All posts by Greta Wall
Coffee With Greta: Traders Anticipate Fed Pivot
DJIA Futures: +70 (+0.2%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +13 (+0.1%) Good morning friends! Futures are rising as traders gear up for a busy earnings week and look ahead to a smaller rate hike next week. Let’s get right to it! Fed Pivot Expected Wall Street is feeling confident the Fed will continue to dial back the size of its rate hikes at the next meeting. CME Group’s FedWatch Tool shows 98.7% of traders expect the central bank to approve a 25 basis point move at the February 1st meeting. That would be the smallest rate hike since the current tightening cycle started in spring 2022. Spotify To Cut 6% Of Workforce Spotify (SPOT) shares are up 5.6% ahead of the open after announcing layoffs this morning. The streaming giant said it plans to cut 6% of its workforce or roughly 600 jobs. The chief content and advertising business officer will also depart the company as part of a broader reorganization. Spotify is the latest tech company to cut jobs in the face of lower ad spending amid the current demand downturn. Activist Investor Takes A Stake In Salesforce Salesforce (CRM) shares are rising 4.5% in premarket trade following reports that activist investor Elliott Management has bought a large stake in the company. Elliott’s managing partner told Reuters, “We look forward to working constructively with Salesforce to realize the value befitting a company of its stature.” He also called Salesforce “one of the preeminent software companies in the world.” It’s unclear what Elliott may push for at Salesforce but the investment comes after the company announced job cuts and office closures earlier this year. Big Banks Team Up On New Digital Wallet PayPal (PYPL) shares are falling 1.8% ahead of the open following reports that the nation’s largest banks are teaming up to create a new digital wallet. JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC) are all reportedly part of the project with four other banks. The Wall Street Journal reported the digital wallet would be managed by Early Warning Services LLC, which is the bank-owned company that operates Zelle. The digital wallet would be linked to shoppers’ debit and credit cards and the goal is to compete with PayPal and Apple’s (AAPL) Apple Pay. Busy Earnings Week Earnings season picks up steam this week with several key companies reporting. Here’s a look at the highlights: Tuesday AM: 3M (MMM), Johnson & Johnson (J&J), General Electric (GM) Tuesday PM: Microsoft (MSFT) Wednesday AM: Boeing (BA), Kimberly-Clark (KMB) Wednesday PM: Tesla (TSLA) Thursday AM: American Airlines (AAL) Thursday PM: Intel (INTC) Friday AM: Chevron (CVX)
Continue Reading -->Coffee With Greta: Netflix Subscribers Surge
DJIA Futures: -3 (-0.01%) SPX Futures: +9 (+0.2%) NASDAQ Futures: +72 (+0.6%) Good morning friends! Futures are mostly higher as Netflix shares boost the tech sector. Let’s get right to it! Netflix Rallies As Subscribers Surge Netflix (NFLX) shares are jumping 6.2% ahead of the open after sharply beating Q4 subscriber growth expectations. Here’s how the streaming giant’s results compared to analysts’ estimates: EPS: $0.12 vs $0.45 expected Revenue: $7.85 billion as expected New global paid net subscribers: 7.66 million vs 4.57 million expected The profit miss was largely due to a loss related to euro-denominated debt but the company’s 7% margins topped analysts’ expectations. Netflix also announced founder Reed Hastings will step down as CEO. Hastings will remain with the company as executive chairman and co-CEO Ted Sarandos will remain in his position. Current COO Greg Peters will take over Hastings’ spot as co-CEO with Saranados. Google Announces Layoffs, Delays Portion Of Bonuses Alphabet (GOOGL) shares are up 3.2% in premarket trade after announcing layoffs this morning. The tech giant’s CEO Sundar Pichai sent an email to employees saying they plan to layoff 12,000 workers. Pichai said layoffs in the U.S. will begin immediately but “will take longer due to local law and practices” in other countries. U.S.-based employees will receive 16 weeks of severance pay plus two weeks for each additional year they’ve worked for Google. The company is also delaying a portion of its annual employee bonus checks. Google employees usually receive their full bonus in January. But now, the tech giant is paying full-time employees 80% of their bonus this month and the remaining 20% in March or April. Moving forward, full bonuses will be paid in March. Nordstrom Sinks After Slashing Guidance After Weak Holiday Sales Nordstrom (JNW) shares are falling 6.9% ahead of the open after reporting weak holiday sales and slashing its guidance. The retailer said net sales dropped 3.5% year over year in the nine-week holiday shopping period that ended December 31. Nordstrom’s net sales fell 1.7% while Nordstrom Rack sales tumbled 7.6%. Those weak sales caused the company to cut its earnings and margin expectations for the full fiscal year. Nordstrom expects full-year revenue growth to be at the low end of its previously announced range of 5% to 7%. The retailer expected adjusted EPS to range between $1.50 and $1.70 vs $2.30 to $2.60 previously. CEO Erik Nordstrom said, “While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment.” The company was also forced to mark down merchandise more than expected during the holiday season in order to clear excess inventory. Nordstrom reports Q4 results on March 2. The disappointing holiday results from Nordstrom are dragging down other retail stocks in premarket trade. Macy’s (M) is down 2.6%, Kohl’s (KSS) is falling 3.5%, and Dillard’s (DDS) is down 1.3%. Existing Home Sales Expected To Fall The National Association of Realtors reports existing home sales for December at 10:00 a.m. ET. That report is expected to show sales fell to a seasonally adjusted annual rate of 3.95 million units last month from 4.09 million in November. That would be the 11th straight month of declining sales as the housing market has weakened due to higher mortgage rates. Key Earnings Next Week Earnings season picks up steam next week with several key companies reporting. Here’s a look at the highlights: Tuesday AM: 3M (MMM), Johnson & Johnson (J&J), General Electric (GM) Tuesday PM: Microsoft (MSFT) Wednesday AM: Boeing (BA), Kimberly-Clark (KMB) Wednesday PM: Tesla (TSLA) Thursday AM: American Airlines (AAL) Thursday PM: Intel (INTC) Friday AM: Chevron (CVX) In Case You Missed It Fed Vice Chair Lael Brainard reiterated the bank’s hawkish stance during a speech in Chicago on Thursday. Brainard said, “Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis.” Her comments echo other recent speeches from Fed officials insisting they will stick to plans to maintain high rates through early 2024. The comments have prompted fears on Wall Street that the bank will overtighten and send the U.S. economy into a deep recession. The Treasury Department began taking “extraordinary measures” as the U.S. hit its $31.4 trillion debt limit. Treasury Secretary Janet Yellen said the department should be able to pay the U.S. government’s bills through June. She is pushing Congress to raise the debt ceiling “without concession”. But many House Republicans have suggested they will push for spending cuts as part of the debt ceiling bill. Want to hear insight from pro traders about this market? Register for my upcoming virtual live event: Conversations With A Pro Trader!
Continue Reading -->Coffee With Greta: New Year Rally Fizzles
DJIA Futures: -268 (-0.8%) SPX Futures: -32 (-0.8%) NASDAQ Futures: -101 (-0.9%) Good morning friends! Futures are falling as the January rally fizzles out amid fears the Fed will over-tighten. Let’s get right to it! December Housing Starts & Building Permits New home construction fell less than expected at the end of 2022. The Census Bureau reported housing starts slumped 1.4% to a seasonally adjusted annual rate of 1.382 million units from a revised 1.401 million in November. That was better than expectations for a drop to 1.359 million units. But it was still the fourth straight month of declining building activity. Single-family starts surged 11.3% monthly but were still down 25% year over year while multi-family starts tumbled 18.9% monthly and were 16.3% lower compared to a year ago. The slowdown in building is expected to continue as permits fell in December. The number of new permits authorized dropped 1.6% last month to a seasonally adjusted annual rate of 1.33 million units from a revised 1.351 million in November. Permits were expected to rise to 1.37 million. Single-family permits fell 6.5% monthly and 34.7% year over year while multi-family permits rose 7.1% monthly but were down 21.8% from a year ago. Weekly Jobless Claims Fall Unexpectedly Weekly jobless claims fell unexpectedly last week to a four-month low. The Labor Department reported 190,000 Americans filed initial claims for unemployment benefits. That was down by 15,000 from the week before and lower than expectations for an increase to 215,000. It was the lowest total since September. Procter & Gamble Profits Fall Procter & Gamble (PG) shares are falling 3.0% ahead of the open despite reporting fiscal Q2 results that were in line with expectations. Here’s how the consumer goods giant’s results compared to analysts’ estimates: Adjusted EPS: $1.59, as expected Revenue: $20.77 billion vs $20.73 billion expected Profits fell by $320 million year over year while revenue was down 1%. All of Procter & Gamble’s divisions reported lower sales volumes in the quarter as consumer demand falls. The company is still planning to hike prices further in the months ahead to make up for that lower sales volume. The CFO said consumers have reacted to higher prices “generally better than expected” and “consumers don’t stop washing their hands or doing their laundry.” P&G expects 2023 sales growth between 4% and 5%, up from 3% to 5% previously. Bed Bath & Beyond Reportedly Looking For Buyer Bed Bath & Beyond (BBBY) shares are up 1.0% in premarket trade amid reports the retailer has been in discussions with potential buyers and lenders ahead of a likely bankruptcy filing. Sources say the company is hoping to find a buyer that would keep both its major chains, Bed Bath & Beyond and Buybuy Baby, open. Bed Bath has also reportedly been looking for a lender to provide capital to keep it afloat through a bankruptcy filing. A company spokeswoman said Wednesday, “Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner,” but declined to comment further. Key Earnings After The Close Here are the major companies set to report earnings after the close today: Netflix (NFLX) In Case You Missed It Homebuilder sentiment rose unexpectedly this month. The National Association of Homebuilders’ sentiment index improved to 35 from 31 in December. That broke a 12-month losing streak and was better than expectations for a decline to 30. The gain comes as mortgage rates have fallen at the start of the year and as the typically busy spring homebuying season approaches.
Continue Reading -->Coffee With Greta: Has Inflation Peaked?
DJIA Futures: +46 (+0.1%) SPX Futures: +13 (+0.3%) NASDAQ Futures: +57 (+0.5%) Good morning friends! Futures are higher following more better-than-expected inflation data. Let’s get right to it! Wholesale Inflation Tumbles Wholesale inflation pressures tumbled more than expected in December. The Bureau of Labor Statistics’ producer price index fell 0.5% monthly vs expectations for a 0.1% drop. The PPI rose 6.2% year over year, down from 7.3% in November. Excluding food, energy, and trade services, the core PPI rose 0.1% monthly and 4.6% annually. That was down from the 0.3% monthly and 4.9% annual gain in November. Retail Sales Drop Sharply U.S. retail sales fell more than expected in December as consumers spent less on cars, gas, and furniture. The Census Bureau reported retail sales dropped 1.1% last month to $677.1 billion. That was steeper than economists’ expectations for a 1% decline. High inflation and interest rates put pressure on shoppers during the key holiday shopping season. On an annual basis, retail sales rose 6% as shoppers continued to pay higher prices. Gas stations saw the largest decline in Decmeber as prices fell, down 4.6% from November. Furniture store sales fell 2.5%, car sales were down 1.2%, electronics and appliances fell 1.1%. The only retailers to see a slight gain were building material retailers which rose 0.3% and sporting goods stores which were up 0.1%. Core retail sales, which exclude vehicles and gas, fell 0.7% monthly and were up 7.2% year over year. United Airlines Jumps After Reporting Q4 Profit United Airlines (UAL) shares are up 4.0% ahead of the open after sharply beating Q4 expectations. Here’s how the carrier’s results compared to analysts’ estimates: Adjusted EPS: $2.46 vs $2.11 expected Revenue: $12.4 billion vs $12.23 billion expected The airline’s guidance also topped expectations. United expects Q1 EPS between $0.50 and $1, well above consensus estimates of $0.31. For the full year, the airline is anticipating adjusted EPS between $10 and $12 vs analysts’ estimates of $6.84. Party City Files For Bankruptcy Party City (PRTY) shares have been halted after rallying 10.6% in premarket trade following the company’s Chapter 11 bankruptcy filing. In a filing with the SEC on Tuesday, the retailer said it had struck an agreement to reduce its debt. Party City had received a $150 million debtor-in-possession loan to continue operations while it reorganizes. The company expects to complete its restructuring in Q2. Mortgage Demand Jumps Amid Lower Rates Mortgage application volume jumped at the start of the year as rates fell to the lowest level since September. The Mortgage Bankers Association reported total application volume rose nearly 28% last week from the week before. Refinance applications jumped 34% but were still 81% lower year over year. Purchase applications rose 25% weekly and were 35% lower than the same week a year ago. The jump came as the average 30-year fixed contract rate fell to 6.23% from 6.42% the week before. Market experts are anticipating an increase in mortgage activity over the next few months as we enter the traditionally busy spring buying season. Homebuilder Sentiment Expected To Fall Homebuilder sentiment is expected to have fallen further this month as the housing market continues to be squeezed by high mortgage rates. The National Association of Homebuilders releases its January sentiment index at 10:00 a.m. ET today. That survey is expected to fall to 30 from 31 in December. Sentiment fell for the 12th straight month in December, hitting the lowest level since June 2012. In Case You Missed It Peloton (PTON) shares rallied 2.7% on Tuesday after hiring a new chief marketing officer. The exercise bike maker hired former Twitter CMO Leslie Berland to fill that position. The former CMO left Peloton in September. Berland said she is “thrilled” to join Peloton at this “unique moment in its transformation journey.”
Continue Reading -->Coffee With Greta: More Big Bank Earnings
DJIA Futures: -114 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -28 (-0.3%) Good morning friends! Futures are lower as Q4 earnings season continues. Let’s get right to it! Morgan Stanley Jumps After Earnings Beat Morgan Stanley (MS) shares are up 2.2% ahead of the open after beating Q4 expectations. Here’s how the bank’s results compared to analysts’ expectations: EPS: $1.26 vs $1.25 expected Revenue: $12.75 billion vs $12.64 billion expected Morgan Stanley’s wealth management division posted record net revenues of $6.63 billion, up 6% year over year. Chairman and CEO James Gorman said, “We reported solid fourth quarter results amidst a difficult market environment. Overall, 2022 was a strong year for the Firm as our clear strategy and balanced business model enabled us to deliver an ROTCE of 16% despite the complex macro backdrop.” But Morgan Stanley’s investment banking saw a big slowdown as IPOs collapsed. Investment banking revenue came in at $1.25 billion, down 49% compared to a year ago. Goldman Sachs Falls On Earnings Miss Goldman Sachs (GS) shares are falling 2.8% in premarket trade after missing Q4 expectations. Here’s how the investment bank’s results compared to analysts’ expectations: EPS: $3.32 vs $5.48 expected Revenue: $10.59 billion vs $10.83 billion expected It was the biggest profit miss since October 2011 as earnings plunged 66% year over year. Revenue was down 16% from a year ago. Operating expenses jumped 11% year over year to $8.09 billion, about $800 million higher than analysts were expecting. Activist Investor Takes Stake In Alibaba Alibaba (BABA) shares are up 0.2% ahead of the open following reports activist investor Ryan Cohen bought a large stake in the company. The Wall Street Journal reported Cohen has built a stake in the Chinese e-commerce giant worth hundreds of millions of dollars. He’s reportedly pushing the company to accelerate and expand its share-repurchase program. Alibaba had repurchased roughly $18 billion worth of its shares as of November 16. Cohen has reportedly told the board the current share buyback plan could be boosted by $20 billion, to roughly $60 billion. Housing Market In Focus This Week The majority of economic data set to come out this week will be focused on the housing market. The National Association of Homebuilders releases its January sentiment index Wednesday morning at 10:00 a.m. ET. Then the Commerce Department reports housing starts and building permits for December at 8:30 a.m. ET on Thursday. And on Friday, the National Association of Realtors reports existing home sales at 10:00 a.m. ET. This week also includes more inflation data with the December PPI and retail sales both set to be released at 8:30 a.m. ET on Wednesday. Key Earnings After The Close Here are the companies set to report earnings after the market close today: United Airlines (UAL)
Continue Reading -->Coffee With Greta: Big Banks Kick Start Earnings
DJIA Futures: -278 (-0.8%) SPX Futures: -38 (-0.9%) NASDAQ Futures: -126 (-1.1%) Good morning friends! Futures are lower after the biggest banks in the U.S. reported earnings and warned of an impending recession. Let’s get right to it! JPMorgan Chase Warns Of Recession Q4 earnings season kicked off this morning with some of the largest banks in the U.S. reporting. JPMorgan Chase (JPM) shares are falling 2.8% ahead of the open despite beating expectations. Here’s how the bank’s results compared to estimates: EPS: $3.57 vs $3.07 expected Revenue: $35.57 billion vs $34.3 billion expected Revenue surged 48% year over year as interest rates jumped. The biggest bank in the U.S. set aside $2.3 billion for credit losses in the quarter, up 49% from Q3 as the bank prepares for a recession. CEO Jamie Dimon said, “We still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening.” Bank of America Tops Expectations Bank of America (BAC) shares are falling 2.7% in premarket trade despite beating Q4 expectations on the top and bottom line. Here’s a look at the bank’s results vs analysts’ expectations: EPS: $0.85 vs $0.77 expected Revenue: $24.66 billion vs $24.33 billion expected Bank of America’s net interest income jumped 29% year over year to $14.7 billion as rates rose. That was shy of analysts’ expectations of $14.8 billion. The bank set aside $1.1 billion for loan loss reserves. CEO Brian Moynihan said the U.S. economic environment is “increasingly slowing.” Wells Fargo Profits Tumble Wells Fargo (WFC) shares are dropping 4% ahead of the open after reporting a sharp drop in Q4 profits. Here’s how the bank’s results compared to analysts’ estimates: EPS: $0.67 vs $0.60 expected Revenue: $19.7 billion vs $19.98 billion expected The bank’s profits tumbled 49% year over year compared to EPS of $1.38 in the same quarter a year ago. That was partly driven by a drop in mortgage banking due to fewer originations or new purchase loans. Home lending revenue was down 57% last quarter. Wells Fargo set aside $957 million for credit losses as the economic outlook deteriorates. CEO Charlie Scharf said, “As we look forward, we are carefully watching the impact of higher rates on our customers and expect to see deposit balances and credit quality continue to return toward pre-pandemic levels.” Citigroup Tops Q4 Expectations Citigroup (C) shares are up 0.7% in premarket trade after beating Q4 expectations on the top and bottom line. Here’s how the investment bank’s results compared to analysts’ expectations: EPS: $1.16 vs $1.14 expected Revenue: $18 billion vs $17.9 billion expected But profits tumbled 21% year over year to $2.5 billion vs $3.2 billion one year ago. As rates jumped, net interest income rose to $13.27 billion vs $12.7 billion expected. Fixed-income trading revenue topped expectations at $3.16 billion while the $789 million in equities trading revenue was below estimates. Citigroup set aside $1.85 billion in loan loss reserves, higher than expectations for $1.79 billion. Delta Drops On Weak Guidance Delta Airlines (DAL) shares are tumbling 5.3% ahead of the open after beating Q4 expectations but issuing weak guidance. Here’s how the airline’s results compared to analysts’ expectations: Adjusted EPS: $1.48 vs $1.33 expected Revenue: $12.29 billion vs $12.23 billion expected Sales were up 17% compared to Q4 2019. Operating costs jumped 19% from 2019 and included a $2.8 billion fuel bill, up 42% year over year. CEO Ed Bastian said Delta “rose to the challenges of 2022, delivering industry-leading operational reliability and financial performance.” But the airline expects profits to fall in the current quarter. Delta forecast Q1 adjusted EPS of just $0.15 to $0.40 and revenue growth of 14% to 17% over 2019 levels. The company also expects unit costs, excluding fuel, to increase by 3% to 4% from last year. Delta reiterated its full-year outlook for earnings of $5 to $6 per share. Tesla Falls After Cutting Prices Tesla (TSLA) shares are down 5.9% in premarket trade after cutting its prices in the U.S. and Europe. The electric automaker lowered the starting price of its Model 3 and Model Y. In the U.S., the Model 3 now starts at about $44,000. That’s down about 6% from the previous price. The performance version of the Model 3 was lowered to $54,000 from $63,000. The long-range version of the Model Y is now listed for about $53,000, down 20% from $66,000. The performance version of the Y was lowered to $57,000 from $70,000. Although Tesla did not comment on the changes many are speculating the move was aimed at qualifying for U.S. tax credits. Electric vehicles priced below $55,000 qualify for the $7,500 purchase tax credit passed in the Inflation Reduction Act. The lower prices are also expected to stimulate demand in the U.S. Tesla also cut its Model 3 and Y prices in Europe by as much as 17%. In Case You Missed It Lucid Group (LCID) shares jumped 4.8% Thursday after the electric automaker reported stronger 2022 production numbers than expected. Lucid said it produced 7,180 vehicles last year. That was higher than its previous outlook for production of between 6,000 and 7,000 vehicles for the full year. The company produced 3,943 vehicles in Q4, up 53% from Q3.
Continue Reading -->Coffee With Greta: Inflation Is Cooling
DJIA Futures: +81 (+0.2%) SPX Futures: +11 (+0.3%) NASDAQ Futures: +29 (+0.3%) Good morning friends! Futures are up as new data shows inflation continuing to cool. Let’s get right to it! CPI Cools In December U.S. inflation pressures declined as expected at the end of 2022. The Bureau of Labor Statistics’ consumer price index fell 0.1% monthly and was up 6.5% year over year. That was down from the 7.1% annual pace in November and the slowest in 14 months. The core CPI rose 0.3% monthly and 5.7% annually. That was also in line with expectations and down from 6% annually in November. The new data shows the Fed’s rate hikes are working to lower inflation. CME Group’s FedWatch Tool now shows 88.7% of traders expecting the central bank to pivot to a 0.25% hike on February 1. Weekly Jobless Claims Dip Weekly jobless claims fell unexpectedly at the start of the new year. The Labor Department reported 205,000 Americans filed initial unemployment claims last week. That was down by 1,000 from the previous week and lower than expectations for an increase to 210,000. Continuing claims also fell by 70,000 to 1.63 million in the week ending December 31. American Airlines Hikes Q4 Guidance American Airlines (AAL) shares are up 4.6% in premarket trade after hiking its Q4 guidance. The airline said this morning its expects to report adjusted Q4 EPS of $1.12 to $1.17 vs analysts’ estimate of $0.61. American also expects Q4 revenue growth of 16% to 17% vs its earlier estimate of 11% to 13% growth. The carrier is scheduled to report full Q4 results on January 26. The first major airline to report will be Delta Airlines (DAL) tomorrow morning. Disney Names New Chairman Disney (DIS) shares are up 2.1% ahead of the open after naming a new chairman late Wednesday. The company chose Nike’s (NKE) executive chairman Mark Parker to succeed current Chair Susan Arnold after the annual shareholders meeting. The board will be reduced to 11 members at that time. Disney also announced it is opposed to activist investor Nelson Peltz’s attempt to join the board. Alphabet To Cut Staff Of Health Sciences Unit Alphabet (GOOGL) shares are 0.2% higher in premarket trade after announcing layoffs in its health sciences unit, Verily. In an email to employees, Verily’s CEO said the unit is cutting 15% of its workforce. This is part of the unit’s restructuring efforts as it strives for financial independence from Alphabet. This is the first round of layoffs at the Google parent company amid the recent wave of industry-wide layoffs at other tech companies. In Case You Missed It Bed Bath & Beyond (BBBY) shares skyrocketed 68.6% on Wednesday while AMC (AMC) rallied 21.2%, and GameStop (GME) rose 7.2% in the latest meme stock surge. The BBBY rally was initially triggered after the company announced a new round of layoffs.
Continue Reading -->Coffee With Greta: Refinance Demand Surges
DJIA Futures: +91 (+0.3%) SPX Futures: +14 (+0.4%) NASDAQ Futures: +35 (+0.3%) Good morning friends! Futures are rising as traders look ahead to the next inflation report on Thursday. Let’s get right to it! Mortgage Refinance Demand Jumps As Rates Fall Mortgage refinance demand jumped last week as rates dropped at the beginning of the new year. The Mortgage Bankers Association reported refinance applications rose 5% weekly but volume was still down 86% year over year. That surge in refinance activity came as the average 30-year contract rate fell to 6.42% from 6.58%. But prchase applications fell 1% weekly and were 44% lower annually. It was the lowest total of purchase applications since 2014 as buyers struggle with high rates and falling supply. Airline Stocks Flat After FAA Outage Grounds U.S. Flights Shares of the major U.S. airlines are flat ahead of the open after the FAA temporarily halted all departing flights in the U.S. due to a system outage. The regulator’s Notice to Air Missions System, which is used to send messages to pilots, went down this morning. The FAA has just lifted the ground stop but the airlines are now working to catchup. More than 3,700 flights remain delayed according to flight tracking site FlightAware. The White House Press Secretary said in a tweet, “There is no evidence of a cyberattack at this point, but the President directed DOT to conduct a full investigation into the causes.” Southwest Airlines (LUV) shares are tumbling 2% in premarket trade after the president of the Southwest Airlines Pilots Association told CNBC the airline is preparing to cancel its flights today to avoid further disruption. Tesla Plans To Expand Texas Factory Tesla (TSLA) shares are up 2.5% ahead of the open after the company registered with the state of Texas to expand its EV factory in Austin. Filings with the Texas Department of Licensing and Registration show the electric automaker plans to spend $770 million on building new facilities at the factory. The company plans to use the new facilities for battery cell manufacturing and testing, cathode and drive unit manufacturing, and a die shop. Binance Plans 2023 Hiring Spree Crypto firm Binance is planning a hiring spree this year even as its competitors like Coinbase (COIN) conduct mass layoffs. Speaking at the Crypto Finance Conference in Switzerland, CEO Changpeng Zhao said the company plans to increase its staff by 15% to 30% this year. In 2022, Binance increased its headcount from 3,000 employees to nearly 8,000. Zhao said the hiring spree is an effort to get the company “well organized” before the next crypto bull market. “We will continue to build and hopefully we will ramp up again before the next bull market,” he said. In Case You Missed It Bed Bath & Beyond (BBBY) shares surged 27.8% on Tuesday after the company started its latest round of layoffs that were previously announced in August. In an email to employees, the CEO said the retailer is cutting jobs “across our corporate, supply chain and store portfolio.” She also announced the company is eliminating its chief transformation officer role. The stock is up another 26.1% ahead of the open.
Continue Reading -->Coffee With Greta: Powell In Focus
DJIA Futures: -146 (-0.4%) SPX Futures: -18 (-0.5%) NASDAQ Futures: -77 (-0.7%) Good morning friends! Futures are down as traders wait to hear what Fed Chair Jerome Powell will say in Sweden. Let’s get right to it! All Eyes On Powell Fed Chair Jerome Powell is speaking at a Central Bank event in Sweden this morning. Wall Street is closely watching that speech for any comments on his views about inflation and the Fed’s plans in 2023. The Central Bank does not hold its first meeting until January 31 – February 1. CME Group’s FedWatch Tool shows 77.1% of traders expect the FOMC to pivot to a smaller 0.25% rate hike at that meeting. Bed Bath & Beyond Reports Steep Fiscal Q3 Loss Bed Bath & Beyond (BBBY) shares are up 4.3% ahead of the open despite reporting a steeper fiscal Q3 loss than expected. Here’s how the retailer’s results compared to analysts’ expectations: Adjusted loss per share: $3.65 vs $2.23 expected Revenue: $1.26 billion vs $1.34 billion expected The $393 million loss was even worse than Bed Bath’s projection for a $385.8 million loss last week and 42% larger than a year ago. Comparable sales tumbled 32% year over year. Those losses included a $100 million impairment charge related to “certain store-level assets”. The CEO said they have aggressively cut costs and are on track to close the 150 stores that were previously announced. Those efforts have reduced operating expenses to $583.6 million from $698 million a year ago. Albertsons Tops Fiscal Q3 Expectations Albertsons (ACI) shares are up 0.6% in premarket trade after beating fiscal Q3 expectations. Here’s how the grocery store chain’s results compared to analysts’ expectations: Adjusted EPS: $0.87 vs $0.66 expected Revenue: $18.2 billion vs $17.8 billion expected Sales rose by $1.5 billion year over year. More Layoffs At Coinbase Coinbase (COIN) shares are falling 2.0% ahead of the open after announcing another round of mass layoffs. The crypto exchange reportedly plans to cut another 950 jobs, representing about 20% of its workforce. This is on top of the layoffs in June which impacted about 18% of the company’s workforce. CEO Brian Armstrong told CNBC, “With perfect hindsight, looking back, we should have done more. The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.” The layoffs and other restructuring measures are expected to reduce Coinbase’s operating expenses by 25% this quarter. Oak Street Health Surges On Reported CVS Takeover Oak Street Health (OSH) shares are surging 32.2% in premarket trade following a Bloomberg report that CVS (CVS) is exploring options to buy the company. CVS is reportedly in negotiations to buy the clinic chain for more than $10 billion. Oak Street has more than 160 healthcare centers across 21 states. In Case You Missed It Consumers’ short-term inflation expectations improved in December. The New York Fed released its latest Survey of Consumer Expectations on Monday. That showed Americans expect inflation to still be at 5% 1 year from now, down from 5.2% in November. But longer-term expectations rose. Respondents to the survey said they see inflation at 2.4% 5 years from now, up from 2.3% in November.
Continue Reading -->Coffee With Greta: Inflation Week
DJIA Futures: +117 (+0.4%) SPX Futures: +20 (+0.5%) NASDAQ Futures: +74 (+0.7%) Good morning friends! Futures are rising as a new week of trade begins and traders look ahead to key inflation data. Let’s get right to it! Inflation In Focus Inflation is on the brain as traders will get the final CPI reading for 2022 later this week. The key data coming out today is also focused on inflation. The New York Fed releases its December survey of consumer expectations at 11:00 a.m. ET. The market will be focused on the 1-year and 5-year inflation expectations in that report. On Tuesday, Fed Chair Jerome Powell is set to speak in Sweden at 9:00 a.m. ET. The Bureau of Economic Analysis releases the December CPI and core CPI at 8:30 a.m. ET on Thursday. And the week will round out on Friday with the University of Michigan’s January consumer sentiment index and inflation expectations. The December jobs report showed wage-side inflation pressures easing up. That caused a big rally on Wall Street with traders anticipating the Fed may pause rate hikes earlier than previously planned. Duck Creek Technologies Skyrockets Duck Creek Technologies (DCT) shares are surging 45.3% ahead of the open after reaching a takeover deal with private firm Vista Equity Partners. Vista will pay $19 per share in cash for Duck Creek, valuing the insurance tech firm at about $2.6 billion. Trading has been halted on the stock at $18.87 per share. The deal is a 68% premium to Friday’s closing price of $11.28 per share. Lululemon Slides After Revising Q4 Guidance Lululemon (LULU) shares are sliding 10.2% in premarket trade after the company revised its Q4 guidance. The athleisure apparel retailer now expects gross margins in Q4 to decline by 90 to 110 basis points. That’s down from previous expectations for margins to improve by 10 to 20 basis points. But the company raised its Q4 net revenue guidance to a range of $2.66 billion to $2.70 billion vs $2.61 billion to $2.66 billion previously. Energy Stocks Gain As Oil Prices Rise Oil prices are higher this morning on demand optimism in China. West Texas Intermediate crude futures are up 3.3% to over $76 bbl while Brent crude futures are up 3% to just under $81 bbl. China reopened its borders over the weekend as part of its continued efforts to ease Covid restrictions. About 2 billion domestic trips for the Lunar New Year season are expected this year, nearly double last year. The Energy Select Sector SPDR ETF (XLE) is up 1.7% ahead of the open. Bed Bath & Beyond Rebounds Bed Bath & Beyond (BBBY) shares are jumping 16.8% in premarket trade as the company looks to bounce back from last week’s major drop. The threat of bankruptcy is looming overhead as the struggling home goods retailer prepares to report earnings Tuesday morning. Bed Bath & Beyond warned last week it expects to report lower sales than analysts are anticipating. The company also said it has “substantial doubt” about its “ability to continue as a going concern.”
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