All posts by Greta Wall
Coffee With Greta: S&P Falls Into Correction Territory
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +196 (+0.6%) SPX Futures: +28 (+0.6%) NASDAQ Futures: +135 (+0.9%) Good morning friends! Futures are bouncing back after the S&P slipped into correction territory for the first time in nearly two years. Let’s get right to it! S&P 500 Falls into Correction The S&P 500 closed in correction Tuesday for the first time in nearly two-years. The index ended the session down 1% at 4,304. That’s down more than 10% from the last record close at 4,796 on January 3, 2022. It’s the first time the S&P has been in a correction since February 27, 2020. Russia Invades Ukraine President Biden declared that Russia’s latest movement into eastern Ukraine is “the beginning of a Russian invasion.” Biden announced economic sanctions against Russia after Moscow moved troops into Ukraine’s Donbas region. The U.S. is also increasing its troop presence in the Baltics in what Biden called a “defensive measure”. The White House is working with Germany to ensure the Nord Stream 2 pipeline project does not move ahead. In an address with Secretary of State Antony Blinken, Ukraine’s Foreign Minister called on the world to “hit Russia’s economy now and hit it hard”. Russian President Putin threatened war against Ukraine in a nationwide address, unless Kyiv abandons its desire to join NATO. Ukrainian President Volodymyr Zelenskyy has activated reservists in response to the Russian troop movement but has not ordered a full military mobilization. Russia-linked stocks fell sharply amid the conflict, the VanEck Russia ETF (RSX) closed 8.9% lower on Tuesday. Virgin Galactic Beats Q4 Expectations Virgin Galactic (SPCE) shares are up 3.3% ahead of the open after the company reported a smaller Q4 loss than expected. The space-tourism company lost $0.31 per share on $141,000 in revenue. That was better than consensus estimates for a loss of $0.35 per share. Although revenue fell short of expectations for $300,000, it was up sharply from zero revenue in Q4 2020. The CEO said, “We remain on track and on schedule to complete our enhancement program and launch commercial service later this year.” Teladoc Slips After Q4 Earnings Teladoc (TDOC) shares are down 0.8% in premarket trade after reporting a smaller Q4 loss than expected. The telemedicine company lost $0.07 per share on $554.2 million in revenue. Analysts had forecast a loss of $0.57 per share on $547 million in revenue. Teladoc forecast full-year sales growth between 25% to 30%, in-line with expectations. The stock is the third largest holding in Cathie Wood’s Ark Innovation ETF (ARKK), which is up 1.6% ahead of the open. Mortgage Rates Tumble as Rates Rise Mortgage application volume fell to the lowest level since December 2019 last week. The Mortgage Bankers Association reports total application volume tumbled 13.1%. Refinance applications were down 15% weekly and 56% compared to a year ago. New purchase applications fell 10% weekly and 6% annually. It was the third straight week of purchase applications falling. The average 30-year rate rose to 4.06% from 4.05%. Covid Cases Plummet 90% Data from Johns Hopkins University shows the U.S. is seeing an average of 84,000 new Covid cases per day. That’s down 90% from the record high of 800,000 per day on January 15. Hospitalizations are also down sharply. The latest seven-day average shows 66,000 patients hospitalized with Covid in the U.S., down from 159,000 on January 20. Average daily deaths have fallen below 2,000 after peaking at 2,600 on February 1. With cases falling, many states are switching to an endemic posture on policy. New York and California, two of the strictest states on Covid policy, both allowed their indoor mask mandates to expire. The CDC is expected to update its mask guidance soon. In Case You Missed It U.S. consumer confidence slipped this month amid continued inflation pressures. The Conference Board’s consumer confidence index fell to 110.5 from January’s downwardly revised 111.1. Confidence in current economic conditions rose to 145.1 from 144.5, expectations index fell to 87.5 from 88.8. Former President Trump’s new social media app Truth Social was #1 on the Apple (AAPL) app store Tuesday. Digital World Acquisition (DWAC) shares closed 10.2% higher. DWAC is the SPAC Trump Media & Technology Group is set to merge with to go public.
Continue Reading -->Coffee With Greta: Russia-Ukraine Intensifies
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -126 (-0.4%) SPX Futures: -10 (-0.2%) NASDAQ Futures: -77 (-0.6%) Good morning friends! Futures are lower as tensions escalate between Russia and Ukraine. Let’s get right to it! Russian Forces Move In to Eastern Ukraine Russian President Vladimir Putin recognized the independence of the Dunetsk and Luhansk regions of eastern Ukraine on Monday. He then ordered Russian troops to enter those separatist regions, on what Putin claims is a “peacekeeping” mission. In response, President Biden ordered sanctions on both regions via an executive order. The U.K. also imposed economic sanctions against five Russian banks and three wealthy individuals. This escalation undermines U.S. willingness to work toward a diplomatic solution. Biden had previously agreed to meet with Putin in a summit with French President Emmanuel Macron, if Russia did not invade Ukraine. Secretary of State Antony Blinken is slated to meet with Ukrainian Foreign Minister Dmytro Kuleba today. Gas Prices Hit 8-Year High Gas prices are continuing to rise as oil prices surge on the Russia-Ukraine tensions. Data from AAA shows the national average has surged to an 8-year high of $3.53 per gallon. More price increases are likely on the way with oil continuing to balloon. West Texas Intermediate Crude futures are up 3.1%, nearing $94 per barrel. Crypto Drops Cryptocurrency prices are down as traders sell-off risk assets amid the Russia-Ukraine tensions. Bitcoin hit a more than two-week low at $36,370 this morning but is now back above $37,500. Ethereum is trading around $2,500 while Dogecoin is at $0.13. Home Depot Beats Q4 Expectations Home Depot (HD) shares are down 3.1% in premarket trade despite beating Q4 expectations on the top and bottom line. The home improvement retailer reported earnings of $3.21 per share on $35.72 billion in revenue. That beat analysts’ expectations for EPS of $3.18 on $34.87 billion in revenue. Home Depot’s global same-store sales surged 8.1% year-over-year while U.S. same-store sales jumped 7.6%. The company forecast growth this fiscal year in-line with expectations. The board approved a 15% quarterly dividend increase to $1.90 per share. Macy’s Pops on Earnings Beat Macy’s (M) shares are up 6.3% ahead of the open after strong Q4 earnings. The department store reported adjusted earnings of $2.45 per share on $8.67 billion in revenue. That was better than analysts’ forecasts for EPS of $2 on $8.47 billion in revenue. Same-store sales surged 27.8% year-over-year and 6.1% compared to 2020. Macy’s fiscal 2022 forecast was also stronger than expected. Finally, the company announced a $2 billion stock repurchase program and hiked its dividend by 5%. Are Home Prices Still Rising? The December S&P Case-Shiller home price index prints at 9:00 a.m. ET. Buyers are hopeful this report will show a continued slowdown in the pace of home price growth. Rising mortgage rates are further squeezing buyers who were already being pressured by high prices. The average 30-year contract rate rose above 4% last week for the first time since 2019. But economists say prices will not fall anytime soon, as demand continues to far outpace supply. How Are Consumers Feeling About Inflation? The Conference Board releases its February consumer confidence index at 10:00 a.m. ET. Consensus estimates show the survey falling more than 4 points to 109.5 this month. Consumers have been squeezed by surging inflation as the CPI hit a fresh 40-year high in January. The market is also eyeing more inflation data this week, with the PCE index scheduled to be released Friday. The Core PCE is the Fed’s preferred measure of inflation. In Case You Missed It U.K. Prime Minister Boris Johnson lifted all remaining Covid restrictions in the country Monday. Those who test positive will no longer be legally required to isolate for 10 days. Free mass testing will also end April 1. The decision came just a day after the Queen tested positive.
Continue Reading -->Coffee With Greta: Roku’s BIG Revenue Miss
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +42 (+0.1%) SPX Futures: +7 (+0.1%) NASDAQ Futures: +23 (+0.2%) Good morning friends! Futures are slightly higher after the market tumbled Thursday with the Dow suffering its worst drop of 2022. Let’s get right to it! Roku Plunges After Disappointing Q4 Roku (ROKU) shares are tumbling 27.2% ahead of the open after the company reported slower than expected revenue growth. Roku reported adjusted earnings of $0.17 per share on $865.3 million in revenue. Earnings were ahead of consensus but revenue fell short of analysts’ estimates for $894 million. Roku’s sales rose 33% year-over-year, a sharp slowdown from 51% in Q3 and 81% growth in Q2. The company expects that slowdown to continue. Roku forecast Q1 revenue of $721 million, implying 25% growth. The stock is the second largest holding in Cathie Wood’s Ark Innovation ETF (ARKK). ARKK is down 2.3% in premarket trade. St. Louis Fed President Reiterates Hawkish Stance St Louis Fed President James Bullard warned the U.S. is at risk of “out of control” inflation. In a panel discussion at Columbia University, Bullard repeated his calls to “front-load” rate hikes with a full percentage increase by July 1. He said, “the Fed should move faster and more aggressively than we would have in other circumstances.” CME Group’s FedWatch Tool now shows 69% of traders expect a 0.25% rate hike at the March meeting, 93% expected a 0.5% hike just a week ago. Russia-Ukraine Tensions Escalate The market is continuing to monitor the tensions between Russia and Ukraine as the U.S. calls for a diplomatic solution. Ukraine has accused pro-Russian rebels of attacking a village near the border on Thursday. Russia is continuing to demand the removal of all NATO and U.S. troops from Eastern Europe. President Biden told reporters Thursday it appears Russia is engaged in a “false flag operation” and it is likely Moscow will invade Ukraine “in the next several days”. The VanEck Russia ETF (RSX) tumbled 5.2% on Thursday and is down 1.9% ahead of the open. Senate Avoids Government Shutdown The Senate passed a short-term funding bill in a 65-27 vote Thursday to avoid a government shutdown today. The legislation will now be signed by Biden and maintains current funding levels through March 11. Lawmakers are now hoping to agree on a long-term spending bill which would fund the government through the end of the fiscal year on September 30. Existing Home Sales Preview The National Association of Realtors reports existing home sales for January at 10:00 a.m. ET. Consensus estimates are for sales to fall to a seasonally adjusted annual rate of 6.10 million units from 6.18 million in December. Homebuyers have been squeezed by high prices due to low supply with demand at record highs. Rising mortgage rates have made that affordability issue worse. No Trading Monday Next week will be shortened for traders as the markets are closed Monday in observance of Washington’s Birthday. There will be no Coffee with Greta that morning but I’ll be back in your inbox Tuesday morning! In Case You Missed It Ford’s (F) Mustang Mach-E beat out Tesla’s (TSLA) Model 3 as Consumer Reports’ top EV pick in 2022. The group said the Mach-E is better when it comes to self-driving and ensuring the driver remains alert. Tesla fell seven spots to 23rd out of 32 major auto brands on the list.
Continue Reading -->Coffee With Greta: Walmart Pops, Nvidia Slips
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -121 (-0.4%) SPX Futures: -20 (-0.4%) NASDAQ Futures: -78 (-0.5%) Good morning friends! Futures are lower as the market digests some key earnings. Let’s get right to it! Walmart Pops on Strong Earnings Walmart (WMT) shares are up 1.5% ahead of the open after the retailer beat Q4 expectations on the top and bottom line. The company reported adjusted earnings of $1.53 per share on $152.87 billion in revenue. That beat analysts’ expectations for adjusted EPS of $1.50 on $151.53 billion in revenue. Walmart’s earnings show the retailer had a strong performance over the holidays. Same-store sales in the U.S. rose 5.6%, in-line with expectations. Walmart hiked its quarterly dividend to $0.56 per share and said it plans to repurchase $10 billion of its stock in fiscal 2023. Nvidia Crushes Q4 Expectations Nvidia (NVDA) shares are down 2% in premarket trade despite reporting a record-breaking fourth quarter. The chipmaker reported adjusted earnings of $1.32 per share on $7.64 billion in revenue. That was higher than analysts’ expectations for EPS of $1.22 on $7.42 billion in revenue. Nvidia’s profits were up 69% year-over-year, while revenue jumped 53%. The company’s gaming business remains its biggest revenue generator. Sales in that division rose 37% year-over-year to $3.42 billion in Q4, driven by sales of its GeForce graphics processors. Nvidia’s data center sales jumped 71% annually to $3.26 billion, while professional visualization sales surged 109% to $643 million. Automotive chip sales fell 14% year-over-year to $125 million amid continued supply constraints for global automakers. The company also had strong Q1 guidance, forecasting $8.10 billion in sales vs the consensus estimate for $7.29 billion. Nvidia also has $9 billion in long-term supply obligations, up from $2.54 billion a year ago. DoorDash Users Hit Record-High DoorDash (DASH) shares are surging 21.5% ahead of the open after reporting record-high user numbers in Q4 even as restaurants reopened. The delivery app reported a steeper profit loss than expected, at $0.45 per share vs the $0.25 loss analysts were expecting. But $1.3 billion in revenue came in higher than estimates for $1.28 billion. The company’s gross-order value jumped 36% year-over-year to $11.2 billion. That was ahead of analysts’ projections for $10.6 billion. DoorDash also had 369 million total orders last quarter vs consensus estimates for 361 million. The company forecast gross-order value this year will range between $48 billion and $50 billion, in-line with analysts’ projections of $49.4 billion. Weekly Jobless Claims Rise Unexpectedly The Labor Department reported 248,000 Americans filed initial claims for unemployment benefits last week. That was up 23,000 from the previous week and higher than expectations for claims to fall to 218,000. It’s the first time claims have risen in a month. Continuing jobless claims fell more than expected to 1.59 million down about 26,000 from the previous week and better than expectations for 1.62 million. Housing Construction Stumbles U.S. home construction pulled back in January as builders struggle with supply chain issues. The Census Bureau reported housing starts fell 4.1% at the beginning of the year, to a seasonally adjusted annualized rate of 1.638 million units. That was a steeper drop than economists’ expectations for a SAAR of 1.69 million units. Single-family starts tumbled 5.6% while multi-family starts fell 2.1%. But permitting activity beat expectations, signaling the pullback in homebuilding may be short-lived. New permits approved in January were at an SAAR of 1.899 million, up 0.7% from December and higher than economists’ forecasts for 1.75 million. Homebuilder sentiment fell 1 point on Wednesday to 82, declining for the second straight month as builders struggle with supply. The average size of a 30-year mortgage in the U.S. also hit a new record high at $453,000 this week. And the average 30-year mortgage rate popped above 4% for the first time since 2019. Higher rates are expected to squeeze more buyers out of the market who are already struggling with high prices. In Case You Missed It The Fed’s January meeting minutes told us what we already know, the bank is ready to raise rates and shrink its balance sheet. But the readout didn’t provide much detail about how many rate hikes officials expect this year. FOMC participants agreed this tightening cycle should be faster than the last and said they will assess moves on a meeting-by-meeting basis. The VanEck Oil Services ETF (OIH) jumped to the highest level in more than two years Wednesday as tensions simmer between Russia and Ukraine. The fund closed 2.3% higher at $248.54 and is up 34.5% YTD. The jump in energy prices comes amid continued tensions between Russia and Ukraine. U.S. officials confirmed Thursday that Russia had increased its troop presence at the Ukraine border by 7,000 in recent days. That contradicts Moscow’s previous claim it was pulling troops back.
Continue Reading -->Coffee With Greta: Inflation Boosts Retail Sales
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -45 (-0.1%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -38 (-0.3%) Good morning friends! Futures are flat as the market digests a strong retail sales report. Let’s get right to it! Retail Sales Surge Amid Hot Inflation The Census Bureau reported retail sales rose 3.8% in January, beating expectations for a 2.1% increase. Core retail sales, which excludes auto and gas sales, jumped 3.3% vs expectations for 0.8%. The beat comes despite inflation soaring to a 40-year high in January, when the CPI surged 7.5%. Since the data is not adjusted for inflation, those surging prices helped boost the sales total to $649.8 billion, as Americans paid more for most goods. Retail sales were 13% higher compared to January 2021 December’s sales were revised lower to show a 2.5% drop from the previous 1.9% decline. Roblox Tumbles on Earnings Miss Roblox (RBLX) shares are dropping 17.2% ahead of the open after the online gaming company reported a steeper Q4 loss than expected. Roblox reported an adjusted loss of $0.25 per share on $568.8 million in revenue. But analysts had forecast a per share loss of just $0.12. Roblox’s bookings also fell short at $770.1 million vs expectations for $772 million. The company defines bookings as “revenue plus the change in deferred revenue during the period and other non-cash adjustments.” This is an important metric because Roblox games use the digital currency Robux for transactions between players, which may be considered “deferred revenue”. The company did report strong user growth. Average Daily Active Users jumped 33% year-over-year to 49.5 million in Q4. In January, DAUs were already up to 54.7 million. “With nearly 55 million daily active users, Roblox is increasingly an integral part of people’s lives,” said the CEO. “As we look ahead to 2022, we will continue to develop our technology to enable deeper forms of communication, immersion and expression on our platform.” Airbnb Pops on Strong Guidance Airbnb (ABNB) shares are up 2.9% in premarket trade after Q4 earnings and Q1 guidance both beat expectations. The company reported earnings of $0.08 per share on $1.53 billion in revenue. That beat analysts’ expectations for EPS of $0.03 on $1.46 billion in revenue. Airbnb’s strong performance came as bookings continued to rebound from the pandemic. The company said average trip lengths have increased by 15% in the past two years, as remote work becomes more permanent for many in the U.S. Stays of more than seven days now represent nearly half of all gross bookings. Airbnb expects Q1 2022 bookings to exceed Q1 2019 levels. The company also forecast revenue between $1.41 billion and $1.48 billion this quarter, topping consensus estimates for $1.24 billion. High Lumber Prices May Weigh on Homebuilders The National Association of Homebuilders releases its February sentiment index at 10:00 a.m. ET. That survey is expected to slip to 82 this month from 83 in January. Homebuilders have benefited from strong demand and short supply in the housing market. But high costs have weighed on their business. And lumber prices are climbing again after cooling last summer. CNBC reported that lumber prices are three times higher than average pre-pandemic levels. The NAHB has estimated those high prices have added more than $18,600 to the price of a new single-family home. Fed Minutes Ahead The Federal Reserve releases the minutes of its January meeting at 2:00 p.m. ET today. The market is eyeing this report to get more clarity on the Central Bank’s plans to tighten monetary policy. With the CPI hitting a 40-year high and the PPI remaining at a record high in January, many analysts have raised their rate hike expectations for the year. The market has priced in as many as seven rate hikes this year. CME Group’s FedWatch Tool shows 57.9% of traders expect the March rate hike to be 0.5% instead of 0.25%. In Case You Missed It President Biden expressed cautious optimism about Russia pulling troops back from the Ukraine border on Tuesday. In a speech at the White House, Biden said the U.S. is prepared to defend NATO members if needed. He reiterated America’s commitment to Ukraine’s sovereignty. Biden said he has made it clear to Russia that the U.S. “will respond” forcefully if Russia targets Americans or Ukraine. Marriott International (MAR) shares closed at a new record $181.20 per share after strong Q4 earnings Tuesday. The hotel chain beat expectations on both the top and bottom line last quarter. Revenue more than doubled year-over-year as leisure bookings bounced back. Marriott said it expects business demand to continue rebounding as the economy recovers.
Continue Reading -->Coffee With Greta: More HOT Inflation Data
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +352 (+1.0%) SPX Futures: +55 (+1.3%) NASDAQ Futures: +244 (+1.8%) Good morning friends! Futures are higher as the market digests some more hot inflation data and Russia-Ukraine tensions appear to be cooling. Let’s get right to it! U.S. Producer Prices Surge The Bureau of Labor Statistics released more hot inflation data this morning. The Producer Price Index surged 9.7% year-over-year in January, higher than expectations for 9.1%. On a monthly basis, the PPI rose 1.0% vs expectations for 0.3%. The Core PPI, which excludes food, energy, and trade prices, jumped 0.9% monthly and 6.9% annually. Both of those readings were higher than expected. This comes after the CPI surged 7.5% year-over-year in January, marking the fastest pace of inflation in 40-years. The higher producer prices are expected to contribute to higher consumer inflation down the line, as producers pass down those costs. Russian Troops Pull Back from Ukraine Border Oil prices are retreating, stock futures are higher, and cryptocurrencies are up after Moscow announced it is pulling back some of the troops at the Ukraine border. U.S. crude prices are down nearly 3%, under $93 per barrel. Oil prices hit a seven-year high as tensions appeared to escalate on Monday. Over the past 24 hours, Bitcoin is 3.7% higher while Ethereum has risen 5.7%. The bounce comes as there appears to be a deescalation between Russia and Ukraine. A spokesman for the Russian Ministry of Defense said the troops had completed their military drills along the Ukraine border and will begin moving back to their bases today. But NATO officials are urging caution in taking Russia’s word. NATO Secretary General Jens Stoltenberg said the group had “not seen any sign of de-escalation on the ground from the Russian side.” The tensions stem from Ukraine’s desire to join NATO, while Russia wants that to never be allowed to happen. Moscow also wants NATO to shrink its presence in Eastern Europe. Israeli Chipmaker Soars on Intel Acquisition News Tower Semiconductor (TSEM) shares are up 41% in premarket trade following a report that it is about to acquired by Intel (INTC). The Wall Street Journal reported Monday evening that Intel was looking to buy the chipmaker for nearly $6 billion. The acquisition is reportedly part of Intel’s plans to expand its manufacturing capabilities. TSEM shares soared more than 50% in after-hours trade following the announcement. Tower Semiconductor has manufacturing facilities in Israel, Italy, California, and Texas. It also owns a 51% stake in Tower Partners Semiconductor, which has three locations in Japan. INTC shares are 1.1% higher ahead of the open. In Case You Missed It St Louis Fed President James Bullard reiterated his hawkish stance on monetary policy Monday. He told CNBC the bank is already behind on inflation and needs to “front load” rate hikes. Bullard is calling for interest rates to be a full 1% higher by July, which would mean one 0.5% hike in the next three meetings. He is a voting member of the FOMC this year and said he will try to convince his colleagues that his position is correct. Shares of the major vaccine makers tumbled Monday as COVID cases wane. Moderna (MRNA) shares plunged 11.7%, BioNTech (BNTX) tumbled 9.6%, Pfizer (PFE) fell 1.9%, and Johnson & Johnson (JNJ) closed 1.3% lower. The drop comes as Omicron cases are rapidly dropping across the U.S. The seven-day average of cases in the U.S. plunged 42% in the past week, to 175,000 as of Sunday.
Continue Reading -->Coffee With Greta: The Bulls Disappear
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. DJIA Futures: +6 (+0.02%) SPX Futures: +3 (+0.1%) NASDAQ Futures: +3 (+0.02%) Good morning friends! Futures are flat as the market continues to monitor tensions between Ukraine and Russia. And the market bulls have vanished. Let’s get right to it! Fear Takes Over The market bulls are gone. T3 Live’s weekly market sentiment survey found traders are more bearish than ever. 81% of respondents to this week’s survey said the S&P 500 will go down in the next 30 days. That’s an all-time low in bearish sentiment for the survey. Sentiment flipped on Apple (AAPL), with 68% saying the stock will go down over the next month. And it was even worse for Tesla (TSLA), as 78% are bears on the stock. The risk-off sentiment spread to crypto, with 70% saying they’re bearish on Bitcoin. As traders ditch risk, gold sentiment hit an all-time high for the survey. 81% of traders said they see gold prices going up in the next 30 days. And oil sentiment rose further. 80% of surveyed traders expect those prices to continue rising. Markets Monitor Russia-Ukraine Tensions Global markets are monitoring tensions between Russia and Ukraine. Bloomberg reported this morning that Russian Foreign Minister Sergei Lavrov is proposing a continuation of diplomatic efforts. But Russia is continuing to train along the Ukraine border, with 130,000 troops in the area. The White House says there was no breakthrough from President Biden’s phone call with Russian President Putin over the weekend. Now the German Chancellor is visiting Ukraine and Russia today. A war in Ukraine would add another layer of uncertainty for Wall Street, on top of tightening monetary policy. More Inflation Data, Retail Sales This Week The Bureau of Labor Statistics releases more inflation data Tuesday morning with the January Producer Price Index. All eyes are on that report after the Consumer Price Index surged to a 40-year high last week. Economists expect that report to show prices surged 9.3% year-over-year last month, down from 9.7% in December. Higher producer prices translate into higher consumer prices down the line. The Census Bureau’s retail sales report Wednesday morning will be key to gauge how much January’s inflation pressures hurt consumer activity. Consensus estimates are for that report to show a 2% increase in retail sales last month after a surprise drop in December. In Case You Missed It Pfizer (PFE) and the FDA delayed the company’s emergency request to approve its COVID vaccine for children under 5-years-old. The company had requested the first two doses to be approved while they awaited clinical data for a third dose. But the FDA said they need that data before they will approve the shots. Pfizer expects to release those trial results in April. The first two doses did not produce an adequate immune response in young children. The Los Angeles Rams won Super Bowl LVI at home on Sunday. It’s the team’s first Super Bowl win since 1999 and the second in franchise history. The Rams were losing at the start of the 4th quarter and secured the win with a late comeback drive.
Continue Reading -->Elon Musk: 5 Fun Facts You Need to Know
Elon Musk… you can love him. You can hate him. But you can’t ignore Tesla’s (TSLA) polarizing CEO. Because most executives can’t move markets with a single Tweet. But you might be surprised to learn the self-proclaimed “Dogefather” hasn’t always liked crypto and is a citizen of 3 countries. So let’s learn a little more about the man.. Musk Was the First Person in History Worth $300 billion Tesla CEO Elon Musk is the richest person in the world and his climb to the top has been historic. The Bloomberg Billionaires Index shows Musk had a net worth of $27.6 billion at the end of 2019. By the end of 2020, that number ballooned to $161 billion. That’s the biggest one-year increase for any person in history. In 2021, he became the first person ever to be worth more than $300 billion. Musk crossed that milestone on October 28, 2021 as Tesla shares jumped to $1,114. Musk’s worth has fluctuated along with Tesla’s share price, but he still remains on top of the billionaire’s list. Tesla is the Only Stock Musk Owns During a 2018 interview at South by Southwest, Musk said, “I actually don’t invest in anything. In fact, the only public security that I own of any kind is Tesla.” As of February 2022, Musk holds an estimated 177 million Tesla shares, after selling a bunch of the stock in the second half of 2021. Those share sales were part of a 10B5-1 trading plan filed by Tesla with the SEC in September 2021. But Musk had a little fun before executing the sales, sending out a Twitter poll in November asking if he should sell 10% of his stake. Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this? — Elon Musk (@elonmusk) November 6, 2021 That poll prompted a short-lived selloff in the stock, and Musk proceeded to sell more than $16 billion worth of shares by December 28. But he also exercised options to purchase more shares at the same time, increasing his total stake by the end of the year. Although he doesn’t own any other stocks, Musk has become a big fan of cryptocurrencies. Speaking of which… The Dogefather Has Not Always Liked Crypto It’s safe to say Musk’s feelings about crypto have changed over the years. In a February 2018 tweet, the Tesla CEO said he literally owned zero cryptocurrency. Not sure. I let @jack know, but it’s still going. I literally own zero cryptocurrency, apart from .25 BTC that a friend sent me many years ago. — Elon Musk (@elonmusk) February 22, 2018 We don’t know exactly when his attitude about crypto changed, but Musk was all-in by 2021. He boosted the value of Dogecoin by tweeting about it, and even proclaimed himself the Dogefather before hosting SNL in April 2021. The Dogefather SNL May 8 — Elon Musk (@elonmusk) April 28, 2021 But he’s also worked to enact change in the crypto space. Musk changed his mind on Tesla accepting Bitcoin as payment in May 2021, raising concerns about the environmental impact of mining. Speaking at the virtual B Word Conference in July 2021, he said the automaker would probably accept Bitcoin again in the future. “I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting bitcoin,” Musk said. Tesla’s 2022 annual report with the SEC showed the automaker still holds about $2 billion worth of Bitcoin. PayPal Helped Musk Start Tesla In March 1999, Musk cofounded the online banking site called X.com. A year later, X.com merged with Max Levchin and Peter Thiel’s PayPal. When PayPal was bought by eBay for $1.5 billion in 2002, Musk received a $180 million payout $70 million of that money went into Tesla. Musk is from South Africa Hearing Elon Musk speak, you might wonder where he’s from. He was born in Pretoria, South Africa on June 28, 1971. The billionaire was raised in that town by his South African father and Canadian mother. He moved to Canada at 17-years-old to avoid being forced to enlist in the South African military. Musk then came to the U.S. two years later when he transferred to the University of Pennsylvania. He holds triple citizenship in South Africa, the U.S., and Canada. So an immigrant from South Africa started the most valuable car company ever and cemented himself as the richest person in history. Talk about your success stories…
Continue Reading -->The Fed: 9 Things Traders Need to Know
Fun fact: the Fed’s job is not to make the stock market go up. Believe it or not, the Central Bank doesn’t care about your 401K balance. So what is the purpose of the Federal Reserve system in the U.S., and how did it come to be? We’re gonna talk about that and a whole lot more today: The Fed Was Born Out of a Fake Duck Hunt on Jekyll Island The U.S. Federal Reserve system was born out of a secret meeting disguised as a duck hunting trip on Jekyll Island off the Coast of Georgia. Seriously. No wonder there’s so many conspiracy theories about the Fed… Rhode Island Senator Nelson Aldrich invited five friends, mostly bankers, on a “duck hunting trip” at the private Jekyll Island Club in November 1910. But the trip wasn’t for hunting. The group was meeting to establish a framework to centralize the U.S. banking system. JP Morgan was a member of the club and is believed to have arranged for them to use the clubhouse. The meeting came in the wake of a series of U.S. financial crises, including The Panic of 1907, and was kept secret to avoid controversy over banking executives being involved in reforming the banking system. Aldrich took the group’s ideas back to the National Monetary Commission established by Congress to study reforms of the banking system. After three years of debate, Congress passed the Federal Reserve Act in late 1913. President Woodrow Wilson signed it into law on December 23, 1913, creating the Federal Reserve System simply referred to as “The Fed” or “The Central Bank” today. And the Jekyll Island meeting? Participants did not publicly admit it happened until the 1930’s. But it’s more than just one big bank. There Are 12 Federal Reserve Banks The Fed is more than just the central bank located in Washington, D.C. The system consists of regional Federal Reserve Banks in 12 districts: Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Each regional bank has its own nine-member board of directors who appoints a president, subject to the approval of the larger Federal Reserve Board of Governors. Each president serves on the Federal Open Market Committee which sets monetary policy, including interest rates. The New York Fed is the Most Important District The Federal Reserve Bank of New York is the most important district and is the only regional bank with a permanent voting position on the Federal Open Market Committee. New York is the bank that actually implements the policies decided by the FOMC. The New York Fed’s Open Market Trading Desk buys Treasury bonds and mortgage-backed securities from large commercial banks in order to manipulate the money supply in the U.S. economy. The Fed System Has a Board of Governors In addition to the regional Fed presidents, the U.S. Federal Reserve system has a seven member Board of Governors. All seven members are nominated by the U.S. President and confirmed by the Senate for a 14-year term. Their terms are staggered, with one of the seven expiring every two years on January 31. This stagger is meant to create political independence at the Fed by ensuring one President cannot “stack” the board with members of a particular political persuasion. A Fed Governor cannot be reappointed after serving a full 14-year term. The President chooses the Federal Reserve Chair and Vice Chair for four-year terms out of the members of the board. The Chair and Vice Chair can serve multiple terms throughout their 14-year board term. The FOMC Was Not Established Until 1935 The Banking Act of 1935 established the Federal Open Market Committee (FOMC) as the policy decision body of the Federal Reserve. Before this, the 12 Fed regional banks worked together to decide monetary policy each year. The FOMC consists of all seven members of the Board of Governors and the 12 regional Fed presidents. But the 12 presidents don’t all have a voting seat at every meeting. The seven Fed Governors and the New York Fed all have permanent voting positions. The other 11 regional presidents serve on a rotating schedule in the other 4 voting seats on the FOMC. The rotation schedule is as follows: One from Boston, Philadelphia, or Richmond One from Cleveland or Chicago One from Atlanta, St. Louis, or Dallas One from Minneapolis, Kansas City, or San Francisco Each voting member serves a one-year term in the seat before it rotates to the next one in line for their seat. By tradition, the Fed Chair is elected by the FOMC as its chair and the New York Fed president is elected the FOMC vice chair. The Fed Has a Dual Mandate You might be surprised to learn the Fed’s job isn’t to make the stock market go up. In 1977, the Fed was given a mandate from Congress to “promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates.” Although that’s actually three goals, this is often referred to as the bank’s “dual mandate”. In plain English, that means the Fed’s purpose is to ensure economic conditions in the U.S. are conducive to a fully-employed labor market with stable inflation. They accomplish these goals by changing interest rates and manipulating how much cash is circulating through the economy. The Fed Doesn’t Set the Interest Rate on Your Car Loan The Fed’s most widely used tool is interest rates. But we’re not talking about the rate on your mortgage or car loan. The interest rate set by the Fed is the federal funds rate, which directly impacts banks, and then consumers down the line. Commercial banks lend each other money for short periods in order to meet the cash reserve requirements from the Fed. These are typically one-night loans. But when one bank sends another money, the recipient bank must send the cash back the next day with interest. The rate on that interest is the federal funds rate, which
Continue Reading -->The Top 11 Economic Indicators Traders Need to Know
Traders are obsessed with economic indicators and data. Why? Because economic numbers move stock prices, commodities prices, options prices, interest rates, and just about everything else you can think of. So it’s a good thing the government is always giving us a fix! But which ones should you pay most attention to as a trader? Here’s a breakdown of the top 11 indicators that traders like you need to know about. 11. Homebuilder Sentiment From the National Association of Homebuilders Released at 8:30 a.m. ET in the third week of the month Measures builder confidence about current and future market conditions To judge Homebuilder Sentiment, The National Association of Homebuilders conducts a monthly survey of its members in partnership with Wells Fargo. The survey asks NAHB members to rate market conditions based on their personal experience. The questions are centered around the current state of the market, conditions 6 months from now, and the traffic of prospective buyers. Builders are asked to rank current and future sales conditions as “good”, “fair”, or “poor”. Prospective buyers are rated as “high to very high”, “average”, or “low to very low”. NAHB seasonally adjusted the number of responses in each category, “Good/High” or “Poor/Low” They then use this formula: (Good/High – Poor/Low + 100), to calculate the monthly index on a scale from 0 to 100. If every response was Good/High then the index will be 100. If all responses were Poor/Low it would be 0. Readings above 50 are considered positive. This index is a leading indicator for future home construction, since it is based on future expectations. The market uses this report to gauge how builders themselves are feeling about their future. NAHB has conducted the monthly survey since January 1985. 10. New Home Sales, Starts & Building Permits From the U.S. Census Bureau Housing Starts and Building Permits report released on the 12th workday of the month at 8:30 a.m. ET New Residential Sales report released on the 17th workday of the month at 10:00 a.m. ET Measures pace of new home construction and sales of newly built homes Housing starts measure how many new homes builders broke ground on each month. It’s a lagging indicator because it measures past activity. Building permits measure how many new permits were approved to build homes in the months ahead, making it a leading indicator. The numbers are reported together by the Census Bureau to measure the health of new home construction. Housing starts and permits include both single-family homes and multi-family buildings. The Census Bureau also reports new residential sales each month. This is a measure of how many newly constructed homes were sold the previous month and is a lagging indicator. The report includes sales data on both single-family homes and multi-family units. The data is reported at a seasonally adjusted annualized rate in order to avoid large swings based on season. The new residential sales report includes data on supply (how many units were for sale at the end of the month) as well as prices. It also breaks down new homes by construction status: not started, under construction, or complete. This group of reports gives the stock market a measure of the overall health of the new home market. 9. Existing & Pending Home Sales From the National Association of Realtors Existing Sales report released in the 3rd week of the month at 8:30 a.m. ET Pending Sales report printed in the 4th week of the month at 8:30 a.m. ET Measure of existing home sales closed in the previous month and number of contracts signed to purchase a home The National Association of Realtors reports existing home sales around the 20th of each month. This report measures the total number of closed sales in the previous month, making it a lagging indicator. Sales are reported at a seasonally adjusted annualized rate, which means the numbers are smoothed out to eliminate the impact of seasonal changes. Home sales are typically faster in summer and slower in winter. The existing sales report also includes data on supply levels and home prices. NAR reports pending home sales in the week after existing sales. This report is a measurement of the number of contracts signed to purchase a home in the previous month. Pending Home Sales are a leading indicator for the housing market. This report typically impacts home building stocks directly. 8. Retail Sales From the U.S. Census Bureau Released mid-monthly at 8:30 a.m. Measure of consumer spending in the U.S. The retail sales report measures the total amount U.S. consumers spend on goods and services per month in 13 categories: Motor vehicle & parts dealers Furniture & home furnishing retailers Electronics and appliances Building materials and gardening Food and beverage stores Health & personal care Gasoline Clothing and accessories Sporting goods, hobby, musical instruments, book store General merchandise Miscellaneous retailers Nonstore retailers (online) Food services and drinking places (restaurants and bars) The monthly report includes a headline number, and retail sales excluding auto and gasoline sales. Auto and gas numbers are considered volatile because prices rise and fall more often than other categories. Each monthly report also includes revisions for the two months prior. Retail sales is a lagging indicator, reporting data from the previous month. The market will typically rise on a good retail sales report and fall with a bad one as it signals the strength of the consumer side of the economy. 7. GDP From the Bureau of Economic Analysis Released at 8:30 a.m. ET, typically on the last Thursday of the month Measures U.S. economic growth by quarter GDP stands for Gross Domestic Product. The Bureau of Economic Analysis reports GDP on a quarterly basis. The advanced estimate for each quarter is typically released on the last Thursday of the first month following the conclusion of the quarter. The first revision is then printed the following month and the final revision the month after that. So for the first calendar quarter ending in March, you
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