Category Archives for Coffee With Greta
Coffee With Greta: Recession on the Brain
DJIA Futures: -183 (-0.6%) SPX Futures: -12 (-0.3%) NASDAQ Futures: +34 (+0.3%) Good morning friends! Futures are mostly lower as traders worry about a global recession. Let’s get right to it! Recession Fears Linger, Dollar Surges Futures are mostly lower as worries over global economic growth take over. The drop in stocks come as Treasury yields are falling with investors fleeing to safety in bonds. The yield curve is still inverted with the 2-year yield down 6 basis points to 3.03% and the 10-year yield down 6 basis points to 2.93%. The U.S. dollar index also popped 0.5% to 108.51 with the euro on the brink of parity with the dollar as recession fears grip Europe. The dollar index is up 13% YTD. Traders are also on edge for earnings season to begin with focus on future forecasts amid rising rates and recession worries. Even High Earners Are Worried About Inflation A new CNBC/Morning Consult survey shows even high-earning Americans are worried about inflation. 96% of respondents who earn $100,000 or more said they were “concerned” about inflation while 65% said they are “very concerned”. 34% said they are worse off financially this year compared to a year ago and 46% have cut household spending due to higher prices. 38% said they plan to make those cuts if inflation gets worse. The survey showed dining out is the first place where consumers cut their spending, followed by entertainment, and travel. The Bureau of Labor Statistics’ consumer price index on Wednesday is expected to show the pace of headline inflation picked up again in June. EV Maker Canoo Skyrockets on Walmart Deal Canoo (GOEV) shares are surging 76% in premarket trade after Walmart (WMT) agreed to buy its electric delivery vans. The two companies signed a definitive agreement for Walmart to purchase at least 4,500 and up to 10,000 of the vans. The retailer will use the vans for local deliveries of online orders. Canoo will build the vehicles at its facility near Dallas and the vans are expected to go into service next year. Lordstown Rises After Naming New CEO Lordstown Motors (RIDE) shares are up 3.5% ahead of the open after naming a new CEO. The company’s president, Edward Hightower, was named CEO effective immediately. The former CEO, Daniel Ninivaggi, will become the company executive chairman. Hightower will lead the new joint venture with Foxconn to design and develop electric vehicles that will be manufactured by Foxconn. Ninivaggi said, “With over 30 years of automotive experience and having made significant contributions to the Endurance launch preparation and Foxconn transactions, Edward is the perfect person to lead the company and launch our product development efforts with Foxconn.” Rivian Drops on Layoff Plans Rivian (RIVN) shares are down 0.2% ahead of the open on news the company is planning layoffs. Bloomberg reported the electric automaker is planning to trim its workforce by about 5% because it grew too quickly in some departments. Rivian has about 14,000 employees which means the cuts would impact around 700 workers. Sources told Bloomberg those layoffs could be announced in the coming weeks. Pepsi Rises on Earnings Beat PepsiCo (PEP) shares are up 1.1% ahead of the open after beating Q2 earnings expectations. The company reported adjusted earnings $1.86 per share on $20.23 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.74 on $19.51 billion in revenue. The CFO told CNBC, “We are facing inflation like everyone else, and we think that is going to persist for a while, but we are taking enough pricing to be able to manage the inflation, and our focus is really much more on how do we drive costs out of the business.” Pepsi hiked its full-year revenue growth forecast to 10% from 8% previously and still expects earnings growth of 8%. Gap Slides As CEO Steps Down Gap (GPS) shares are down 7.3% in premarket trade after announcing its CEO and president is stepping down after-hours on Monday. Sonia Syngal is leaving her position effective immediately. The current executive chairman of the board will serve as interim president and CEO. Syngal said she is “thankful to have the board’s support in stepping down, ushering in a new opportunity for fresh perspective and rejuvenated leadership to carry Gap Inc. forward.” The company also announced former Walmart Canada CEO and president Horacio Barbeito will take over as the Old Navy CEO on August 1. Natural Gas Prices Jump as Russia Halts Flow to Europe U.S. natural gas prices are up 3.9% as the largest pipeline between Russia and Germany is shutdown. The Nord Stream 1 pipeline was closed Monday for maintenance work that is set to run through July 21. That pipeline is the largest transporter of Russian natural gas into Europe, through Germany. It carries around 55 billion cubic meters of gas per year. Europeans are fearful the shutdown could last longer than the planned 10 days. The EU currently receives 40% of its gas via Russian pipelines. Oil Prices Slide on China Covid Surge Oil prices are sliding as a Covid surge in China prompts concerns about demand. West Texas Intermediate crude futures are down 4.4% to $99 bbl while Brent crude futures are down 4% to just under $103 bbl. The fresh Covid restrictions in China pile on top of rising recession fears for the oil market. The American Petroleum Institute releases its report on oil and gas inventories today followed by the official Energy Information Administration report on Wednesday. Gas Prices Extend Decline U.S. gas prices fell for the 27th day in a row today. AAA shows the national average for regular gas fell more than 2 cents overnight to $4.655/gal today. Diesel also fell nearly 2 cents to $5.625/gal. In Case You Missed It Consumers’ short-term inflation expectations hit a record-high in June. The New York Fed’s Survey of Consumer Expectations shows Americans expect inflation to remain at 6.8% 1-year from now. Consumers’ 3-year expectations fell to 3.6% while 5-year
Continue Reading -->Coffee With Greta: Elon Musk Has Commitment Issues, Dumps Twitter
DJIA Futures: -201 (-0.6%) SPX Futures: -30 (-0.8%) NASDAQ Futures: -103 (-0.8%) Good morning friends! Futures are falling as traders gear up for inflation week and the beginning of Q2 earnings season. But first, Elon Musk’s commitment issues are on full display as he seeks to dump his Twitter deal. Let’s get right to it! Musk Seeks to Terminate Twitter Buyout Twitter (TWTR) shares are down 6.3% ahead of the open as the company gears up for a legal battle with Tesla (TSLA) CEO Elon Musk. Musk informed the social media company on Friday that he wants to terminate his $44 billion takeover deal. But it’s not as simple as paying a fee and walking away. In a tweet, Twitter Chairman Bret Taylor said, “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.” Musk alleges Twitter violated the terms of the agreement by misrepresenting the number of spam users on the platform. TSLA shares are up 1.1% in premarket trade on optimism over Musk’s desire to ditch the deal. Traders Brace for Inflation, Earnings This week is all about inflation after the hot June jobs report on Friday. The Bureau of Labor Statistics releases the June consumer price index Wednesday morning. Economists expect the CPI to show prices rose 8.8% annually last month which would be an increase from 8.6% in May. That jump would mostly be due to higher energy prices, particularly gas. The core CPI, which excludes food and energy prices, is expected to decrease to an annual pace of 5.7% from 6% in May. The producer price index will also be released Thursday morning and is a leading indicator for consumer prices. It’s also the beginning of Q2 earnings season with big banks reporting later this week. JPMorgan Chase (JPM) and Morgan Stanley (MS) report Thursday morning followed by Citigroup (C) and Wells Fargo (WFC) Friday morning. Klarna Valuation Tumbles in Latest Funding Round Buy now, pay later service Klarna’s valuation plummeted in its latest funding round. The company raised $800 million in financing at a valuation of just $6.7 billion. That’s down sharply from a $45.6 billion valuation in June 2021. The company said, “the adjustment in Klarna’s valuation is on par with its public peers”. A partner at one of Klarna’s investors, Sequoia, said, “The shift in Klarna’s valuation is entirely due to investors suddenly voting in the opposite manner to the way they voted for the past few years.” The company is reportedly considering going public this year but the CEO has previously said market volatility makes him “nervous” about an IPO. The drop in Klarna’s valuation is weighing on other buy now, pay later firms with Affirm (AFRM) shares falling 2.2% ahead of the open. Oil Prices Fall Oil prices are lower as the market continues to weigh recession fears against supply concerns. West Texas Intermediate crude futures are down 3.5% at just over $101 bbl while Brent crude futures are down 2.9% at just under $104 bbl. The drop comes after both contracts posted weekly losses last week. Gas Prices Still Tumbling Lower oil prices are pushing U.S. gas prices even lower as the national average fell for the 26th day in a row. AAA shows the national average for regular gas fell to $4.678/gal today. Diesel also fell to $5.642/gal. The continued decline comes despite an increase in gasoline demand. The Energy Information Administration reported gas demand rose to 9.41 million barrels per day from 8.92 million bpd ahead of the 4th of July.
Continue Reading -->Coffee With Greta: Stocks Drop on BIG Jobs Report Beat
DJIA Futures: -79 (-0.3%) SPX Futures: -22 (-0.6%) NASDAQ Futures: -122 (-1%) Good morning friends! Futures are dropping as Treasury yields pop after the release of a strong June jobs report. Let’s get right to it! June Jobs Report Comes in Hot Job growth sharply beat expectations in June showing the U.S. labor market is still strong. The Labor Department reported the U.S. economy added 372,000 jobs last month vs economists’ expectations for 250,000. The unemployment rate was unchanged from May at 3.6%. April and May were both revised lower by 74,000 total jobs. The labor force participation rate was little changed at 62.2%, still below the pre-pandemic level of 63.4%. Average hourly earnings rose 0.3% monthly and 5.1% annually, still far behind inflation. But analysts expect the strong job growth to slow soon as the Fed continues and aggressive tightening schedule. Treasury Yields Spike on Strong Jobs Report Treasury yields popped higher after the release of the June jobs report but the yield curve is still inverted. The 2-year yield is up 10 basis points to 3.12% while the 10-year yield is up 8 basis points at 3.08%. The rally in the bond market is dragging down stock prices. The strong job growth gives the Fed more room to stay aggressive on inflation without concern about hurting the labor market. Fed Officials Support More Large Rate Hikes Two Fed officials are expecting another 0.75% rate hike later this month. Speaking at an event on Thursday, Fed Governor Christopher Waller said, “I’m definitely in support of doing another 75 basis point hike in July, probably 50 in September, and then after that we can debate whether to go back down to 25s.” St Louis Fed President James Bullard, who is a voting member of the FOMC this year, echoed that sentiment in a separate speech. Bullard said, “I think it would make a lot of sense to go with the 75 at this juncture. I’ve advocated and continue to advocate getting to 3.5% this year, then we can see where we are and see how inflation’s developing at that point.” Both officials downplayed fears over a recession but Waller did admit a slowdown may come with getting inflation under control. Waller said, “We’re going to get inflation down. That means we are going to be aggressive on rate hikes and we may have to take the risk of causing some economic damage, but I don’t think given how strong the labor market is right now that that should be that much.” GameStop Fires CFO, Announces Layoffs GameStop (GME) shares are down 6% ahead of the open after firing its CFO and announcing layoffs after-hours on Thursday. The company’s CEO Matt Furlong made that announcement in a memo to employees obtained by CNBC. Furlong said GameStop is “making a number of reductions to help us keep things simple and operate nimbly with the right talent in place.” He also said they will be “making a significant investment in our Store Leaders and field employees.” The CFO is being immediately replaced by GameStop’s current Chief Accounting Officer. Furlong said, “These changes will enable us to operate in a profitable manner as we execute against our strategy of pursuing sales growth in our commerce business and launching new products that empower customers within the digital asset and web3 gaming verticals.” Twitter Slashes Recruiting Team Twitter (TWTR) shares are falling 3.9% in premarket trade after announcing layoffs Thursday evening. The company is cutting 30% of its talent-acquisition team as part of cost-cutting efforts. The cuts will impact less than 100 employees. Sources also told MarketWatch Twitter is pausing nearly all hiring. A separate Washington Post report on Thursday claimed Elon Musk’s acquisition deal may be in jeopardy. That report said talks have cooled after Musk’s team was unable to verify Twitter’s claims about the number of spam accounts. Levi Strauss Tops Q2 Expectations Levi Strauss & Co (LEVI) shares are up 3.8% ahead of the open after beating Q2 earnings expectations. The clothing retailer reported adjusted earnings of $0.29 per share on $1.47 billion in revenue. That beat analysts’ expectations for adjusted EPS of $0.23 on $1.43 billion in revenue. Sales rose 15% year-over-year as digital sales jumped 20%. Levi maintained its full-year guidance for revenue growth between 11% and 13% and adjusted earnings between $1.50 to $1.56 per share. The company hiked its quarterly dividend to $0.12 a share from $0.10 a share. Oil Prices Stay Volatile Oil prices are dipping today as the market remains torn between supply worries and recession fears. West Texas Intermediate crude futures are down 0.4% to $102 bbl while Brent crude futures are slipping 0.2% to $104.50 bbl. Both contracts are on track for weekly losses for the second week in a row. The Energy Information Administration reported Thursday that U.S. crude inventories rose by 8.2 million barrels last week while gasoline stockpiles fell by 2.5 million barrels. Gas Prices Tumble U.S. gas prices fell for the 23rd day in a row. AAA shows the national average for regular gas fell more than 3 cents overnight to $4.721/gal today. Diesel also fell by more than 2 cents overnight to $5.675/gal. The EIA reported Thursday that product supplied rose to 20.5 million barrels per day last week. Overall gasoline demand was down over 5% compared to a year ago. In Case You Missed It Goldman Sachs (GS) economists slashed their Q2 GDP outlook on Thursday. The group now sees the economy expanding just 0.7%, down from the previous forecast for 1.9% growth. But the Atlanta Fed’s GDPNow tracker shows an expected 1.9% contraction in Q2. If that is the case, the U.S. would officially be in a recession.
Continue Reading -->Coffee With Greta: GameStop Splits!
DJIA Futures: +170 (+0.6%) SPX Futures: +16 (+0.4%) NASDAQ Futures: +49 (+0.4%) Good morning friends! Futures are up as the S&P 500 looks to extend its gains for the third straight day. Let’s get right to it! GameStop Rallies After Announcing Stock Split GameStop (GME) shares are up 5.9% ahead of the open after the company announced a 4-for-1 stock split after hours on Wednesday. The video game retailer said its board of directors approved the split. Shareholders who own the stock before the close on July 18 will get three additional shares for each one they own. The dividend will be distributed after trading closes on July 21 and GME will start trading at the split-adjusted price on July 22. Samsung Earnings Guidance Boosts Chip Stocks Chip stocks are rising in premarket trade after Samsung released better than expected Q2 earnings guidance. The VanEck Semiconductor ETF (SMH) is up 1.8% ahead of the open. Samsung said today it expects Q2 revenue to rise 22% year-over-year with operating profit expected to grow 12%. The South Korean chipmaker will release detailed second-quarter results later this month. Weekly Jobless Claims Hit 6-Month High Weekly jobless claims rose unexpectedly last week in a sign layoffs are increasing. The Labor Department reported 235,000 Americans filed initial claims for unemployment benefits. That was an increase of 4,000 from the previous week and the highest level since January. The 4-week moving average of new claims also rose to 232,500, a 6-month high as well. Continuing claims also rose by 51,000 to 1.38 million in the week ending June 25. U.S. Trade Deficit Shrinks in May The U.S. trade deficit decreased in May to $85.5 billion. That was down 1.3% from April but higher than expectations for $84.9 billion. It’s still the lowest trade gap so far this year after the deficit hit a record-high two months ago. Exports rose 1.2% to a record $255.9 billion while imports rose 0.6% to $341.4 billion. Adjusted for inflation, the real goods deficit rose to $116.6 billion in May. The lower trade deficit will be positive for GDP growth as the record-high gap in March was blamed for the contraction in Q1. Treasury Yields Rise, Curve Remains Inverted The curve between the 2-year and 10-year Treasury yields is still inverted, signaling a recession is on the horizon. The 2-year Treasury yield is up about 3 basis points to over 3% while the 10-year yield is up just over 1 basis point to 2.95%. This part of the yield curve first inverted on March 31 and then again briefly in June. Yields are rising today after the Fed minutes on Wednesday showed the bank is leaning toward another 75 basis point hike this month. Oil Prices Rise Oil prices are rebounding today after plunging on global recession fears Wednesday. West Texas Intermediate crude futures are up 1.1% at just under $100 bbl while Brent crude futures are up 0.7% at over $101 bbl. Both closed at their lowest price since April 11 on Wednesday as recession fears overtook supply concerns. The Energy Information Administration reports U.S. crude and gas inventories at 11:00 a.m. ET today. Analysts expect that report to show oil stockpiles fell by 1.2 million barrels in the week ending July 1 while gas inventories are expected to have dropped by 500,000 barrels. The American Petroleum Institute reported a 3.8 million barrel increase in crude inventories and 1.8 million decrease in gasoline stockpiles on Wednesday. Gas Prices Still Dropping U.S. gas prices fell for the 22nd day in a row. AAA shows the national average for regular gas fell to $4.752/gal today. Diesel also fell by more than a cent overnight to $5.698/gal. The sharp decline in oil prices is expected to continue pushing U.S. gas prices down. In Case You Missed It The number of available jobs is still outpacing workers by about 2 to 1. The Labor Department’s JOLTS shows there were 11.25 million job openings in May. That was down from 11.67 million in April but just 5.95 million unemployed workers were counted in May. The Great Resignation continued to slow with 4.27 million workers quitting their jobs in May. The Fed’s June meeting minutes show the bank is committed to lowering inflation even if it causes a recession. The Fed released those minutes on Wednesday afternoon, showing another 0.75% rate hike is on the table for the July meeting. FOMC members acknowledged that tighter policy will likely slow the pace of economic growth but they see inflation returning to 2% as “critical to achieving maximum employment on a sustained basis”.
Continue Reading -->Coffee With Greta: The Fed Is Dead Ahead
DJIA Futures: +13 (+0.04%) SPX Futures: +2 (+0.1%) NASDAQ Futures: +10 (+0.1%) Good morning friends! Futures are flat as traders gear up for new economic data. Let’s get right to it! Futures Flat with JOLTS, Fed Minutes Ahead Futures are flat with the focus on new jobs data and the Fed. The Labor Department releases the May Job Openings and Labor Turnover Survey (JOLTS) at 10:00 a.m. ET. That is expected to show the number of available jobs fell to 11.1 million from 11.4 million in April. The Fed then releases the minutes of its June meeting at 2:00 p.m. ET. Traders are eyeing that readout for more clarity on the bank’s plans for larger rate hikes moving forward. The Fed raised rates by 0.75% in June and the Fed Chair signaled they will consider more hikes of that size to combat inflation. Treasury Yields Fall, Curve Remains Inverted Recession alarms are sounding as a key part of the Treasury yield curve is still inverted. The 2-year Treasury yield is down about 5 basis points at 2.77% while the 10-year yield is down 5 basis points at 2.75%. An inversion between the 2-year and 10-year yields is typically seen as a sign the economy is weakening and a recession is on the horizon. Mortgage Demand Falls Despite Lower Rates Mortgage demand slipped last week even as rates dropped for the second week in a row. The Mortgage Bankers Association shows purchase applications fell 4% weekly and 17% year-over-year. Refinance applications dropped 8% weekly and tumbled 78% compared to a year ago. The average 30-year contract rate pulled back to 5.74% from 5.84% the prior week. The drop in rates followed the decrease in Treasury yields as mortgage rates typically track with the 10-year yield. Oil Prices Rebound on Supply Concerns Oil prices are bouncing back after Tuesday’s drop as supply worries take over. West Texas Intermediate crude futures are up 1% at over $100 bbl while Brent crude futures are rising 1.8% to over $104 bbl. The rebound comes after WTI crude closed below $100 bbl for the first time since late April on Tuesday. Analysts expect volatility to continue as the market grapples with supply worries against economic growth concerns. Gas Prices Continue Pullback U.S. gas prices are still falling as demand drops. AAA shows the national average for regular gas fell to $4.779/gal today. That’s down nearly 10 cents from a week ago and nearly 24 cents from the record-high. Diesel also fell to $5.716/gal, down a full cent from yesterday. The Energy Information Administration shows U.S. gasoline demand at 8.93 million barrels per day, down from 9.11 million bpd at the same time last year. Amazon Partners with Grubhub Amazon (AMZN) Prime members will now get a free year of Grubhub deliveries. The online retail giant announced that deal with the food delivery service today. It also includes an option for Amazon to acquire an up to 15% stake in the company. The news is dragging down competitors like Uber (UBER) and DoorDash (DASH). UBER shares are down 3.3% ahead of the open while DASH is tumbling 6.9%. Spirit Wins Newark Peak-Hour Flights Spirit Airlines (SAVE) shares are flat ahead of the open after the government shifted peak-hour runway timings at Newark Airport to the company. The U.S. Transportation Department said this “secures low-cost service options for Newark customers and improves competition in the Newark market.” Southwest Airlines (LUV) previously operated those timings but pulled out of Newark in favor of LaGuardia in 2019. Spirit beat out JetBlue (JBLU) and Alaska Air Group (ALK) for the approvals. Spirit said it will “continue to promote competition and offer affordable, high-value travel options for guests traveling in and out of the New York Metropolitan area.”
Continue Reading -->Coffee With Greta: Stocks Are Free… Free Fallin’
DJIA Futures: -98 (-0.3%) SPX Futures: -11 (-0.3%) NASDAQ Futures: -46 (-0.4) Good morning friends! Futures are falling as traders gear up for the first day of Q3 after the worst first half in decades. Let’s get right to it! Worst First Half in 50+ Years The S&P 500 logged its worst first half of a year since 1970. And things are even worse for the Dow, which booked its worst first half since 1962. Stocks are deep in a bear market as traders are focused on inflation and the possibility of a recession. Even though the Core PCE Price Index fell in May, it was still one of the hottest readings since the 1970s. Analysts say the dramatic drop in stocks was all due to the Fed getting behind on inflation. Now the Fed is playing catch up, with a recession looming overhead. If data later this month shows another GDP contraction in Q2, that will officially meet the criteria for a recession. Bitcoin Logs Worst Month Ever Crypto currencies are rising this morning after another tough session on Thursday. Bitcoin is up about 1.7% in the past 24 hours at over $19,200 while Ethereum is up over 3% at about $1,050. Bitcoin suffered its worst month on record in June, losing more than 38% of its value last month. Ethereum also plunged 47% in June. More than $2 trillion has been wiped off the global crypto market cap in recent months. Micron Slides on Weak Forecast Micron (MU) shares are down 4.7% ahead of the open despite beating fiscal Q3 expectations as traders focus on weak guidance. The chipmaker beat reported adjusted fiscal Q3 earnings of $2.59 per share on $8.64 billion in revenue. That topped analysts’ expectations for adjusted EPS of $2.43 on $8.64 billion in revenue. But Micron released a grim forecast for fiscal Q4. The company expects $7.2 billion in revenue this quarter, sharply missing Wall Street’s estimate for $9.1 billion. Micron also announced it is slowing its expansion plans. The CEO said, “Recently, the industry demand environment has weakened, and we are taking action to moderate our supply growth in fiscal 2023. We are confident about the long-term secular demand for memory and storage and are well-positioned to deliver strong cross-cycle financial performance.” Kohl’s Tumbles After Ending Takeover Talks Kohl’s (KSS) shares are plunging 18.6% in premarket trade after terminating sales talks with Franchise Group (FRG). The retailer announced today is was ending those talks and said the retail environment has significantly deteriorated since the beginning of the process. Kohl’s also slashed its fiscal Q2 outlook due to slowing consumer spending amid high inflation. The company now expects its annual sales decline to be in the high-single digits vs its previous forecast for low-single digits. The Chair of the board said, “Despite a concerted effort on both sides, the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable agreement.” Meta Slashes Hiring Plans, Warns About Economy Meta Platforms (META) shares are down just 0.6% ahead of the open despite slashing its hiring plans for engineers. During a weekly employee Q&A on Thursday, CEO Mark Zuckerberg said the company has cut plans to hire engineers by at least 30% this year. Zuckerberg also warned them to brace for a severe economic downturn saying, “If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history.” Meta originally planned to hire about 10,000 new engineers this year but has now lowered that target to around 6,000-7,000. Gas Prices Still Dropping U.S. gas prices are still falling ahead of the 4th of July holiday weekend. AAA shows the national average for regular gas fell to $4.842/gal today. That’s down more than a cent overnight and more than 17 cents from the record high. Diesel also fell by more than a cent over night, down to $5.76/gal. Oil Prices Rebound Oil prices are rebounding today after falling on Thursday. West Texas Intermediate crude futures are up 2.8% to just under $109 bbl while Brent crude futures are up 2.9% to over $112 bbl. Prices have been volatile as the market grapples with supply concerns against the possibility of a recession. Libya’s oil production has fallen sharply as more ports and oilfields have been shutdown due to protests. Norway is expected to see shutdowns early next week with offshore workers planning to strike.In Case You Missed It A new CNBC survey shows investors expect stocks to keep falling. 42% of respondents said they’re most likely to buy high-dividend stocks right now while just 18% said they would buy mega-cap tech stocks. 50% also said cash is their safest play right now, signaling more investors may be pulling out of the market during this time.
Continue Reading -->Coffee With Greta: Is Inflation Actually Cooling?
DJIA Futures: -299 (-1%) SPX Futures: -40 (-1%) NASDAQ Futures: -125 (-1.1%) Good morning friends! Futures are slipping after the release of the Fed’s favorite inflation gauge. Let’s get right to it! Core PCE Inflation Cools The Fed’s favorite inflation measure cooled slightly in May. The Bureau of Labor Statistics Core Personal Consumption Expenditures (PCE) Price Index rose 0.3% monthly and 4.7% year-over-year. That index excludes food and energy prices. The gain was lower than expectations for a 0.4% monthly increase and 4.8% annual jump in prices. It was a slowdown from 4.9% in April but is still the highest reading since the 1980s. The headline PCE Price Index rose 0.6% monthly and 6.3% annually. That was sharply higher than the 0.2% monthly increase in April and unchanged on an annual basis. Personal incomes rose 0.5% but disposable incomes fell 0.1%. Headline personal spending rose 0.2% monthly but when adjusted for inflation that spending dropped 0.4%. Weekly Jobless Claims Fall Less Than Expected Weekly jobless claims fell slightly last week as the labor market remains tight. The Labor Department reported 231,000 Americans filed initial claims for unemployment benefits last week. That was down 2,000 from the previous week but higher than expectations for 228,000. It was the second weekly drop in a row but claims are still hovering near a five-month high. Continuing claims fell by 3,000 to 1.328 million in the week ending June 18. Walgreens Slips Despite Earnings Beat Walgreens (WBA) shares are down 2.3% ahead of the open despite beating fiscal Q3 expectations. The drugstore chain reported adjusted earnings of $0.96 per share on $32.6 billion in revenue. That beat analysts’ expectations for adjusted EPS of $0.92 on $32.06 billion in revenue. Sales were down year-over-year as demand fell for Covid vaccines. The company administered 4.7 million vaccines in Q3, down from 11.8 million in Q2 and 15.6 million in Q1. Walgreens reiterated its full-year forecast, expecting adjusted earnings growth in the low single-digits. RH Tumbles After Slashing Outlook RH (RH) shares are tumbling 8.6% in premarket trade after slashing its full-year outlook after-hours on Wednesday. The high-end furniture chain now expects annual sales to fall between 2% and 5% this year. That’s down from previous guidance for sales to rise 0% to 2%. In a statement, RH’s CEO said, “With mortgage rates double last year’s levels, luxury home sales down 18% in the first quarter, and the Federal Reserve’s forecast for another 175 basis point increase to the Fed Funds Rate by year-end, our expectation is that demand will continue to slow throughout the year.” Gas Prices Continue Decline U.S. gas prices are continuing to fall. AAA shows the national average for regular gas fell to $4.857/gal today. That’s down about 16 cents from the record high earlier this month. Diesel prices are also continuing to decline. The national average for diesel slipped to $5.772/gal today, down from the peak of $5.816/gal on June 19. Oil Prices Slip Oil prices are falling today as the market weighs supply concerns against an increase in fuel product inventories in the U.S. West Texas Intermediate crude futures are down 1.2% at $108 bbl while Brent crude futures are slipping 0.8% to $115 bbl. U.S. oil inventories fell more than expected last week. The Energy Information Administration reported crude stockpiles fell by 2.8 million barrels vs 800,000 barrels expected. But U.S. crude-oil production also rose by 100,000 barrels per day to 12.1 million bpd, the highest level since mid-April 2020. The EIA reported gas inventories rose by 2.6 million barrels last week vs expectations for an 800,000 barrel drop. The gas increase comes as U.S. refineries are running at 95% capacity in an effort to keep up with demand and lower prices. Bitcoin Drops Below $19,000 The crypto crash is continuing with Bitcoin briefly falling below $19,000 today. Currently, the largest coin in the world is down 4.3% at $19,200. Ethereum is down 6.8% at just over $1,000 per coin. Crypto has been hit hard by macroeconomic pressures like inflation and the possibility of a recession. Bitcoin has fallen more than 70% from its record-high. In Case You Missed It Fed Chair Jerome Powell told other Central Bankers around the world on Wednesday that the Fed cannot “guarantee” a soft-landing for the U.S. economy. Speaking at a conference in Portugal, Powell said the bank is still optimistic the economy can handle tighter monetary policy. But he said recent events have made that goal more challenging. He said the Fed is aiming to “growth moderate” to allow the supply chain to catch up with demand. JPMorgan (JPM) analysts say they now see a “reasonable” risk of a recession this year. In a note on Wednesday, Bruce Kasman and Joseph Lipton said “it is reasonable to consider the risk that the US and/or global economy slips into recession this year.” They added, “rising concern about persistent inflation shocks has combined with news of a more aggressive Fed and sliding sentiment to materially shift our views on 2022 growth.” This is a reversal from last week’s global markets outlook that showed no risk of a recession this year.
Continue Reading -->Coffee With Greta: Recession Alarms Go Off
DJIA Futures: +33 (+0.1%) SPX Futures: -1 (-0.03%) NASDAQ Futures: -20 (-0.2%) Good morning friends! Futures are falling flat after new data shows the U.S. economy contracted further than initially estimated in Q1. Let’s get right to it! Q1 GDP Contraction Was Worse Than Originally Estimated The U.S. economy contracted further than originally estimated in the first quarter. The Commerce Department released its final Q1 GDP revision this morning, showing the economy shrank 1.6% annually. That was worse than the initial estimate of a 1.4% contraction. All eyes are now on the first Q2 GDP estimate on July 28. If that report shows another contraction it would meet the official criteria for a recession. Bed Bath & Beyond Sales Plunge Bed Bath & Beyond (BBBY) shares are tumbling 12.6% ahead of the open after missing fiscal Q1 expectations on the top and bottom line. The retailer reported a loss of $2.83 per share on $1.46 billion in revenue. That was worse than analysts’ expectations for a loss of $1.39 per share on $1.51 billion in revenue. Same-store sales tumbled 24% year-over-year, worse than the 20.1% drop in the previous quarter. Bed Bath & Beyond also announced it is replacing CEO Mark Tritton. Sue Gove, who serves as an independent director on the board, will tak over as interim CEO. In a statement, Gove said, “We must deliver improved results. Our shareholders, Associates, customers, and partners all expect more.” General Mills Tops Fiscal Q4 Expectations General Mills (GIS) shares are up 2.4% in premarket trade after topping fiscal Q4 expectations on the top and bottom line. The company reported adjusted earnings of $1.12 per share on $4.89 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.03 on $4.81 billion in revenue. Sales rose 8% year-over-year and General Mills said price increases helped offset supply chain challenges and higher costs. The Chairman and CEO said, “Though significant inflation and supply chain disruptions put pressure on our margins, we responded quickly to address those challenges and keep our brands on shelf for our customers and consumers.” The company said it expects double-digit inflation on its costs of goods sold in the next fiscal year and plans to raise prices further. Gas Prices Continue to Tumble U.S. gas prices are continuing to tumble. AAA shows the national average for regular gas fell to $4.868/gal today. That’s down about 15 cents from the record high earlier this month. Diesel prices are also continuing to decline. The national average for diesel slipped to $5.78/gal today, down from the peak of $5.816/gal on June 19. Oil Prices Rise on Supply Worries Oil prices are rising for the fourth straight session as supply concerns outweigh economic growth worries. West Texas Intermediate crude futures are up 1.5% at over $113 bbl while Brent crude futures are up 1.4% to just under $120 bbl. The market is concerned OPEC will not be able to make up for lost Russian oil supply. Saudi Arabia and the UAE have so far been seen as the only two countries with spare capacity to fill that gap. Tesla Begins Layoffs Tesla (TSLA) shares are down 1% in premarket trade after the automaker layed off about 200 autopilot workers. CNBC confirmed the automaker is shutting down its office in San Mateo, CA and eliminating the jobs located there. The employees at that location labeled videos from Tesla cars to improve the Autopilot system. The layoffs are part of a wider cost-cutting effort at the company after CEO Elon Musk said he has a “super bad feeling” about the economy. Pinterest CEO Steps Down Pinterest (PINS) shares are up 4.3% ahead of the open after announcing its CEO Bel Silbermann is stepping down. The company made that announcement after the close on Tuesday and said a former Google executive, Bill Ready, will take his place. Ready also previously served as the vice president and COO of PayPal (PYPL). In a statement, Silbermann said, “In our next chapter, we are focused on helping Pinners buy, try and act on all the great ideas they see. Bill is a great leader for this transition. He is a builder who deeply understands commerce and payments.” Ready said in a LinkedIn post, “As someone who has spent most of my career in commerce and payments, it’s so clear to me that Pinterest has the opportunity to build something unique—something special.”In Case You Missed It Consumer confidence tumbled to a 16-month low as Americans deal with high inflation. The Conference Board’s consumer confidence index fell to 98.7 this month from 103.2 in May. That was worse than economists’ expectations for 100. Confidence in current conditions fell to 147.1 from 147.4 while six month expectations plunged to 66.4 from 73.7.
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DJIA Futures: -464, (-1.5%) SPX Futures: -64 (-1.7%) NASDAQ Futures: -208 (-1.8%) Good morning friends! Futures are lower as traders turn their focus back to the Fed and the looming possibility of a recession. A quick note that I will be out of the office tomorrow through Tuesday, June 28 so there will be no Coffee With Greta during that time. Let’s get right to it! Jerome Powell Prepares for Senate Testimony Focus is back on the Fed as Chairman Jerome Powell is set to deliver his report on monetary policy to the Senate Banking Committee today. Powell’s testimony begins at 9:30 a.m. ET. This is a routine hearing but comes at a time when the Fed is working to tackle sky-high inflation. Analysts expect the questioning to focus on what the Central Bank got wrong about inflation, what the rate hike schedule looks like moving forward, and whether Powell sees a recession on the horizon. President Biden Set to Call on Congress for Gas Tax Holiday White House officials say President Biden will call on Congress today to suspend federal taxes on gas and diesel for 3 months. He’s also expected to call on states to suspend their own taxes. The federal gas tax is 18.4 cents per gallon while the diesel tax is 24.4 cents a gallon. The suspension would save Americans roughly 3.6% on gas. But the move has been viewed in the past as a bad idea as it would impact funding for infrastructure projects. White House officials say the $10 billion cost of the tax suspension would be paid for without impacting the Highway Trust Fund, but did not detail new sources of revenue for it. The plan requires approval from both the House and the Senate. Biden is expected to make the announcement at 2:00 p.m. ET today. Gas Prices Continue to Fall U.S. gas prices are continuing to fall after peaking last week. AAA shows the national average for regular gas fell to $4.955/gal today from $4.968/gal yesterday. Diesel prices are unchanged at $5.812/gal. The recent drop comes as gasoline demand dipped but more Americans are expected to drive over the July 4 holiday weekend. Oil Slumps Oil prices are falling amid Biden’s push to suspend federal taxes on fuel. West Texas Intermediate crude futures are down 5.3% at under $104 bbl while Brent crude futures are down 4.7% at just above $109 bbl. The Energy Information Administration reported Tuesday that U.S. oil refining capacity fell in 2021 for the second year in a row. That capacity declined by 125,790 barrels per day last year on top of the 800,000 bpd drop in 2020. Capacity is down 5.4% from its peak in 2019. The American Petroleum Institute will release its weekly report on oil and gasoline inventories later today. Mortgage Demand Rises Despite Biggest Rate Jump in 13 Years Mortgage demand rose last week even as rates continued to soar. The Mortgage Bankers Association reported purchase applications rose 8% weekly but were still down 10% year-over-year. That increase was boosted by higher demand for adjustable-rate mortgages. ARM applications made up more than 10% of all purchase applications. The average 30-year contract rate soared to 5.98% from 5.65% the prior week. Refinance applications fell 3% last week and tumbled 77% compared to a year ago. In Case You Missed It The National Association of Realtors reported existing home sales fell 3.4% in May to a seasonally adjusted annual rate of 5.41 million units. That was the lowest reading since June 2020. Supply rose 12.6% from April to 1.16 million units but the median price still hit a new record-high at $407,600. Twitter’s (TWTR) board of directors voted unanimously Tuesday to recommend shareholders approve Elon Musk’s $44 billion takeover. The $54.20 per share offer requires shareholder approval. Musk meantime said debt financing is still needed and he is awaiting a resolution on the dispute over fake users.
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DJIA Futures: +417 (+1.4%) SPX Futures: +58 (+1.6%) NASDAQ Futures: +182 (+1.6%) Good morning friends! Futures are rebounding after the market suffered its worst week since 2020. Let’s get right to it! Biden Considers Gas Tax Holiday President Biden told reporters Monday he is strongly considering a federal gas tax holiday. He said he could make a decision on that proposal by the end of this week. The White House is aiming to do something to lower gas prices before the July 4 weekend. But a gas tax holiday would require Congressional approval. A gas tax holiday would eliminate some funding for the massive infrastructure law Biden signed last year. Gas Prices Continue To Cool The average U.S. gas price is continuing to cool after peaking last week. AAA shows the national average for regular gas fell to $4.968/gal today, down from the record $5.016/gal a week ago. Diesel prices also slipped today after peaking over the weekend. The national average for slipped to $5.812/gal today from the record-high $5.816/gal on Sunday. Oil Prices Rise On High Demand, Tight Supply Oil prices are rising today as high summer demand weighs on tight supply issues. West Texas Intermediate crude futures are up 2.5% at just under $111 bbl while Brent crude futures are up 1.8% at over $116 bbl. Analysts say oil demand has remained solid despite recent concerns about economic growth. Elon Musk Clarifies Tesla Layoff Plan Speaking at a Bloomberg event today, Tesla (TSLA) CEO Elon Musk clarified layoff plans at the automaker. Musk said the company will layoff 10% of salaried workers in the next three months and simultaneously expand the number of hourly employees. A leaked email to employees last week said he simply wanted to cut 10% of jobs because he had a “super bad feeling” about the economy. The cuts will end up affecting about 3.5% of Tesla’s overall workforce. Tesla shares are up 3% ahead of the open. Kellogg To Split Into 3 Companies Kellogg (K) shares are jumping 6.6% in premarket trade after announcing plans to split into three independent companies. Those will include a snacking, cereal, and plant-based company. Kellogg’s CEO said, “These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities.” The company expects the spinoffs to be complete by the end of 2023. The current CEO will lead the snacking company and executives for the other two will be announced at later dates. JetBlue Sweetens Spirit Buyout Offer Spirit Airlines (SAVE) shares are rallying 8.4% ahead of the open after JetBlue (JBLU) upped its buyout offer for the discount airline. JetBlue raised its offer to $33.50 a share from $31.50. The new offer is an effort to push Spirit into accepting this offer over the Frontier (ULCC) merger. Spirit has said it will decide between the two by the end of June.In Case You Missed It Pixar’s “Lightyear” had the best animated domestic opening since the beginning of the pandemic. The film brought in $51 million in domestic ticket sales over the weekend and $34.6 million in international ticket sales. Although that was the strongest animated film opening since before the pandemic, it fell short of analysts’ expectations for $70 million to $85 million domestically. Universal’s “Jurassic World: Dominion” brought in $58.6 million over the weekend while Paramount’s “Top Gun: Maverick” sold $44 million in tickets.
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