Coffee With Greta: Waiting For NVDA
Register now for today’s free pro trader Q&A on LinkedIn with me and T3 Trading Group’s Josh Lefler! DJIA Futures: +35 (+0.1%) SPX Futures: +7 (+0.2%) NASDAQ Futures: +39 (+0.3%) Good morning friends! Futures are rising as traders digest the latest batch of retail earnings and look ahead to Nvidia’s (NVDA) earnings this afternoon. Let’s get right to it! Foot Locker Plummets Foot Locker (FL) shares are plummeting 30.1% ahead of the open after missing Q2 sales expectations and slashing its outlook for the second time this year. Here’s how the sneaker giant’s results compared to analysts’ estimates: Adjusted EPS: $0.04 as expected Revenue: $1.86 billion vs $1.88 billion expected Sales dropped 9.9% year over year as consumers pull back on discretionary spending. Foot Locker now expects full-year sales to drop between 8% and 9% vs its previous forecast for a 6.5% to 8% decline. The company sees same-store sales falling 9% to 10% vs 7.5% to 9% in previous guidance. Foot Locker also cut its full-year adjusted earnings guidance to between $1.30 to $1.50 per share vs $2.00 to $2.25 previously. Abercrombie Surges Abercrombie & Fitch (ANF) shares are rallying 16.4% in premarket trade after crushing Q2 expectations and hiking its outlook. Here’s how the retailer’s results compared to analysts’ estimates: EPS: $1.10 vs $0.17 expected Revenue: $935.3 million vs $842.4 million expected Comparable sales jumped 13% year over year with Abercrombie’s namesake brand sales up 23% and Hollister sales rising 5%. Inventory dropped 30% year over year as the company better-managed orders based on demand. Abercrombie now expects net sales to rise 10% this fiscal year, up from its previous outlook for 2% to 4% growth. The company also expects operating margins to improve to between 8% to 9% vs prior expectations of 5% to 6%. Kohl’s Earnings Beat Kohl’s (KSS) shares are up 1.1% ahead of the open after beating Q2 profit expectations. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $0.52 vs $0.22 expected Revenue: $3.68 billion vs $3.69 billion expected Revenue was down 4.8% year over year and Kohl’s maintained its full-year outlook. The CEO said, “Our second-quarter earnings were in line with our expectations. We maintained strong sales momentum in Sephora at Kohl’s, reduced inventory by 14%, and managed expenses tightly.” Peloton Plunges Peloton (PTON) shares are plunging 29.3% in premarket trade after reporting a wider than expected fiscal Q4 loss. Here’s how the exercise equipment maker’s results compared to analysts’ estimates: Loss per share: $0.68 vs $0.38 expected Revenue: $642.1 million vs $639.9 million expected Peloton blamed the loss on the massive recall of its Bike seat post and seasonal changes in demand. The company had 3.08 million subscribers at the end of the quarter, up 4% from a year ago but down by 29,000 from the previous quarter. The CEO said, “Peloton’s FYQ4 performance is a reminder we operate a seasonal business.” Mortgage Demand Hits 28-Year Low Mortgage demand dropped last week as rates hit the highest level in 23 years. The Mortgage Bankers Association reported total application fell 4.2% last week. The average 30-year fixed contract rate rose to 7.31% from 7.16%. Purchase applications dropped 5% weekly and 30% year over year. That put buyer demand at the lowest level since December 1995. Amid high rates, the adjustable-rate mortgage share of applications jumped to 7.6%, the highest level in 5 months. ARM applications rose 4% weekly. Refinance applications fell 3% weekly and 35% annually. Mortgage rates have continued to climb this week with Mortgage News Daily showing the current rate at 7.49%. In Case You Missed It Existing home sales fell more than expected in July. The National Association of Realtors reported existing sales dropped 2.2% to a seasonally adjusted annual rate of 4.07 million units. That was lower than economists’ expectations for 4.15 million. Sales were down 16.6% year over year and it was the slowest sales pace since July 2010. Supply remained tight amid high mortgage rates. There were 1.11 million homes for sale at the end of July, representing a 3.3-month supply. That was down 14.6% from a year ago and the lowest level since 1999. The median price of a home sold in July rose 1.9% year over year to $406,700.
Continue Reading -->Coffee With Greta: Tech Bounce
Register now for tomorrow’s free pro trader Q&A on LinkedIn with me and T3 Trading Group’s Josh Lefler! DJIA Futures: +66 (+0.2%) SPX Futures: +21 (+0.5%) NASDAQ Futures: +108 (+0.7%) Good morning friends! Futures are rising as tech stocks continue to rally. Let’s get right to it! More Bank Downgrades Several banks were downgraded by S&P Global late Monday night. Trading in both the Financial Select Sector SPDR ETF (XLF) and SPDR S&P Regional Banking ETF (KRE) is halted premarket. S&P Global downgraded Associated Banc-Corp (ASB) and Valley National Bancorp (VLY) on funding risks and a higher reliance on brokered deposits. The agency also cute the ratings of UMB Financial Corp (UMBF), Comerica Bank (CMA), and Keycorp (KEY), citing large deposit outflows and prevailing higher interest rates. S&P Global warned that funding risks and weaker profitability will likely test the banking sector’s credit strength. This move comes after Moody’s downgraded 10 banks earlier this month and placed six large banks on review for potential downgrades. Lowe’s Tops Q2 Earnings Estimates Lowe’s (LOW) shares are up 2.8% ahead of the open after beating Q2 profit expectations. Here’s how the home improvement retailer’s results compared to analysts’ estimates: EPS: $4.56 vs $4.49 expected Revenue: $24.96 billion vs $24.99 billion expected Comparable sales decreased 1.6% year over year, better than expectations for a 2.6% decline. Lowe’s maintained its full-year forecast for adjusted EPS between $13.20 and $13.60 on sales between $87 billion and $89 billion. The company expects comparable sales to drop between 2% and 4% this fiscal year. Macy’s Earnings Beat Macy’s (M) shares are falling 4.1% in premarket trade after beating Q2 expectations but reiterating its cautious outlook. Here’s how the department store’s results compared to analysts’ estimates: Adjusted EPS: $.026 vs $0.13 expected Revenue: $5.13 billion vs $5.09 billion expected Comparable sales dropped 7.3% year over year, worse than expectations for a 6.5% decline. Sales at stores were down 8% while digital sales dropped 10%. The retailer reiterated its lower forecast from early June. The company expects full-year comparable sales to fall 6% to 7.5%, adjusted EPS between $2.70 and $3.20, and revenue of $22.8 billion to $23.2 billion. Dick’s Sporting Goods Slashes Outlook Dick’s Sporting Goods (DKS) shares are plunging 20.2% ahead of the open after missing Q2 expectations and slashing its outlook. Here’s how the sporting goods retailer’s results compared to analysts’ estimates: EPS: $2.82 vs $3.81 expected Revenue: $3.22 billion vs $3.24 billion expected Profits tumbled 23% year over year while sales rose slightly. The CEO blamed that profit miss on “shrink”, an industry term that refers to theft. She said, “Our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers.” Dick’s now expects full-year EPS between $11.33 and $12.13 vs $12.90 to $13.80 previously. The company reaffirmed its comparable store sales forecast of flat to up 2%.
Continue Reading -->Coffee With Greta: Stocks Bounce
Register now for Wednesday’s free pro trader Q&A on LinkedIn with me and Josh Lefler! DJIA Futures: +67 (+0.2%) SPX Futures: +16 (+0.4%) NASDAQ Futures: +86 (+0.6%) Good morning friends! Futures are higher as traders hope to bounce back from a losing week on Wall Street. Let’s get right to it! Earnings Season Winds Down Although earnings season is winding down, this week includes some important results. From major retailers to big tech, here are the highlights: Tuesday AM: Lowe’s (LOW), Dick’s Sporting Goods (DKS), Macy’s (M) Wednesday AM: Kohl’s (KSS), Peloton (PTON) Wednesday PM: Nvidia (NVDA), Snowflake (SNOW) Thursday AM: Dollar Tree (DLTR) Thursday PM: Intuit (INTU), Affirm (AFRM), Gap (GPS), Nordstrom (JWN) Yields Jump Treasury yields are rising this morning as investors look ahead to comments from Fed officials this week and other economic data. The 2-year yield is up 22 basis points to 4.97% while the 10-year yield is up 49 basis points to 4.30%. The Fed’s Jackson Hole Symposium is set to kickoff on Thursday with the Fed Chair’s speech scheduled for Friday morning. Here’s a look at the other economic data scheduled to be released this week: Tuesday: July existing home sales Wednesday: S&P flash services and manufacturing PMIs, July new home sales Thursday: Weekly jobless claims, durable goods orders Friday: August consumer sentiment Palo Alto Surges Palo Alto Networks (PANW) shares are surging 12.6% ahead of the open after beating fiscal Q4 profit expectations. Here’s how the security software company’s results compared to analysts’ estimates: Adjusted EPS: $1.44 vs $1.28 expected Revenue: $1.95 billion vs $1.96 billion expected Revenue jumped 26% year over year. The company forecast fiscal Q1 revenue of $1.82 billion to $1.85 billion and full-year revenue between $8.15 billion and $8.2 billion. That outlook fell short of analysts’ expectations for fiscal Q1 revenue of $1.93 billion and full-year sales of $8.38 billion. Earthstone Energy Jumps On Buy Out Earthstone Energy (ESTE) shares are jumping 9.1% in premarket trade after announcing Permian Resources (PR) agreed to buy the oil company. Permian Resources will acquire Earthstone in an all-stock transaction valued at $4.5 billion. Each Earthstone shareholder will receive 1.446 shares of Permian Resources common stock for each Earthstone share they own. That implies a value of $18.64 per share of Earthstone stock. The deal has been unanimously approved by both companies’ boards of directors and is expected to close by the end of this year.
Continue Reading -->Coffee With Greta: Tough Week
Register now for next week’s free pro trader Q&A on LinkedIn with me and Josh Lefler! DJIA Futures: -180 (-0.5%) SPX Futures: -27 (-0.6%) NASDAQ Futures: -136 (-0.9%) Good morning friends! Futures are dropping as traders gear up for another down session. Let’s get right to it! Ross Earnings Beat Ross Stores (ROST) shares are up 5.4% ahead of the open after beating Q2 expectations on the top and bottom line. Here’s how the discount retailer’s results compared to analysts’ estimates: EPS: $1.32 vs $1.16 expected Revenue: $4.93 billion vs $4.75 billion expected Ross raised its full-year outlook following the beat. The company now expects fiscal year earnings between $5.15 and $5.26 per share vs $5 expected and $4.77 to $4.99 previously. Ross forecast Q3 EPS between $1.16 and $1.21 and Q4 EPS between $1.58 and $1.64. Chinese EV Maker Posts Record Loss Xpeng (XPEV) shares are tumbling 7.9% in premarket trade after reporting the largest quarterly loss in company history. Here’s how the Chinese EV maker’s Q2 results compared to analysts’ estimates: Net loss: 2.8 billion yuan vs 2.13 billion yuan expected Revenue: 5.06 billion yuan, in line with estimates Revenue dropped 31% year over year and it was the biggest quarterly loss Xpeng has reported since going public in August 2020. The company’s vehicle margin dropped to -8.9% during the quarter vs 9.1% a year ago. Xpeng blamed that decline on “inventory write-downs and losses on inventory purchase commitments”. The company is relying on its new G6 electric vehicle to turn around performance. Xpeng expects between 39,000 and 41,000 vehicle deliveries in Q3, up from Q2 and 31.9% to 38.7% higher year over year. The company also forecast Q3 revenue between 8.5 billion yuan and 9 billion yuan, which would be an annual increase of 24.6% to 31.9%. Bitcoin Plunges Bitcoin prices abruptly plunged Thursday evening to just over $26,000. The coin is currently down 7.5% at $26,364. The drop comes after a Wall Street Journal report that SpaceX wrote down the value of its bitcoin holding by $373 million in 2022 and 2021. The report also said the space travel company sold the crypto currency. In Case You Missed It CVS Health (CVS) shares tumbled 8.1% on Thursday after insurance giant Blue Shield of California said it will drop the company’s pharmacy services. CVS Health’s Caremark has been Blue Shield’s pharmacy benefit management partner for more than 5 years. Blue Shield will now partner with Cost Plus Drugs company and Amazon Pharmacy instead. The health insurer said the change will provide “convenient, transparent access to medications while lowering costs.”
Continue Reading -->Coffee With Greta: Higher Open
DJIA Futures: +41 (+0.1%) SPX Futures: +15 (+0.3%) NASDAQ Futures: +63 (+0.4%) Good morning friends! Futures are up as the market attempts to recover from back-to-back losing days. Let’s get right to it! Walmart Slips Despite Earnings Beat Walmart (WMT) shares are down 0.4% ahead of the open despite beating Q2 expectations and hiking its full-year outlook. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $1.84 vs $1.71 expected Revenue: $161.63 billion vs $160.27 billion expected Net income jumped 33% year over year. Transactions rose 2.9% and the average ticket increased by 3.4% for Walmart U.S. Walmart’s same-store sales in the U.S. grew 6.4% vs 4.1% expected. As food prices remain high, shoppers are buying more of Walmart’s brands. Private label grocery sales rose 9% year over year and made up 20% of Walmart’s total U.S. sales. Walmart now expects full-year net sales growth of 4% to 4.5% with adjusted EPS between $6.36 and $6.46. Cisco Jumps On Beat Cisco (CSCO) shares are rising 2.4% in premarket trade after beating fiscal Q4 expectations on the top and bottom line. Here’s how the computer networking giant’s results compared to analysts’ estimates: Adjusted EPS: $1.14 vs $1.06 expected Revenue: $15.2 billion vs $15.05 billion expected Cisco forecast full-year revenue between $57 billion and $58.20 billion vs $58.38 billion expected. But the CEO said during the earnings call that the company has gained more than 3% of market share in its three largest markets so far this quarter. He also touted the company as a potential leading supplier of the networking gear needed for AI, saying, “This is a huge opportunity for Cisco.” Weekly Jobless Claims Fall Weekly jobless claims fell more than expected last week as the labor market remains tight. The Labor Department reported 239,000 Americans filed initial claims for unemployment benefits. That was down by 11,000 from the week before and lower than 240,000 expected. Continuing claims rose by 32,000 to 1.72 million in the week ending August 5. Philly Fed Manufacturing Index Expands The Philadelphia Fed’s manufacturing index showed an unexpected expansion in August. The index jumped 25.5 points this month to 12 vs expectations for -10. It was the first positive reading since August 2022 and up from -13.5 in July. The gain was led by a surge in the new orders index which jumped 32 points to +16 vs -15.9 last month. But the six-month index fell to 3.9 from 29.1 in July, the capital expenditures index fell to -4.5 from 8.6, and the employment index declined to -6 from -1. In Case You Missed It The Fed released the minutes of its July meeting on Wednesday, showing officials are still worried about inflation remaining sticky. The readout said, “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.” But the minutes also showed members are uncertain about the future of rate hikes. The report said, “Participants generally noted a high degree of uncertainty regarding the cumulative effects on the economy of past monetary policy tightening.”
Continue Reading -->Coffee With Greta: More Retail Results
Register now for today’s free Q&A event on LinkedIn with Scott Redler! DJIA Futures: -40 (-0.1%) SPX Futures: -5 (-0.1%) NASDAQ Futures: -21 (-0.1%) Good morning friends! Futures are slightly lower as traders digest the latest batch of earnings. Let’s get right to it! Target Jumps Despite Slashing Forecast Target (TGT) shares are up 6.5% ahead of the open despite reporting mixed Q2 results and cutting its full-year outlook. Here’s how the retailer’s results compared to analysts’ estimates: EPS: $1.80 vs $1.39 expected Revenue: $24.77 billion vs $25.16 billion expected The market seems focused on the profit beat and improving inventory levels. Total revenue was down 5% year over year and comparable sales dropped 5.4% vs a 3.7% drop expected. The CEO said sales softened in the second half of May into June before rebounding in July. Inventory was down 17% compared to a year ago, including a 25% drop in discretionary categories. Target now expects comparable sales to decline by mid single digits for the full fiscal year and EPS between $7 and $8 vs $7.75 to $8.75 previously. TJX Jumps After Earnings TJX Companies (TJX) shares are 2.1% higher in premarket trading after beating Q2 expectations and hiking its guidance. Here’s how the discount retailer’s results compared to analysts’ estimates: Adjusted EPS: $0.85 vs $0.77 expected Revenue: $12.8 billion vs $12.5 billion expected TJX hiked its full-year outlook now expecting adjusted EPS to range between $3.56 and $3.62 vs $3.39 to $3.48 previously. Analysts expected full-year adjusted earnings of $3.59 per share. TJX forecast Q3 EPS between $0.95 and $0.98 and Q4 EPS between $1 and $1.03. Cava’s First Earnings Report Cava (CAVA) shares are rallying 9.1% ahead of the open after reporting a profit in its first earnings release after IPO. Here’s how the Mediterranean restaurant chain’s results compared to analysts’ estimates: EPS: $0.21 Revenue: $172.9 million vs $163 million expected Net sales soared 62% and Cava said it opened 16 new restaurants during the quarter. Same-store sales were up 18.2% and traffic grew 10.3%. Cava’s menu prices were up 8% year over year but the company said it does not plan to raise prices further. The company forecast full-year same-store sales growth of between 13% and 15% and adjusted EBITDA of $62 million to $67 million. Cava plans to open 65 to 70 new locations this year. Home Building Rebounds New home construction rebounded in July. The Census Bureau reported housing starts jumped 3.9% from June to a seasonally adjusted annual rate of 1.45 million units. That was in line with expectations and up 5.9% year over year. Single-family starts jumped 6.7% monthly and multi-family starts were unchanged. Building permits issued rose just 0.1% monthly to a seasonally adjusted annual rate of 1.44 million units vs 1.47 million expected. Permits were down 13% year over year. Single-family permits rose 0.6% monthly while multi-family permits dropped 0.2%. Mortgage Demand Drops Mortgage demand dropped last week as rates pushed higher. The Mortgage Bankers Association reported total application volume was 29% lower year over year. Purchase applications were unchanged weekly and 26% lower than a year ago. Refinance application fell 2% weekly and 35% year over year. The drop came as the average 30-year fixed contract rate rose to 7.16% from 7.09%. That was the third straight weekly increase and the highest since October 2022. But applications for a mortgage to purchase a newly built home jumped 35.5% year over year. The FHA share of those applications hit the highest level since May 2020, indicating more first-time buyers are turning to new construction amid the lack of existing inventory. In Case You Missed It Homebuilder sentiment fell unexpectedly this month as mortgage rates surge. The National Association of Homebuilders sentiment index dropped 6 points in August to 50 vs expectations for 57. It was the first decline in seven months and the lowest reading since May. Sentiment about current sales conditions fell 5 points to 57, buyer traffic dropped 6 points to 34, and 6-month sales expectations fell 4 points to 55. The share of builders cutting prices in August rose to 25% vs 22% in July and the average price cut remained at 6%.
Continue Reading -->Coffee With Greta: Strong Consumer
Register now for tomorrow’s free Q&A event on LinkedIn with Scott Redler! DJIA Futures: -250 (-0.7%) SPX Futures: -26 (-0.6%) NASDAQ Futures: -71 (-0.5%) Good morning friends! Futures are falling as traders digest the latest economic data and earnings. Let’s get right to it! Retail Sales Jump U.S. retail sales rose more than expected in July. The Commerce Department reported retail sales rose 0.7% last month to $696.4 billion. That was stronger than expectations for sales to increase 0.4%. Excluding autos, retail sales jumped 1% vs 0.4% expected. That number was boosted by a 1.9% increase in online spending, as Amazon (AMZN) Prime Day fell during the month. Spending at sporting goods stores rose 1.5% with spending at restaurants and bars up 1.4%. Furniture store sales dropped 1.8% and electronics and appliance store sales fell 1.3%. Sales at gas stations rose just 0.4% despite higher prices. Home Depot Sales Slide Home Depot (HD) shares are down 0.8% ahead of the open despite beating Q2 expectations as sales dropped year over year. Here’s how the home improvement retailer’s results compared to analysts’ estimates: EPS: $4.65 vs $4.45 expected Revenue: $42.92 billion vs $42.23 billion expected It was the first revenue beat in three quarters but sales were down 2% year over year. Home Depot reiterated its full-year forecast, expecting sales to decline 2% to 5% from a year ago. The CFO said the company has seen “continued caution on the part of consumers when it comes to larger ticket, more discretionary spending.” Home Depot also announced its board of directors approved $15 billion in share buybacks. Fitch Warns About Bank Downgrades Bank stocks are falling in premarket trade after an analyst at Fitch Ratings warned the agency may be forced to downgrade dozens of banks. The Financial Select Sector SPDR ETF (XLF) is down 0.9% in premarket trade with the SPDR S&P Regional Banking ETF (KRE) down 1.7%. Fitch cut the U.S. banking industry’s operating environment score from AA+ to AA- back in June. If that rating is downgraded again, Fitch would be forced to reevaluate ratings on each of the more than 70 banks it covers. That could include the country’s two largest banks, JPMorgan Chase (JPM) and Bank of America (BAC). JPM shares are down 1.5% ahead of the open with BAC shares falling 1.8%. Coming Up: Homebuilder Sentiment The National Association of Homebuilders releases its August sentiment index at 10:00 a.m. ET. Economists expect that index to rise to 57 from 56 in July. Confidence among builders has been rising in recent months as they see higher demand from buyers who are struggling with low supply of existing homes for sale.
Continue Reading -->Coffee With Greta: Spotlight On Retailers
Register now for Wednesday’s free Q&A event on LinkedIn with Scott Redler! DJIA Futures: -48 (-0.1%) SPX Futures: -10 (-0.2%) NASDAQ Futures: -29 (-0.2%) Good morning friends! Futures are slipping as traders gear up for a big week focused on retailers and consumers. Let’s get right to it! Retailers In Focus This week’s economic data and earnings will be all about U.S. retailers and consumers. The Commerce Department reports retail sales for July Tuesday morning. Economists’ expectations are for both headline and core retail sales to rise 0.4% monthly. Major retail earnings also start on Tuesday morning, here are the highlights: Tuesday AM: Home Depot (HD) Wednesday AM: Target (TGT). TJX Companies (TJX) Thursday AM: Walmart (WMT) Thursday PM: Ross Stores (ROST) This data will give traders more insight into the strength of the U.S. consumer amid the Fed’s fight against inflation. U.S. Steel Surges United States Steel Corp. (X) shares are surging 27.7% ahead of the open after rejecting a $7.3 billion buyout proposal from rival Cleveland-Cliffs Inc (CLF). U.S. Steel said it is reviewing “strategic alternatives” after it received several unsolicited offers. It rejected the Cleveland-Cliffs offer because they were pushing it to accept the deal without being allowed to conduct proper due diligence. U.S. Steel’s CEO said in a letter to Cleveland-Cliff’s CEO, “At this juncture, we cannot determine whether your unsolicited proposal properly reflects the full and fair value of the Company. For all of the above reasons, the Board has no choice but to reject your unreasonable proposal.” Tesla Cuts Prices In China Tesla (TSLA) shares are slipping 3% in premarket trade after cutting prices again in China. The electric automaker lowered prices for the long-range and performance versions of the Model Y in China by about $2,000 over the weekend. A long-range Model Y now starts at $41,400 in China vs $49,400 at the start of 2023. The performance version now starts at $48,300 vs $55,000 at the beginning of the year. Tesla also rolled out a new $1,100 incentive for certain Model 3 sedans in the country. Nikola Drops On Recall Announcement Nikola (NKLA) shares are tumbling 17.5% ahead of the open after announcing a recall related to battery issues. The electric truck maker issued a voluntary recall for 209 of its Class 8 Tre electric trucks after an investigation into the battery packs. Nikola said the recall is a “precautionary measure” and it will pause new sales of its battery-electric vehicles “temporarily”. A third party investigator, Exponent, determined a coolant leak inside of a battery pack was the likely cause of a truck fire in June 2023. The company said, “Internal investigations from Nikola’s safety and engineering teams indicate a single supplier component within the battery pack as the likely source of the coolant leak and efforts are underway to provide a field remedy in the coming weeks.”
Continue Reading -->Coffee With Greta: Wholesale Inflation Surprise
Register now for next week’s free Q&A event on LinkedIn with Scott Redler! DJIA Futures: -80 (-0.2%) SPX Futures: -17 (-0.4%) NASDAQ Futures: -107 (-0.7%) Good morning friends! Futures are falling after the release of hotter-than-expected inflation data. Let’s get right to it! Wholesale Inflation Runs Hot Wholesale inflation pressures rose more than expected in July. The Bureau of Labor Statistics’ producer price index rose 0.3% monthly and 0.8% year over year. That was higher than economists’ expectations for +0.2% monthly and +0.7% annually. The core PPI was also hotter than expected, up 0.3% monthly and 2.4% year over year. Economists were expecting the core PPI to rise 0.2% monthly and 2.4% annually. The PPI gauges the costs that goods and services producers receive for their products. It is a leading indicator for CPI as retailers, restaurants, and other businesses then pass down those costs to consumers in their prices. Yields Jump After PPI Treasury yields are rising after the release of that hotter-than-expected PPI data. The 2-year yield is up 4 basis points to 4.88% while the 10-year yield is up 2 basis points to 4.14%. This week’s inflation data is key in the Fed’s fight against inflation. The Central Bank has vowed to be data-dependent at the September meeting with the door open for another 25 basis point rate hike if needed. CME Group’s FedWatch Tool currently shows 88.5% of traders expecting the Fed to keep rates unchanged at that meeting. Chip Stocks Fall Chip stocks are continuing to pullback ahead of the open following the Biden Administration’s new investment ban in China. The VanEck Semiconductor ETF (SMH) is down 1.2%. Nvidia (NVDA) shares are falling 1.4% with Advanced Micro Devices (AMD) down 1.1%. The President signed an executive order this week to regulate new U.S. investments in China. The order targets semiconductors and microelectronics, quantum computing, and certain AI capabilities. The restrictions are expected to be implemented next year.
Continue Reading -->Coffee With Greta: Soft Inflation
Register now for next week’s free Q&A event on LinkedIn with Scott Redler! DJIA Futures: +93 (+0.3%) SPX Futures: +13 (+0.3%) NASDAQ Futures: +94 (+0.6%) Good morning friends! Futures are higher after a soft July inflation report. Let’s get right to it! Cooling CPI Inflation pressures came in cooler than expected in July. The Bureau of Labor Statistics’ consumer price index rose 0.2% monthly and 3.2% year over year. That was better than expectations for a 3.3% annual gain but a tick up from 3% in June. Food and shelter prices contributed the most to that gain. Grocery prices rose 3.6% annually, restaurant prices jumped 7.1%, and shelter prices were up 7.7%. Gas prices were down 19.9% from a year ago with oil prices down 26.5%. The core CPI rose 0.2% monthly and 4.7% annually. That was better than expectations for 4.8% annually and marked the slowest annual increase since October 2021. Weekly Jobless Claims Rise Weekly jobless claims jumped more than expected last week. The Labor Department reported 248,000 Americans filed initial claims for unemployment benefits. That was up by 21,000 from the previous week and higher than 230,000 expected. That was the highest level since the week ending July 1. Continuing claims fell by 8,000 to 1.64 million in the week ending July 29. Disney Profits Beat Walt Disney (DIS) shares are up 1.8% ahead of the open after reporting mixed fiscal Q3 results. Here’s how the entertainment giant’s results compared to analysts’ estimates: Adjusted EPS: $1.03 vs $0.95 expected Revenue: $22.33 billion vs $22.5 billion expected Disney+ subscriptions: 146.1 million vs 151.1 million expected Revenue was up 4% year over year but Disney+ subscribers dropped 7.4% from the previous quarter. Due to those struggles in the streaming business, Disney announced it will raise the price on its ad-free Disney+ tier in October and crackdown on password sharing. The parks, experiences, and products division was a bright spot for the company as revenue jumped 13% year over year to $8.3 billion. CEO Bob Iger said, “Moving forward, I believe three businesses will drive the greatest growth and value creation over the next five years. They are our film studios, our parks business and streaming, all of which are inextricably linked to our brands and franchises.” Alibaba Beats Expectations Alibaba (BABA) shares are up 3.6% in premarket trade after beating quarterly expectations on the top and bottom line. Here’s how the Chinese e-commerce giant’s results compared to analysts’ estimates: Net income: 34.33 billion yuan vs 28.66 billion yuan expected Revenue: 234.16 billion yuan vs 224.92 billion yuan expected Revenue in Alibaba’s main business jumped 12% year over year. International commerce retail revenue surged 60% from a year ago as Alibaba makes efforts to expand overseas. The cloud business – which Alibaba has previously said it plans to publicly list – saw revenue growth of 4%. The CEO said, “Alibaba delivered a solid quarter as we continue to execute our Reorganization, which is beginning to unleash new energy across our businesses.”
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