Coffee With Greta: Quiet Week
Register now for today’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: -5 (-0.01%) SPX Futures: +2 (+0.04%) NASDAQ Futures: +17 (+0.1%) Good morning friends! Futures are flat as the S&P 500 nears a fresh all-time high. Let’s get right to it! Flirting With A Record The S&P 500 closed Tuesday with 0.5% of its previous closing record that was set in January 2022. The major indexes are all set to post strong gains for the year with just three trading days left. In 2023, the Dow is up 13%, the S&P 500 is up 24%, and the Nasdaq has surged 44%. The tech-heavy Nasdaq is on track for its largest annual gain since 2003, when it rallied over 50%. Bonds Continue Downtrend Treasury yields are continuing to fall this morning as traders assess the future of Fed policy in 2024. The 10-year yield is down 5 basis points at 3.85% while the 2-year yield is 1 basis point lower at 4.27%. CME Group’s FedWatch Tool shows nearly 73% of traders expecting the first rate cut at the Fed’s March 20 meeting. The market will be focused on data in the weeks ahead like the jobs report and the CPI to gauge whether those predictions should stand. Oil Prices Stabilize Oil prices are lower this morning after jumping on Wednesday amid tensions in the Red Sea. West Texas Intermediate crude futures are down 0.8% at just under $75 bbl while Brent crude futures are down 0.6% at over $80 bbl. Major shippers resumed passage through the key trade route in the Red Sea today after fresh attacks on ships in the region. The American Petroleum Institute is set to release its inventory report today while the Energy Information Administration will release its report on Thursday. Tesla To Refresh Model Y Tesla (TSLA) shares are up 0.6% ahead of the open following a Bloomberg News report the company plans to revamp its Model Y. The refreshed SUV is expected to be built at the automaker’s plant in Shanghai. It will reportedly feature significant changes to both the interior and exterior and is expected to reach mass production in mid-2024. Sources told Bloomberg the Shanghai factory will pause production for about a week after the new year to upgrade its production capabilities and the plant will need another upgrade later in the year. In Case You Missed It Home prices rose at the strongest pace of 2023 in October. The S&P Case-Shiller national home price index jumped 4.8% from October 2022. That was up from the 4% gain in September. The 20-city index rose 4.9% and the 10-city index rose 5.7%. Detroit saw the largest gain with prices up 8.1%, prices rose 7.2% in San Diego, and 7.1% in New York.
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Register now for tomorrow’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: +15 (+0.04%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +22 (+0.1%) Good morning friends! Futures are up slightly as the final week of 2023 begins. Let’s get right to it! Win Streak Continues The S&P 500 logged its eighth straight weekly gain last week, marking the longest win streak since 2017. The Dow and the Nasdaq also both rose for the eighth consecutive week. The S&P ended last week 0.9% below its all-time closing record of 4,796.56 and the index is 1.3% from its intraday record high. It is a light week of economic data to close out the week. The S&P Case-Shiller home price index will be released at 10:00 a.m. ET today. Then weekly jobless claims, the advanced goods trade balance, advanced retail inventories, and advanced wholesale inventories at 8:30 a.m. ET Thursday. The National Association of Realtors reports pending home sales at 10:00 a.m. ET on Thursday. Bonds Tick Slightly Higher U.S. Treasury yields are up slightly this morning after dipping earlier in the session. The 10-year yield is currently one basis point higher at 3.91% with the 2-year yield up two basis points at 4.36%. Recent data supports the Fed’s plans to cut rates in 2024 after the PCE price index came in lighter than expected on Friday. CME Group’s FedWatch Tool now shows over 74% of traders betting on the first rate cut at the March 20 meeting. Intel Jumps On Israeli Grant Intel (INTC) shares are up 2.2% ahead of the open after news the Israeli government agreed to grant the company $3.2 billion for a new $25 billion chip plant in southern Israel. It is the largest investment Israel has ever made in a company. Intel said the expansion plan for its Kiryat Gat site is an “important part of Intel’s efforts to foster a more resilient global supply chain, alongside the company’s ongoing and planned manufacturing investments in Europe and the United States.” The chipmaker also agreed to buy $16.6 billion worth of goods and services from Israeli suppliers over the next decade. The new plant is expected to open in 2028 and operate through 2035.
Continue Reading -->Coffee With Greta: Will Santa Visit Wall Street?
Register now for next week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: -60 (-0.2%) SPX Futures: +11 (+0.2%) NASDAQ Futures: +44 (+0.3%) Good morning friends! Futures are mixed after the release of better-than-expected inflation data as Nike (NKE) weighs on the Dow. Let’s get right to it! Two Months Of Gains The major indexes are all on track to close out this week higher, marking the 8th positive week in a row. That’s the longest win streak for the S&P 500 since 2017 and for the Dow since 2019. So far, the S&P is up 0.58% this week, the Dow has gained 0.27%, and the Nasdaq is up 1%. The small-cap Russell 2000 is also on track for its sixth straight positive week. PCE Price Index Comes In Light The Fed’s preferred inflation gauge rose less than expected in November. The personal consumption expenditures price index fell 0.1% monthly and rose 2.6% year over year. That was better than expectations for a 2.8% annual increase and marked the lowest level of inflation since March 2021. It was also the first monthly decrease in the headline number since 2020. The core PCE price index rose 0.1% monthly and 3.2% annually. That was also lower than expectations for a 3.3% annual increase and the lowest since early 2021. Consumer Spending Weak Consumer activity was weaker than expected in November. The Bureau of Economic Analysis reported consumer spending rose 0.2% last month vs 0.3% expected. The data shows consumers spent more on housing, utilities, dining out, and hotel stays last month. But they spent less on gasoline as prices fell. Personal incomes rose 0.4%, topping expectations for 0.2% and outpacing inflation. Nike Tumbles After Slashing Guidance Nike (NKE) shares are dropping 11.7% ahead of the open after reporting mixed fiscal Q2 results and slashing its full-year guidance. Here’s how the sneaker giant’s results compared to analysts’ estimates: EPS: $1.03 vs $0.85 expected Revenue: $13.39 billion vs $13.43 billion expected Sales rose about 1% year over year. Nike’s gross margin increased by 1.7% to 44.6% as the company continued work to lower its inventories. Inventories were down 14% during the quarter. The company now expects full-year revenue growth of 1% and gross margins to expand between 1.4% and 1.6%. Nike said it expects revenue growth in the current quarter to be slightly negative. The CFO said, “Last quarter as I provided guidance, I highlighted a number of risks in our operating environment, including the effects of a stronger U.S. dollar on foreign currency translation, consumer demand over the holiday season and our second half wholesale order books. Looking forward, the impact of these risks is becoming clearer.”
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Register now for next week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: +253 (+0.7%) SPX Futures: +39 (+0.8%) NASDAQ Futures: +181 (+1.1%) Good morning friends! Futures are rising as stocks rebound from Wednesday’s slump. Let’s get right to it! Weekly Jobless Claims Inch Higher Weekly jobless claims rose less than expected last week as layoffs remain low. The Labor Department reported 205,000 Americans filed initial claims for unemployment benefits. That was up by 2,000 from the previous week and lower than 215,000 expected. Continuing claims decreased by 1,000 to 1.865 million in the week ending December 9 vs 1.88 million expected. Q3 GDP Revised Lower Economic growth in the third quarter has been revised lower. The Commerce Department’s final revision shows the U.S. economy expanded at a 4.9% annual pace in Q3 down from the previous estimate of 5.2%. It was still the largest increase in a decade, excluding the pandemic years. GDP growth has slowed in the final three months of this year, with forecasts for 1% to 2% growth in Q4. CarMax Pops On Earnings Beat CarMax (KMX) shares are up 9.5% ahead of the open after reporting mixed fiscal Q3 results. Here’s how the used-car retailer’s results compared to analysts’ estimates: EPS: $0.52 vs $0.38 expected Revenue: $6.15 billion vs $6.29 billion expected Total used-unit sales fell 2.9% from a year ago while comparable-store used-unit sales dropped 4.1%. CarMax also said it is resuming its buyback program after pausing it a year ago. The company has $2.41 billion remaining in its outstanding authorization to buy back shares and said it purchased 648,500 shares for $41.9 million during Q3. The President and CEO said, “Our third-quarter performance reflects the continued efforts of the team that have resulted in several quarters of sequential improvements across key components of our business, despite the persistent widespread pressures in the used-car industry.” Micron Jumps After Earnings Micron Technology (MU) shares are rising 7.5% in premarket trade after beating fiscal Q1 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted loss per share: $0.95 vs $1.01 expected Revenue: $4.73 billion vs $4.58 billion expected The company’s CEO said, “Micron’s strong execution and pricing drove better-than-anticipated first quarter financial results. We expect our business fundamentals to improve throughout 2024.” Micron forecast $5.3 billion in revenue for the fiscal second quarter topping expectations for $4.97 billion. In Case You Missed It Consumer confidence jumped to a five-month high in December. The Conference Board’s consumer confidence index rose 9.7 points to 110.7, topping expectations for 104. Confidence in current economic conditions rose 12 points to 148.5 while the expectations index rose 8.2 points to 85.6. The expectations index is back above the 80 threshold that is seen as a sign of an impending recession. Existing home sales rose unexpectedly in November. The National Association of Realtors reported existing sales rose 0.8% last month to a seasonally adjusted annual rate of 3.82 million units vs 3.76 million expected. The median sales price of an existing home sold in November rose 4% year over year to $387,600, the fifth straight monthly increase. There were 1.13 million homes for sale at the end of November, down 1.7% from October and marking a 3.5-month supply.
Continue Reading -->Coffee With Greta: Hovering Near Records
Register now for today’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: -59 (-0.2%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -38 (-0.2%) Good morning friends! Futures are sliding as the S&P 500 hovers near record territory. Let’s get right to it! 10-Year Yield Hits 5-Month Low Treasury yields are continuing to fall this morning with the 10-year hitting its lowest level in nearly five months. The 10-year yield is down 6 basis points at 3.88% while the 2-year yield is down 7 basis points at 4.37%. The 10-year hit a low of 3.87% earlier this morning, its lowest since July 27. FedEx Tumbles On Earnings Miss, Weak Outlook FedEx (FDX) shares are dropping 11.2% ahead of the open after missing fiscal Q2 expectations and lowering its full-year outlook. Here’s how the shipping giant’s results compared to analysts’ estimates: Adjusted EPS: $3.99 vs $4.18 expected Revenue: $22.17 billion vs $22.41 billion expected Profit jumped 25% year over year while revenue fell 3%. FedEx credited its cost-cutting initiatives for the increase in profit. The company said it now expects a low-single-digit decline in revenue for the full-year down from its previous forecast for sales to be flat. FedEx maintained its full-year EPS guidance of $17.75. General Mills Cuts Guidance After Revenue Miss General Mills (GIS) shares are falling 3.8% in premarket trade after reporting mixed fiscal Q2 results and lowering its full-year sales guidance. Here’s how the cereal maker’s results compared to analysts’ estimates: Adjusted EPS: $1.25 vs $1.16 expected Revenue: $5.14 billion vs $5.35 billion expected In North America, General Mills’ foodservice net sales were flat, retail net sales fell 2% and net sales in the pet segment were down 4%. International foodservice net sales jumped 2%. The company now expects fiscal-year organic net sales to range between down 1% to flat, down from its previous outlook for 3% to 4% growth. General Mills said that lower outlook reflects “a slower volume recovery in fiscal 2024.” Adjusted operating profit and adjusted diluted EPS are now expected to rise 4% to 5% vs 4% to 6% previously. Mortgage Demand Slips Mortgage demand fell last week despite a continued decline in rates. The Mortgage Bankers Association reported purchase applications fell 1% weekly and 18% year over year. Refinance applications dropped 2% weekly but was 18% higher than the same week a year ago. The decrease came despite the average 30-year fixed contract rate falling to 6.83% from 7.07%. That was the lowest rate since June 2023. The MBA said it expects the Fed’s plans for rate cuts to be good news for the housing market. The group said, “We expect that this path for monetary policy should support further declines in mortgage rates, just in time for the spring housing market. We are forecasting modest growth in new and existing home sales in 2024, supporting growth in purchase originations.” In Case You Missed It Affirm Holdings (AFRM) shares rallied 15.5% on Tuesday after the company announced it is expanding its partnership with Walmart (WMT). Affirm’s buy-now pay-later service will now be a payment option for shoppers at self-checkout kiosks in over 4,500 Walmart stores across the U.S. Shoppers will be able to pre-apply for credit through Affirm and then scan the barcode for that payment option at the self-checkout kiosks.
Continue Reading -->Coffee With Greta: Bulls In Control
Register now for this week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: +78 (+0.2%) SPX Futures: +10 (+0.2%) NASDAQ Futures: +21 (+0.1%) Good morning friends! Futures are rising as the rally continues. Let’s get right to it! Futures Extend Rally The major indexes are all inching higher ahead of the market open. The S&P 500 is currently trading just above 4,800, higher than its all-time closing high of 4,797.56 in January 2022. The Dow notched out a new closing record on Monday and the Nasdaq is still climbing as well. Fed officials have attempted to throw cold water on the market’s anticipation of rate cuts at the end of Q1 but traders seem to have brushed off those comments. For the month, the S&P 500 is up 3.8%, the Nasdaq is up 4.8%, and the Dow is up 3.8%. Bonds Continue Downtrend Treasury yields are falling this morning after rising on Monday. The 10-year yield is down 3 basis points at 3.91% with the 2-year yield down 2 basis points at 4.45%. Yields have been on a downward trend since the Fed meeting last Wednesday as traders assess the future of rate cuts. CME Group’s FedWatch Tool shows just under 66% of traders anticipating the first 25 basis point cut at the March meeting. Homebuilding Rebounds U.S. homebuilding rebounded more than expected in November. The Census Bureau reported housing starts surged 14.8% monthly and 9.3% annually to a seasonally adjusted annual rate of 1.56 million units. That topped expectations for 1.36 million and was the strongest pace since May. Single-family starts jumped 18% with multi-family starts up 8.9%. But new permits issued for future builds fell more than expected. Permits fell 2.5% monthly and 4.1% annually to a SAAR of 1.46 million units vs 1.48 million expected. Single-family permits rose 0.7% while multi-family permits dropped 9.6%. In Case You Missed It Homebuilder sentiment rebounded more than expected this month as mortgage rates dropped. The National Association of Homebuilders sentiment index rose three points to 37 vs 36 expected. That was the first increase in four months but any reading below 50 is considered negative. Sentiment about current sales conditions was unchanged at 40, buyer traffic rose three points to 24, and six-month sales expectations jumped six points to 45.
Continue Reading -->Coffee With Greta: New Week, Same Rally
Register now for this week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: +67 (+0.2%) SPX Futures: +14 (+0.3%) NASDAQ Futures: +24 (+0.1%) Good morning friends! Futures are higher, extending the market’s seven-week long rally. Let’s get right to it! Win Streak Continues The S&P 500 is on its longest win-streak since 2017, logging weekly gains for seven straight weeks. So far this month, the index is up 3.3% while the Dow is 3.8% higher and the Nasdaq is up 4.1%. Slowing inflation and optimism over the Fed’s plans for rate cuts in 2024 fueled the latest move higher in this nearly 2-month long rally. And traders will get more key inflation data this week. Economic data starts with the NAHB homebuilder sentiment index today at 10:00 a.m. ET. Housing starts and building permits for November will be out Tuesday morning followed by existing home sales on Wednesday. Thursday will see weekly jobless claims, the final Q3 GDP revision, the Philly Fed manufacturing index, and the leading economic indicators index. Then on Friday, the market will get the Fed’s preferred inflation gauge with the PCE price index at 8:30 a.m. ET, plus personal income, personal spending, durable goods orders, new home sales, and consumer sentiment. U.S. Steel Surges On Buyout Offer United States Steel Corp (X) shares are rallying 28.4% ahead of the open after receiving a buyout offer from a Japanese steel company. Nippon Steel offered to buy U.S. Steel for $55 per share, making the all-cash deal worth $14.9 billion. Nippon said the deal is expected to help it move toward its goal of 100 million tonnes of global crude steel capacity and expand its production in the U.S. All of U.S. Steel’s current commitments with employees, including union deals, would be honored. Nippon’s executive vice president said, “Standard Steel that we own is a union company in the United States, we have a good history of working with unions. We see no regulatory or antitrust issues with the deal.” The transaction is expected to close in Q2 or Q3 of 2024. Adobe, Figma Call Off Merger Adobe (ADBE) shares are up 2.0% in premarket trade after calling off the planned $20 billion merger with cloud-based design tool Figma. The companies ditched the deal due to regulatory hurdles. In a statement, the two said, “there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.” Adobe will pay Figma a $1 billion breakup fee.
Continue Reading -->Coffee With Greta: Huge Week
Register now for next week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: -28 (-0.1%) SPX Futures: -3 (-0.1%) NASDAQ Futures: +22 (+0.1%) Good morning friends! Futures are mixed as this week’s Fed-fueled surge takes a breather. Let’s get right to it! New York Fed President Speaks New York Fed President John Williams says the rate cuts are not a topic of discussion at the Fed yet. In an interview with CNBC this morning, Williams said, “We aren’t really talking about rate cuts right now. We’re very focused on the question in front of us, which as chair Powell said… is, have we gotten monetary policy to a sufficiently restrictive stance in order to ensure the inflation comes back down to 2%? That’s the question in front of us.” His comments appeared to be an attempt to rein in some market enthusiasm after the updated dot plot showed plans for three rate cuts in 2024. Williams said the Fed is ready and willing to tighten policy again if the data warranted it. He said, “One thing we’ve learned even over the past year is that the data can move and in surprising ways, we need to be ready to move to tighten the policy further, if the progress of inflation were to stall or reverse.” Key Manufacturing Index Tumbles The Empire State manufacturing index fell sharply this month into negative territory. The index dropped 24 points to -14.5. That was lower than economists’ expectations for 4 and marked the lowest reading in four months. The new orders index dropped for the third straight month by 6 points to -11.3. The six-month expectations index rose 13 points to 12.1. Costco Rises After Earnings Beat Costco (COST) shares are up 1.9% ahead of the open after beating fiscal Q1 expectations. Here’s how the big box store’s results compared to analysts’ estimates: EPS: $3.58 vs $3.41 expected Revenue: $57.8 billion, in line with expectations Same-store sales rose 3.8% year over year while e-commerce same-store sales jumped 6.3%. Costco added 72 million paid household members during the quarter, up 7.6% from a year ago. The company also announced a special cash dividend of $15 per common share, payable January 12.
Continue Reading -->Coffee With Greta: Doves Take Flight
DJIA Futures: +162 (+0.4%) SPX Futures: +22 (+0.5%) NASDAQ Futures: +66 (+0.4%) Good morning friends! Futures are rising after the Fed’s dovish rate decision and outlook on Wednesday. Let’s get right to it! Yields Tumble After Fed Turns Dovish Treasury yields are falling this morning after the Federal Reserve left rates unchanged as expected on Wednesday and signaled plans for three rate cuts in 2024. The 10-year yield is down 5 basis points at 3.97% while the 2-year yield is down 7 basis points at 4.36%. It’s the first time the 10-year yield has broken below 4% since August. The Federal Funds Rate currently stands at a range of 5.25% to 5.50% and the updated dot plot shows at least three 25 basis point cuts next year. Market pricing is a bit more aggressive with CME Group’s FedWatch Tool showing over 71% of traders expecting the first rate cut in March. The FOMC also indicated another four cuts in 2025 and three more reductions in 2026. That would bring the rate down to between 2% and 2.25%. Retail Sales Rebound Retail sales rose unexpectedly in November. The Commerce Department reported retail sales jumped 0.3% last month vs a 0.1% decrease expected. That was a turnaround from the 0.2% decrease in October. Sales jumped 4.1% year over year. Sales rose 1.6% at bars and restaurants, 1.3% at sporting goods stores, and 1% online. Gas station sales dropped 2.9% as prices went down. Excluding autos and gas, core retail sales rose 0.6%. Weekly Jobless Claims Fall Weekly jobless claims fell unexpectedly last week as the labor market maintains strength. The Labor Department reported 202,000 Americans filed initial claims for unemployment benefits. That was down by 18,000 from the week before and sharply lower than 220,000 expected. Continuing claims rose by 15,000 to 1.876 million vs 1.887 million expected. Adobe Drops On Weak Guidance Adobe (ADBE) shares are down 3.9% ahead of the open after beating fiscal Q4 expectations but issuing soft guidance. Here’s how the software maker’s results compared to analysts’ estimates: Adjusted EPS: $4.27 vs $4.14 expected Revenue: $5.05 billion vs $5.03 billion expected Revenue jumped nearly 12% year over year while net income increase 26%. Adobe forecast fiscal 2024 adjusted EPS of $17.60 to $18 on $21.3 billion to $21.5 billion in revenue. That was weaker than analysts’ expectations for adjusted EPS of $18 on $21.73 billion in revenue.
Continue Reading -->Coffee With Greta: 2023 Fed Finale
Register now for today’s free pro trader Q&A on LinkedIn with Scott Redler! DJIA Futures: +70 (+0.2%) SPX Futures: +10 (+0.2%) NASDAQ Futures: +47 (+0.3%) Good morning friends! Futures are higher as traders await today’s Fed decision. Let’s get right to it! November Wholesale Prices Unchanged Wholesale prices were lower than expected in November in another sign of easing inflation. The Bureau of Labor Statistics’ producer price index was unchanged on a monthly basis and up 0.9% year over year. That was better than economists’ expectations for a 0.1% monthly increase and 1% annually. The core PPI was also unchanged on a monthly basis and up 2% annually vs 0.2% monthly and 2.2% annually expected. That was the slowest core reading since February 2021. Producer prices are a leading indicator for consumer prices. Yields Dip Ahead Of Fed Decision Treasury yields are pulling back ahead of the Federal Open Market Committee’s interest rate decision at 2:00 p.m. ET today. The 10-year yield is down 4 basis points at 4.17% while the 2-year yield is down 4 basis points at 4.70%. CME Group’s FedWatch Tool shows 98.2% of traders anticipating no rate hike today. Focus will be on the language in the FOMC statement and Chairman Powell’s press conference about the future of monetary policy. Fed officials have given no hints about rate cuts starting any earlier than mid-2024. But the market has started pricing in a 25 basis point cut as early as the March meeting. Tesla Issues Massive Recall Tesla (TSLA) shares are down 0.9% ahead of the open after issuing a recall for nearly all of its vehicles sold in the U.S. The recall covers nearly 2 million vehicles to fix a defective system that ensures drivers are paying attention while using Autopilot. Tesla will send out a software update to fix the problems on models Y, S, 3, and X produced between October 5, 2012 and December 7, 2023. The recall comes in response to the National Highway Traffic Safety Administration’s two-year investigation into crashes that happened while Autopilot was in use. Mortgage Demand Jumps Again As Rates Drop Mortgage demand continued to rise last week as rates fell. The Mortgage Bankers Association reported purchase applications rose 4% weekly and were down 18% year over year. Refinance applications jumped 19% weekly and 27% compared to a year ago. That surge in refinance activity came as the average 30-year fixed contract rate fell to 7.07% from 7.17%. That was the lowest level since July.
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