs $0.57 expected Revenue: $31.3 billion vs $31.4 billion expected AT&T added 656,000 monthly cell phone subscribers in the quarter vs 570,000 expected, bringing the 2022 total to nearly 2.9 million. The company forecast adjusted EPS of $2.35 to $2.45 for the full-year 2023 vs $2.53 expected. AT&T is targeting $16 billion or more in free-cash flow this year vs $16.2 billion estimates Mortgage Demand Rises As Rates Hit 4-Month Low Mortgage demand jumped last week as rates fell for the third week in a row. The Mortgage Bankers Association reported total application volume rose 7% last week. Purchase applications rose 3% weekly and were down 39% year over year. Refinance applications jumped 15% weekly and were down 77% annually. The jump came as the average 30-year contract rate fell to 6.2% from 6.23%, the lowest since September. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Tesla (TSLA) IBM (IBM) ServiceNow (NOW) Levi Strauss (LEVI)
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