Category Archives for Coffee With Greta
Coffee With Greta: Is Another Bank Failing?
DJIA Futures: -69 (-0.2%) SPX Futures: -11 (-0.3%) NASDAQ Futures: -13 (-0.1%) Good morning friends! Futures are falling as regional bank fears return. Let’s get right to it! PacWest Plunges PacWest Bancorp (PACW) shares are plunging 37.7% ahead of the open amid concerns it will be the next regional bank to fail. In a statement this morning, the bank confirmed reports that the bank is reviewing “strategic options”, including a potential sale. PacWest said it “will continue to evaluate all options to maximize shareholder value.” The statement also said it had not experienced “out-of-the-ordinary deposit flows” after the failure of First Republic Bank earlier this week. The news is dragging down other regional banks as well with the SPDR S&P Regional Banking ETF (KRE) down 3.9%, Western Alliance Bancorp (WAL) dropping 14.4%, and Comerica (CMA) sliding 7%. PacWest reported Q1 earnings last week, which showed total deposits declined by $5 billion in the first quarter to $28.2 billion. But the bank said it was already seeing a rebound in deposits at the end of the quarter and into the beginning of Q2. The turmoil for PacWest comes after the Fed said on Wednesday that the U.S. banking system is sound and resilient. Qualcomm Falls On Weak Guidance Qualcomm (QCOM) shares are falling 7.5% in premarket trade after reporting fiscal Q2 results that were in line with expectations but issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $2.15 as expected Revenue: $9.28 billion vs $9.1 billion expected Total revenue dropped 17% year over year, driven by a slowdown in demand for its cellphone chips. That drop is expected to continue with Qualcomm forecasting $8.5 billion in fiscal Q3 revenue, missing expectations of $9.14 billion. The company also forecast EPS of $1.80 vs analysts’ estimates of $2.16. Moderna Reports Surprise Q1 Profit Moderna (MRNA) shares are up 1.8% ahead of the open after reporting a surprise profit in the first quarter. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: EPS: $0.19 vs a loss of $1.77 per share expected Revenue: $1.86 billion vs $1.18 billion expected That profit surprise came despite lower demand for the company’s Covid vaccine. Revenue was down 30% year over year. Moderna maintained its full-year guidance for around $5 billion in Covid vaccine revenue. Weekly Jobless Claims Climb Weekly jobless claims rose more than expected last week as the labor market continues to slowly tighten. The Labor Department reported 242,000 Americans filed initial unemployment claims. That was up by 13,000 from the previous week and higher than 236,000 expected. Continuing claims though fell by 38,000 to 1.81 million in the week ending April 22. Q1 Productivity Tumbles Worker productivity dropped more than expected in the first quarter. The Bureau of Labor Statistics reported productivity fell 2.7% annually vs expectations for a 1.9% decrease. Output during the quarter rose just 0.2% while hours worked rose 3%. And labor costs picked back up as well. Unit-labor costs rose 4.5% in Q1, up from 3.3% in Q4. Over the past 12-months, unit labor costs have risen 5.3%. Those rising wages have been a problem for the Fed in its fight against inflation. Trade Deficit Narrows The U.S. trade deficit narrowed in March as exports rose. The Commerce Department reported the deficit dropped by $6.4 billion to $64.2 billion. The decline came as exports rose by $5.3 billion to $256.2 billion. Imports fell by $1.1 billion to $320.4 billion. The goods deficit with China fell by $2.3 billion to $22.9 billion in March. In Case You Missed It The Federal Reserve hiked rates as expected by 25 basis points on Wednesday. That puts the federal funds rate in a range of 5% to 5.25%, the highest since August 2007. The FOMC statement seemed to hint this will be the last rate hike as it removed language about future policy tightening being appropriate. But Fed Chair Jerome Powell said in his press conference, “A decision on a pause has not been made today.” Powell emphasized that “the process of getting inflation back down to 2% has a long way to go.”
Continue Reading -->Coffee With Greta: Fed Day
DJIA Futures: +25 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures:+18 (+0.1%) Good morning friends! Futures are up slightly as traders look ahead to this afternoon’s Fed decision. Let’s get right to it! Fed Day The Federal Reserve releases its latest interest rate decision at 2:00 p.m. ET today. CME Group’s FedWatch Tool currently shows 82.8% of traders anticipating another 25 basis point rate hike. But the real focus will be on the language in the Fed statement about future hikes and the Fed Chair’s tone during his 2:30 p.m. press conference. Traders will also be listening for what Powell has to say about the regional banking crisis after the failure of First Republic Bank earlier this week. Private Job Growth Surges Private sector job growth was way hotter than expected in April. Payroll firm ADP reported that private employers added 296,000 jobs last month. That was sharply higher than 133,000 expected and up from the downwardly revised 142,000 in March. It was the highest monthly increase since July 2022. But annual pay growth continued to slow, up 6.7% year over year. The leisure and hospitality sector led April’s gains, adding 154,000 jobs. Education and health services added 69,000, construction added 53,000, natural resources and mining added 52,000, and trade, transportation, and utilities added 32,000. The financial services sector lost 28,000 jobs while manufacturing lost 38,000. This data comes ahead of the Labor Department’s official April jobs report on Friday which is expected to show the U.S. economy added 180,000 jobs last month with the unemployment rate ticking higher to 3.6%. AMD Tops Q1 Estimates, Issues Weak Guidance Advanced Micro Devices (AMD) shares are falling 7.4% ahead of the open after beating Q1 expectations on the top and bottom line but issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted EPS: $0.60 vs $0.56 expected Revenue: $5.35 billion vs $5.3 billion expected Although the results topped analysts’ estimates, revenue was down 9% year over year and AMD’s Q2 guidance was weaker than expected. The company expects $5.3 billion in Q2 revenue vs $5.48 billion expected. Ford Smashes Q1 Expectations, Maintains Outlook Ford (F) shares are down 1.1% in premarket trading after solidly beating Q1 expectations but reiterating its full-year guidance. Here’s how the automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.63 vs $0.41 expected Revenue: $39.09 billion vs $36.08 billion expected The CFO said Q1 was a “peek at what’s possible to generate value and growth.” Ford reiterated its forecast for full-year adjusted earnings between $9 billion and $11 billion. It also still expects to lose about $3 billion from its EV operations this year after the segment lost $722 million in Q1. But Ford’s traditional car business earned $2.6 billion in profit while its fleet operations reported $1.4 billion in earnings. Starbucks Earnings Top Expectations Starbucks (SBUX) shares are down 5.3% ahead of the open after beating fiscal Q2 expectations on the top and bottom line. Here’s how the coffee giant’s results compared to analysts’ estimates: Adjusted EPS: $0.74 vs $0.65 expected Revenue: $8.72 billion vs $8.4 billion expected Global same-store sales were up 11% from a year ago vs expectations of 7.1%. Same-store sales jumped 12% in the U.S. and 3% in China, which is Starbucks’ second-largest market. It was the first sales increase in China since Q3 2021. But the stock is sinking after Starbucks reaffirmed its full-year outlook. The company still expects revenue growth of 10% to 12% and EPS growth on the low end of 15% to 20%. CVS Slips On Lower Outlook CVS (CVS) shares are down 2.6% in premarket trade after beating Q1 expectations but lowering its profit outlook. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $2.20 vs $2.09 expected Revenue: $85.28 billion vs $80.81 billion expected Revenue was up 11% year over year. But CVS lowered its 2023 adjusted EPS guidance to a range of $8.50 to $8.70, down $0.20 from its previous forecast. The company said that lower guidance was due to costs associated with its acquisitions of Signify Health and Oak Street Health. In Case You Missed It Job openings fell more than expected in March. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) shows there were 9.6 million available jobs in March vs 9.7 million expected. That was down from 9.9 million in February and the lowest number of openings since April 2021.
Continue Reading -->Coffee With Greta: Fed Meeting Begins
DJIA Futures: -85 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -5 (-0.03%) Good morning friends! Futures are slipping as the Fed meeting kicks off. Let’s get right to it! Focus On The Fed The Federal Reserve kicks off its two-day policy meeting today with the rate hike decision set to be released at 2:00 p.m. ET on Wednesday. CME Group’s FedWatch Tool shows nearly 91% of traders expecting another 25 basis point rate hike. There will be a lot of focus on Fed Chair Jerome Powell’s press conference following the meeting to see whether he shifts to a more dovish tone or stays hawkish. The Fed’s dot plot previously showed this will be the last rate hike with the bank planning to then hold rates higher until 2024. Pfizer Rises After Earnings Beat Pfizer (PFE) are up 0.9% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: Adjusted EPS: $1.23 vs $0.98 expected Revenue: $18.28 billion vs $16.59 billion expected Sales were down 29% year over year with Covid vaccine sales tumbling 75%. Excluding Covid product sales, Pfizer’s revenue was up 5% year over year driven by products from recently acquired companies. The company reiterated its full-year forecast for both earnings and revenue. Uber Rallies On Revenue Beat Uber Technologies (UBER) shares are rallying 9.4% in premarket trade after reporting better-than-expected Q1 results. Here’s how the ride hailing giant’s results compared to analysts’ estimates: Loss per share: $0.08 vs $0.09 expected Revenue: $8.82 billion vs $8.72 billion expected Revenue was up 29% year over year. Uber’s CEO said the company is already starting to use AI to improve its business. He said, “We are still in the early stages of using large data models to power improved user experiences and efficiencies across our platform, with much more to come.” Uber also reported $31.4 billion in gross bookings during the quarter, up 19% from a year ago. Here’s how those bookings broke down between its business segments: Mobility gross bookings: $14.98 billion, up 40% year over year Delivery gross bookings: $15.02 billion, up 8% year over year The company expected to report between $33 billion and $34 billion in Q2 gross bookings Morgan Stanley Planning More Layoffs Morgan Stanley (MS) shares are flat ahead of the open following a report the company is planing more layoffs. Bloomberg first reported the investment bank is planning to eliminate roughly 3,000 positions by the end of June. That would represent about 5% of the bank’s workforce. Morgan Stanley’s wealth management division, which includes financial advisers, would reportedly be excluded from the cuts. Tesla Hikes Prices Tesla (TSLA) shares are up 0.2% in premarket trade after raising prices on several of its cars in the U.S. and China. In China, the Model 3 now starts at 231,900 Chinese yuan vs 229,900 yuan previously. The Model Y price was also raised by 2,000 yuan to 263,900 yuan. In the U.S., the Model 3 and Model Y prices were hiked by $250 to $40,240 and $47,240 respectively. Tesla’s prices are still lower than at the start of the year following several price cuts ahead of these increases. In Case You Missed It Manufacturing activity improved more than expected in April. The Institute for Supply Management’s manufacturing PMI rose to 47.1% from 46.3%. That was better than expectations for 46.7% but still below the key 50% level which signals contraction across the sector.
Continue Reading -->Coffee With Greta: Another Bank Failure
DJIA Futures: +9 (+0.03%) SPX Futures: -3 (-0.1%) NASDAQ Futures: -17 (-0.1%) Good morning friends! Futures are flat as another regional bank fails and traders get ready for a big week on Wall Street. Let’s get right to it! JPMorgan Buys First Republic After Failure First Republic Bank (FRC) was officially seized by regulators this morning, making it the third regional bank to fail since March. JPMorgan Chase (JPM) was the winner of a weekend auction for the bank and shares are up 4.3% ahead of the open. The largest bank in the U.S. is getting about $92 billion in deposits and taking over $73 billion in loans and $30 billion in securities. JPMorgan will share losses on mortgages and commercial loans assumed in the deal with the Federal Deposit Insurance Corporation. It also received a $50 billion credit line from the FDIC. This deal will cost the FDIC’s Deposit Insurance Fund $13 billion. The FDIC said, “As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank, National Association, today during normal business hours. All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.” JPMorgan CEO Jamie Dimon said, “Our government invited us and others to step up, and we did. This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.” SoFi Rallies On Earnings Beat SoFi Technologies (SOFI) shares are rallying 6.4% in premarket trade after beating Q1 expectations on the top and bottom line. Here’s how the online lending giant’s results compared to analysts’ estimates: Adjusted loss per share: $0.05 vs $0.08 expected Revenue: $460.16 million vs $441 million expected SoFi added 433,000 members during the quarter, bringing the total to 5.7 million. The company hiked its full-year guidance now expecting revenue between $1.96 billion to $2.02 billion vs $1.93 billion to $2 billion previously. For the second quarter, SoFi expects revenue of $470 million to $480 million vs analysts’ expectations for $463.8 million. Big Week Traders are gearing up for a busy week on Wall Street with earnings, the Fed, and some big economic data. More than 1,400 companies are set to report earnings this week including giants like Ford (F), Starbucks (SBUX), Uber (UBER), Lyft (LYFT), and Apple (AAPL). Plus, it’s Fed week with the central bank’s latest rate decision set to be released on Wednesday. CME Group’s FedWatch Tool shows 87.5% of traders expecting another 25 basis point hike this week. And it’s also jobs week. The Labor Department releases the official April jobs report Friday morning. Other key jobs data this week includes the job openings and labor turnover survey (JOLTS) on Tuesday, ADP’s April private employment report on Wednesday, and weekly jobless claims on Thursday. In Case You Missed It The University of Michigan’s final consumer sentiment reading for April was unchanged at 63.5 on Friday. That was in line with expectations. The expectations index improved to 60.5 from the 60.3 estimate. The current conditions index fell to 68.2 from the 68.6 estimate. Consumers’ 1-year inflation expectations remained at 4.6% while the 5-year outlook ticked higher to 3.0%.
Continue Reading -->Coffee With Greta: Amazon’s Storm Cloud
DJIA Futures: -107 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -11 (-0.1%) Good morning friends! Futures are falling as traders digest the latest batch of earnings and new inflation data. Let’s get right to it! Amazon’s Cloud Outlook Disappoints Amazon (AMZN) shares are down 2.4% ahead of the open as the company’s uncertain outlook for its cloud services overshadows strong Q1 results. Here’s how the company’s results compared to analysts’ estimates: EPS: $0.31 vs $0.21 expected Revenue: $127.4 billion vs $124.6 billion expected Amazon Web Services revenue: $21.3 billion vs $21.22 billion expected Advertising revenue: $9.5 billion vs $9.1 billion expected AWS sales rose about 16% in Q1, which was a slowdown from 20% in the previous quarter. Amazon’s CFO warned that slowdown is continuing. He said, “customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter. We are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points lower than what we saw in Q1.” Amazon’s stock initially rallied in after-hours trading Thursday following the earnings beat but then dropped after the CFO’s comments on slowing cloud revenue. The company expected Q2 revenue between $127 billion and $133 billion vs analysts’ estimates of $129.8 billion. Snap Plunges On Q1 Miss Snap Inc (SNAP) shares are tumbling 18.5% in premarket trade after missing Q1 expectations. Here’s how the social media giant’s results compared to analysts’ estimates: Adjusted EPS: $0.01 vs $0.01 per share loss expected Revenue: 989 million vs $1.01 billion expected Daily active users: 383 million vs 384 million expected Average revenue per user: $2.58 vs $2.63 expected Snap did not provide any official Q2 guidance but said its “internal forecast” for revenue would be $1.04 billion, which would be down 6% year over yera and lower than analysts’ estimates of $1.10 billion. Intel Beats Despite Largest Quarterly Loss In Company History Intel (INTC) shares are up 6.8% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted loss per share: $0.04 vs $0.15 expected Revenue: $11.7 billion vs $11.04 billion expected Earnings plummeted 133% year over year while revenue dropped nearly 26%. The $2.8 billion net loss was the largest in company history. Intel forecast Q2 revenue of $12 billion and a $0.04 loss per share vs analysts’ expectations for a $0.01 loss per share on $11.75 billion in revenue. Exxon Mobil Reports Record Q1 Profit Exxon Mobil (XOM) shares are up 0.3% in premarket trade after reporting a record profit in the first quarter. Here’s how the oil giant’s results compared to analysts’ estimates: Adjusted EPS: $2.83 vs $2.60 expected Revenue: $86.56 billion vs $85.65 billion expected Exxon’s CFO said, “We delivered a first-quarter record despite the fact that energy prices and refining margins are softening a bit.” The earnings beat was driven by increased oil and gas production which rose by nearly 300,000 barrels per day year over year. That higher production helped offset lower gas prices during the quarter. Chevron Tops Q1 Expectations Chevron (CVX) shares are slipping 0.5% ahead of the open despite beating Q1 expectations on the top and bottom line. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $3.55 vs $3.40 expected Revenue: $50.79 billion vs $48.60 billion expected Higher margins in Chevron’s oil refining segment helped income surge more than five times to $1.8 billion. But profit in the oil and gas production business tumbled 25% as prices dropped. PCE Inflation Continues To Slow The Fed’s preferred inflation gauge slowed as expected in March. The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.1% last month and 4.2% year over year. The core PCE price index rose 0.3% monthly and 4.6% annually. That was in line with expectations on a monthly basis and slightly higher than estimates for a 4.5% gain annually. In Case You Missed It Pending home sales fell unexpectedly in March. The National Association of Realtors reported the number of contracts signed to purchase a home last month fell 5.2%. That missed expectations for a 0.5% increase and was the first drop since November. Pending sales were down 23.2% year over year. Lyft (LYFT) shares rose 1.5% on Thursday after the company announced layoffs. A new SEC filing showed the rideshare giant plans to cut 1,072 jobs, representing 26% of its workforce. These cuts come in addition to the 13% workforce reduction announced in November 2022.
Continue Reading -->Coffee With Greta: Mega Meta
DJIA Futures: +151 (+0.5%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +136 (+1.1%) Good morning friends! Futures are rising as traders digest the latest batch of earnings and new economic data. Let’s get right to it! Meta Rallies On Earnings Beat Meta Platforms (META) shares are jumping 12.9% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the social media giant’s results compared to analysts’ estimates: EPS: $2.20 vs $2.03 expected Revenue: $28.65 billion vs $27.65 billion expected Daily Active Users: 2.04 billion vs 2.01 billion expected Monthly Active Users: 2.99 billion as expected Average Revenue per User: $9.62 vs $9.30 expected Revenue jumped 3% year over year, the first increase in four quarters. The company forecast Q2 revenue between $29.5 billion and $32 billion vs analysts’ estimates of $29.5 billion. CEO Mark Zuckerberg said Meta is “becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long term vision.” The Reality Labs unit – aka the Metaverse unit – brought in $339 million in revenue but logged an operating loss of $3.99 billion. Meta said that operating loss will increase this year. Roku Tops Q1 Estimates Roku (ROKU) shares are slipping in premarket trade despite the company beating Q1 expectations and issuing strong guidance. Here’s how the streaming platform’s results compared to analysts’ estimates: Loss per share: $1.38 vs $1.47 expected Revenue: $741 million vs $708.5 million expected Roku’s active accounts jumped 17% year over year to 71.6 million. The number of hours spent watching streaming content on its platforms rose 20% to 25.1 billion. Roku expects $770 million in second-quarter revenue, topping analysts’ expectations for $708.5 million. Southwest Drops After Disappointing Earnings Southwest Airlines (LUV) shares are falling 4.7% ahead of the open after reporting a wider loss than expected in the first quarter. Here’s how the airline’s results compared to analysts’ estimates: Adjusted loss per share: $0.27 vs $0.23 expected Revenue: $5.71 billion vs $5.73 billion expected Southwest said it took a $325 million revenue hit during the quarter related to its holiday cancellations at the end of 2022. The company expects revenue struggles to continue this quarter. Southwest forecast revenue per available seat mile will be down 8% to 10% year over year in Q2 with capacity up 14% But the airline did forecast a profit for the current quarter. GDP Growth Slows U.S. economic growth slowed more than expected at the beginning of 2023. The Commerce Department’s initial estimate shows GDP rose at a 1.1% annualized pace in the first quarter. That was slower than economists’ expectations for 2% growth and down from 2.6% in Q4. Inflation remained high during the quarter with the PCE price index rising 4.2% vs 3.7% expected. Consumer spending rose 3.7% and exports jumped 4.8%. But gross private domestic investment tumbled 12.5%. Weekly Jobless Claims Tumble Weekly jobless claims dropped unexpectedly last week. The Labor Department reported 230,000 Americans filed initial claims for unemployment benefits. That was down by 16,000 and better than expectations for claims to rise to 249,000. Continuing claims fell by 3,000 to 1.86 million in the week ending April 15.
Continue Reading -->Coffee With Greta: Big Tech Earnings Bounce
DJIA Futures: +67 (+0.2%) SPX Futures: +12 (+0.3%) NASDAQ Futures: +142 (+1.1%) Good morning friends! Futures are up as traders digest the first batch of big tech earnings. Let’s get right to it! Microsoft Rallies On Earnings Beat Microsoft (MSFT) shares are rallying 7.9% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $2.45 vs $2.23 expected Revenue: $52.86 billion vs $51.02 billion expected For fiscal Q4, Microsoft forecast revenue between $54.85 billion and $55.85 billion, beating expectations for $54.84 billion. The CFO said, We will continue to invest in our cloud infrastructure, particularly AI-related spend, as we scale to the growing demand driven by customer transformation. And we expect the resulting revenue to grow over time.” Alphabet Tops Q1 Expectations Alphabet (GOOGL) shares are up 0.3% in premarket trade after reporting better-than-expected Q1 results. Here’s how the company’s results compared to analysts’ estimates: EPS: $1.17 vs $1.07 expected Revenue: $69.79 billion vs $68.9 billion expected It was the first time Alphabet has beat expectations since Q4 2021. YouTube ad revenue was better-than-expected at $6.69 billion while traffic acquisition costs were lower-than-expected at $11.72 billion. Google’s cloud service turned $7.45 billion in revenue during the quarter, slightly lower than expectations, but the segment was profitable for the first time on record. The cloud segment generated $191 million in operating income last quarter. Boeing Rises After Revenue Beat Boeing (BA) shares are up 3% ahead of the open after reporting mixed Q1 results. Here’s how the plane maker’s results compared to analysts’ estimates: Loss per share: $1.27 vs $1.07 expected Revenue: $17.92 billion vs $17.57 billion expected Sales were up 28% year-over-year with commercial airplane revenue surging 60%. Boeing said it plans to increase output of its 737 Max planes later this year to 38 a month from 31. It also plans to increase production of the 787 Dreamliner to five planes per month from 3 currently. With demand rising, the company expects to deliver a total of 400 to 450 737 planes this year. The CEO said, “This is an important year for us. As demand surges across our markets, we must focus together on execution and meeting our customer commitments.” Chipotle Smashes Q1 Expectations Chipotle Mexican Grill (CMG) shares are up 7.7% in premarket trade after solidly beating Q1 expectations. Here’s how the restaurant chain’s results compared to analysts’ estimates: EPS: $10.50 vs $8.92 expected Revenue: $2.37 billion vs $2.34 billion expected Higher menu prices and lower avocado prices helped improve Chipotle’s profit margins during the quarter. Same-store sales jumped 10.9% vs 8.6% expected. Chipotle forecast same-store sales growth in the mid-to-high single digits next quarter and for the full year, in line with expectations. The company also reiterated its plans to open between 255 and 285 new restaurants this year. Durable Goods Orders Jump Durable goods orders rose more than expected in March as demand for planes jumped. The Commerce Department reported durable goods orders rose 3.2% monthly vs expectations for a 0.5% gain. That increase was led by transportation orders which surged 9.1%. Excluding transportation, orders rose 0.3% monthly vs estimates for a 0.2% decline. February’s contraction was revised higher to -1.2% from -1% previously. Mortgage Demand Rebounds Despite High Rates Mortgage demand jumped last week despite rates hitting the highest level in a month. The Mortgage Bankers Association reported total application volume rose 3.7% weekly. Purchase applications were up 5% weekly and 28% lower year over year. Refinance applications rose 2% weekly and were down 51% annually. The average 30-year contract rate rose to 6.55% from 6.43%. In Case You Missed It Consumer confidence slipped to a 9-month low in April. The Conference Board’s consumer confidence index fell 2.7 points this month to 101.3. That was lower than economists’ estimates for the index to be unchanged at 104. The expectations index fell to 68.1 from 74. One-year inflation expectations improved to 6.2% from 6.3%. Home prices rose for the first time in seven months in February. The S&P Case-Shiller national home price index rose 0.2% monthly and 2% year over year. The largest annual gains were in Miami, Tampa, and Atlanta where prices rose 10.8%, 7.7%, and 6.6% respectively. New home sales surged in March as buyers turn to builders. The Census Bureau reported new sales jumped 9.6% last month to a seasonally adjusted annual rate of 683,000 units. That was better than expectations for 634,000 and the fourth straight monthly gain in new sales.
Continue Reading -->Coffee With Greta: Earnings Rush
DJIA Futures: -75 (-0.2%) SPX Futures: -19 (-0.4%) NASDAQ Futures: -59 (-0.5%) Good morning friends! Futures are down as traders digest the latest earnings and look ahead to results from big tech names later today. Let’s get right to it! First Republic Tumbles After Earnings First Republic Bank (FRC) shares are dropping 21% ahead of the open despite beating Q1 expectations as deposits plunged. Here’s how the regional bank’s results compared to analysts’ estimates: EPS: $1.23 vs $0.85 expected Revenue: $1.21 billion vs $1.15 billion expected The bank said its deposits tumbled 40% in the quarter to $104.5 billion. That was lower than analysts’ expectations for deposits to be about $145 billion. But First Republic said deposit flows have since stabilized. The bank said, “Deposit activity began to stabilize beginning the week of March 27, 2023, and has remained stable through Friday, April 21, 2023. Total deposits were $102.7 billion as of April 21, 2023, down only 1.7% from March 31, 2023, primarily reflecting seasonal client tax payments that occur each April.” The bank also announced new cost cutting efforts which include cuts to executive compensation, condensing office space, and reducing head count by 20% to 25% in Q2. GM Tops Q1 Expectations, Hikes Guidance General Motors (GM) shares are up 2.7% in premarket trade after beating Q1 expectations on the top and bottom line and raising its 2023 guidance. Here’s how the automaker’s results compared to analysts’ estimates: Adjusted EPS: $2.21 vs $1.73 expected Revenue: $39.99 billion vs $38.96 billion expected GM now expects full-year adjusted EPS of $6.35 to $7.35 vs $6 to $7 previously. The automaker also raised its expectations for adjusted automotive free cash flow to between $5.5 billion and $7.5 billion from $5 billion to $7 billion previously. McDonald’s Shares Rise After Earnings Beat McDonald’s (MCD) shares are up 1% ahead of the open after beating Q1 expectations. Here’s how the fast food giant’s results compared to analysts’ estimates: Adjusted EPS: $2.63 vs $2.33 expected Revenue: $5.9 billion vs $5.59 billion expected McDonald’s reported same-store sales growth of 12.6% across all three of its divisions, fueled by higher menu prices. The company’s U.S. traffic rose for the third consecutive quarter. PepsiCo Hikes Outlook After Earnings Beat PepsiCo (PEP) shares are up 1.7% in premarket trade after beating Q1 expectations and raising its full-year outlook. Here’s how the beverage giant’s results compared to analysts’ estimates: Adjusted EPS: $1.50 vs $1.39 expected Revenue: $17.85 billion vs $17.22 billion expected Net sales rose 10.2% year over year while organic revenue jumped 14.3%. Sales volumes in PepsiCo’s beverage business rose 1% and declined 3% in its food segment. Overall volumes were down 2% while prices were up 16%. PepsiCo now expects full-year 2023 organic revenue growth of 8% vs 6% previously. 3M Beats Q1 Estimates, Announces Layoffs 3M (MMM) shares are up 1.3% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the industrial giant’s results compared to analysts’ estimates: Adjusted EPS: $1.92 vs $1.60 expected Revenue: $7.7 billion vs $7.5 billion expected 3M maintained its full-year outlook for sales to drop 3% year over year and EPS between $8.50 and $9. The CEO said, “we continued our relentless focus on serving customers and aggressively managed costs” during Q1. As part of its cost cutting efforts, 3M announced plans to cut 6,000 more jobs globally in addition to the 2,500 announced in January. UPS Misses Q1 Expectations UPS (UPS) shares are down 4.9% in premarket trade after missing Q1 expectations. Here’s how the shipping giant’s results compared to analysts’ estimates: Adjusted EPS: $2.20 vs $2.21 expected Revenue: $22.93 billion vs $23.01 billion expected The CEO said, “In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia. Given current macro conditions, we expect volume to remain under pressure. We will remain focused on driving productivity.” UPS now expects 2023 sales of $97 billion, down from its previous forecast of $97 billion to $99.2 billion. Operating profit margin is expected to be 12,8% vs the previous outlook for 12.8% to 13.6%. JetBlue Forecasts Profit After Q1 Earnings Beat JetBlue (JBLU) shares are up 2.2% ahead of the open after reporting a smaller Q1 loss than expected and forecasting a profit in Q2. Here’s how the airline’s results compared to analysts’ estimates: Adjusted loss per share: $0.34 vs $0.38 expected Revenue: $2.33 billion vs $2.32 billion expected Expenses surged more than 22% year over year to $2.57 billion. JetBlue’s fuel bill jumped 34% from a year ago. The airline expects adjusted EPS of $0.35 to $0.45 in Q2 with revenue growth of 4.5% to 8.5%, topping analysts’ expectations. The CEO said, “For the second quarter, we expect strong revenue growth to continue as demand remains robust and as we see continued momentum from our commercial initiatives. We are forecasting a solidly profitable quarter, and we remain confident in our full-year earnings outlook.”
Continue Reading -->Coffee With Greta: Traders Digest Earnings, Recession Fears
DJIA Futures: +28 (+0.1%) SPX Futures: -1 (-0.01%) NASDAQ Futures: -28 (-0.2%) Good morning friends! Futures are flat as traders digest earnings and the latest data showing the economy is headed for a recession. Let’s get right to it! Procter & Gamble Tops Fiscal Q3 Expectations Procter & Gamble (PG) shares are up 2.4% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. Here’s how the consumer goods giant’s results compared to analysts’ estimates: EPS: $1.37 vs $1.32 expected Revenue: $20.07 billion vs $19.32 billion expected Organic sales jumped 7% year over year but sales volume fell 3% as consumers opted for cheaper alternatives. But higher prices helped offset that lower volume. P&G’s prices were up 10% year over year after the company raised prices again during the quarter. The company now expects fiscal 2023 organic sales growth of 6%, up from 4% to 5% previously. Tesla Hikes Prices After Share Slump Tesla (TSLA) shares are up 0.5% in premarket trade after the electric automaker raised prices on some its vehicles Thursday night. The Model S and Model X prices were raised by $2,500 each. The Model S now starts at $87,490 and the Model X at 97,490. The vehicles are still cheaper than they were at the end of the first quarter but the adjustments come just two days after Tesla lowered the prices on its Model Y and Model 3 gain. Tesla shares dropped 9.7% on Thursday, the largest drop since January 3. That decline came after CEO Elon Musk suggested the company will continue cutting prices after reporting Q1 earnings. Musk told analysts, “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin.” Coming Up: Services, Manufacturing PMI S&P Global releases its April flash readings for both the services and manufacturing PMIs today. The services index is expected to fall to 51.5 from 52.6 last month while the manufacturing index is expected to decline to 49 from 49.2. These surveys are used to determine the health of the economy by sector. Any reading above 50 signals growth while a reading below 50 signals contraction. In Case You Missed It The latest data signals the U.S. economy is headed for a recession this year. The Conference Board’s leading economic indicators index sank 1.2% in March vs expectations for a 0.7% decline. It was the biggest drop in three years and the 12th consecutive monthly decline. Existing home sales slowed more than expected in March. The National Association of Realtors reported existing sales fell 2.4% last month to a seasonally adjusted annual rate of 4.44 million units vs 4.48 million expected. Home sales were down 22% year over year as high mortgage rates and low supply put pressure on buyers.
Continue Reading -->Coffee With Greta: Tesla Drops
DJIA Futures: -182 (-0.5%) SPX Futures: -31 (-0.7%) NASDAQ Futures: -121 (-0.9%) Good morning friends! Futures are dropping as traders digest the latest Q1 earnings reports. Let’s get right to it! Tesla Drops As Profits, Margins Decline Tesla (TSLA) shares are tumbling 8.3% ahead of the open despite reporting Q1 results that were mostly in line with expectations. Here’s how the electric automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.85 as expected Revenue: $23.33 billion vs $23.21 billion expected Net income tumbled 24% year over year while total revenue rose 24%. Tesla said “underutilization of new factories” stressed its margins during the quarter. Ebitda profit margins dropped to 18.3% in Q1 from 27% a year ago while operating margins fell to 11%. The Q1 results came after Tesla cut its vehicle prices for the sixth time this year earlier on Wednesday. The company said it expects “ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale.” It said pricing will continue to “evolve upwards or downwards, depending on a number of factors.” IBM Earnings IBM (IBM) shares are up 1.2% in premarket trade after beating Q1 profit expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $1.36 vs $1.26 expected Revenue: $14.25 billion vs $14.35 billion expected Net income jumped 26% year over year while revenue increased 0.4%. IBM’s total expenses and other income declined 4% as the company took steps to operate more efficiently. The company said it expects 3% to 5% revenue growth this year and maintained its guidance for $10.5 billion in 2023 free cash flow. Philly Fed Manufacturing Index Contracts Further A key manufacturing gauge slipped further into contraction in April. The Philadelphia Fed’s manufacturing index fell by 8.1 points to negative 31.3 this month. That was the eight straight negative reading and worse than expectations for the index to improve to negative 20. Any reading below zero signals contraction in business activity in the manufacturing sector. Weekly Jobless Claims Rise Weekly jobless claims rose more than expected last week in a sign of rising layoffs. The Labor Department reported 245,000 Americans filed initial unemployment claims, up by 5,000 from the previous week. That was higher than expectations for 244,000. Continuing claims rose by 61,000 to 1.87 million in the week ending April 8, the highest level since November 2021. Coming Up: Existing Home Sales The National Association of Realtors reports existing home sales for March at 10:00 a.m. ET. That report is expected to show the pace of sales slowed to a seasonally adjusted annual rate of 4.48 million units from 4.58 million in February. The housing market has remained under pressure in 2023 due to high mortgage rates, low supply, and high prices. In Case You Missed It Meta Platforms (META) started its latest round of job cuts on Wednesday. The company started laying off employees in technical roles after announcing the cuts in March. The cuts are part of a plan to lay off 10,000 workers this year in addition to the 11,000 announced back in November. Meta is expected to incur $3 billion to $5 billion in restructuring costs related to the layoffs.
Continue Reading -->