Coffee With Greta: More Good Inflation News
DJIA Futures: -128 (0.4%) SPX Futures: -3 (-0.1%) NASDAQ Futures: +33 (+0.3%) Good morning friends! Futures are mixed as traders digest more inflation data, jobs data, and earnings. Let’s get right to it! Wholesale Inflation Eases U.S. wholesale inflation pressures cooled more than expected in April, in a sign that consumer prices will continue to fall. The Bureau of Labor Statistics’ producer price index rose 0.2% last month and 2.3% year over year. That was better than expectations for +0.3% monthly and +2.5% annually. It was also the lowest annual reading since January 2021. The core PPI rose 0.2% monthly and 3.2% annually, in line with expectations on a monthly basis and better than 3.3% annually expected. Weekly Jobless Claims Jump Weekly jobless claims jumped last week to a nearly two-year high. The Labor Department reported 264,000 Americans filed initial claims for unemployment benefits. That was up by 22,000 from the previous week and higher than 245,000 expected and the highest level since October 2021. The data is a sign of tightening in the labor market, which is what the Fed wants to see. Continuing claims fell by 63,900 to 1.72 million in the week ending April 22. PacWest Deposits Tumble PacWest Bancorp (PACW) shares are plunging 18.9% in premarket trade after the regional bank revealed a steep drop in deposits last week. In an SEC filing today, PACW said deposits declined 9.5% during the week of May 5. But the bank said it was able to fund all of the withdrawals with available liquidity. PacWest said it now has $15 billion of available liquidity vs $5.2 billion in uninsured deposits. The latest drop in deposits comes on top of the 16.9% decline the bank reported in Q1. Disney Falls As Subscriber Numbers Drop Walt Disney (DIS) shares are down 5.3% ahead of the open after the company reported fiscal Q2 results that were in line with expectations, but subscriber numbers declined. Here’s how the entertainment company’s results compared to analysts’ estimates: EPS: $0.93, as expected Revenue: $21.82 billion vs $21.78 billion expected Disney+ subscribers: 157.8 million vs 163.17 million expected The company lost 4 million Disney+ subscribers, or 2%, during the quarter. But Disney’s streaming losses were better than estimates at $659 million vs $841 million expected. But the parks, experiences, and products divisions were a bright spot as revenue jumped 17% to $7.7 billion. About $5.5 billion of that revenue was from Disney’s theme park locations. Robinhood Jumps After Earnings Beat Robinhood (HOOD) shares are up 3.9% in premarket trade after beating Q1 expectations on the top and bottom line. Here’s how the online broker’s results compared to analysts’ estimates: Loss per share: $0.57 vs $0.62 expected Revenue: $441 million vs $425 million expected Robinhood added 120,000 customers during the quarter, bringing the total to 23.1 million vs 23.05 million expected. The company made more money on deposits last quarter than trading, as it offered above-average interest rates. And stock-trading declined with monthly active users falling 26% year over year to 11.8 million. Robinhood announced it will allow 24 hour trading, Monday through Friday, on a select group of stocks starting next week.
Continue Reading -->Coffee With Greta: Inflation Is Cooling
DJIA Futures: +144 (+0.4%) SPX Futures: +29 (+0.7%) NASDAQ Futures: +103 (+0.8%) Good morning friends! Futures are jumping after a better-than-expected inflation report. Let’s get right to it! CPI Cools More Than Expected U.S. inflation pressures cooled more than expected in April. The Bureau of Labor Statistics’ consumer price index rose 0.4% monthly and 4.9% year over year. That monthly gain was in line with expectations and cooler than 5% annually expected. Used cars and gas prices saw the largest increases last month, up 4.4% and 2.7% respectively from March. The core CPI rose 0.4% monthly and 5.5% year over year, in line with estimates. I’m hosting a free Q&A with Scott Redler after the market close today to discuss the reaction to the CPI and more inflation data on the way. Register for free now! (*you must login to LinkedIn to sign-up) Airbnb Plunges On Q2 Warning Airbnb (ABNB) shares are plunging 14.2% ahead of the open after beating Q1 expectations but issuing weak Q2 guidance. Here’s how the company’s results compared to analysts’ estimates: EPS: $0.18 vs $0.09 expected Revenue: $1.82 billion vs $1.79 billion expected Revenue rose 20% year over year and it was the first time Airbnb has been profitable in Q1 on a GAAP basis. The company said it had a “strong start” to the year and it’s looking forward to another “strong summer travel season”. But Airbnb also warned, “Nights and Experiences Booked will have unfavorable year-over-year comparisons in Q2 2023 as we overlap pent-up 2022 demand following the COVID Omicron variant.” The company forecast Q2 revenue between $2.35 billion and $2.45 billion vs analysts’ expectations for $2.42 billion. Rivian Jumps After Q1 Earnings Beat Rivian (RIVN) shares are jumping 8.9% in premarket trade after beating Q1 expectations and reaffirming its 2023 production target. Here’s how the electric truckmaker’s results compared to analysts’ estimates: Adjusted loss per share: $1.25 vs $1.59 expected Revenue: $661 million vs $652.1 million expected Rivian said it is still on track to meet its 50,000 vehicle production target for 2023. Roblox Flat After Missing Q1 Expectations Roblox (RBLX) shares are up 0.3% in premarket trade after reporting a wider loss and lower revenue than expected in Q1. Here’s how the video game company’s results compared to analysts’ estimates: Loss per share: $0.44 vs $0.40 expected Revenue: $774 million vs $766 million expected Roblox’s average daily active users jumped 22% year over year to 66 million while engagement hours rose 23% to 14.5 billion. Mortgage Demand Jumps After Fed Meeting Mortgage demand jumped last week after the Fed seemed to signal a pause in rate hikes. The Mortgage Bankers Association reported purchase applications rose 5% weekly and were 32% lower than a year ago. Refinance applications jumped 10% weekly and were down 44% annually. The average 30-year contract fixed rate fell to 6.48% from 6.5% the previous week. In Case You Missed It The President and top Congressional leaders appeared to make no progress on a debt ceiling deal Tuesday. Biden plans to host another meeting with the “big four” from Congress on Friday. He told reporters after Tuesday’s meeting, “Everyone in the meeting understood the risk of default. I made clear during our meeting that default is not an option.”
Continue Reading -->Coffee With Greta: Traders Await Inflation Data
DJIA Futures: -83 (-0.2%) SPX Futures: -16 (-0.4%) NASDAQ Futures: -74 (-0.6%) Good morning friends! Futures are falling as traders digest the latest earnings ahead of key inflation data on Wednesday. Let’s get right to it! PayPal Slips Despite Earnings Beat PayPal (PYPL) shares are down 6.9% in premarket trade despite beating Q1 expectations on the top and bottom line. Here’s how the digital payments company’s results compared to analysts’ estimates: EPS: $1.17 vs $1.10 expected Revenue: $7.04 billion vs $6.98 billion expected But PayPal’s guidance for the current quarter was underwhelming. The company expects Q2 earnings on the low end of $1.15 to $1.17 per share vs analysts’ forecast for $1.17. PayPal forecast full-year adjusted earnings of $4.95 per share vs $4.87 per share previously. Palantir Rallies After Earnings Beat Palantir (PLTR) shares are jumping 15.4% ahead of the open after beating Q1 expectations and forecasting a full-year profit. Here’s how the software company’s results compared to analysts’ estimates: EPS: $0.05 vs $0.04 expected Revenue: $525 million vs $506 million expected Revenue increased 18% year over year with U.S. commercial revenue up 26%. The CEO said Palantir expects to remain profitable “each quarter through the end of the year.” The company forecast Q2 revenue between $528 million and $532 million and $2.19 billion to $2.24 billion for the full year. Lucid Falls After Q1 Miss, Lower Production Guidance Lucid Group (LCID) shares are dropping 10.1% ahead of the open after missing Q1 expectations and cutting its production guidance. Here’s how the electric automaker’s results compared to analysts’ estimates: Loss per share: $0.43 vs $0.39 expected Revenue: $149 million vs $204 million expected Lucid delivered 1,406 vehicles in Q1, making the average revenue per delivery $106,000 vs $133,000 in Q4. That indicates pricing has dropped faster than expected as analysts were anticipating $145,000 in revenue per vehicle. The CEO said, “We are on track to produce over 10,000 vehicles in 2023.” But Lucid’s forecast in Q4 was for production of 10,000 to 14,000 vehicles this year. Biden Hosts Debt Ceiling Negotiations President Biden will meet with Congressional leaders at the White House today for negotiations about raising the debt ceiling. The House Speaker, Senate Majority Leader, House Minority Leader, and Senate Minority Leader will all attend today’s meeting. This comes as the two sides remain at odds over an agreement to raise or suspend the debt ceiling. But Treasury Secretary Janet Yellen has warned the government will run out of money in early June. Yellen says the Treasury Department is already relying on “extraordinary measures” to pay its bills. Republicans have pushed for spending cuts in exchange for raising the debt ceiling but Democrats have labeled that a non-starter. Biden said Friday, “Those two are totally unrelated. Whether you pay the debt or not, doesn’t have a damn thing to do with what your budget is. They’re two separate issues.”
Continue Reading -->Coffee With Greta: Banks Rally, Inflation Week Begins
DJIA Futures: +82 (+0.2%) SPX Futures: +6 (+0.1%) NASDAQ Futures: -22 (-0.2%) Good morning friends! Futures are mixed as bank stocks extend Friday’s rally and traders look ahead to inflation data this week. Let’s get right to it! Regional Banks Extend Rebound Regional bank stocks are rallying again today after bouncing back on Friday. PacWest Bancorp (PACW) shares are leading the trend, up 35.2% ahead of the open. That adds to the bank’s 81.7% gain on Friday. PacWest slashed its dividend late Friday evening to just $0.01 per share vs $0.25 previously. The CEO also said the bank’s businesses remain “fundamentally sound”. Western Alliance Bancorp (WAL) shares are up 14.7% with the SPDR S&P Regional Banking ETF (KRE) up 2.5%. Tyson Foods Drops On Surprise Loss, Lower Outlook Tyson Foods (TSN) shares are tumbling 10% in premarket trade after reporting a surprise fiscal Q2 loss and cutting its full-year outlook. Here’s how the meat company’s results compared to analysts’ estimates: Adjusted loss per share: $0.04 vs $0.79 earnings per share expected Revenue: $13.1 billion vs $13.6 billion expected Tyson said beef and pork sales declined year over year while chicken and prepared foods sales rose. The company cut its fiscal 2023 revenue outlook to between $53 billion and $54 billion vs $55 billion to $57 billion previously. Inflation Week Traders are gearing up for the latest inflation data later this week. The April consumer price index will be released before the market open on Wednesday. Then the producer price index will be released Thursday morning. This data comes after the Fed seemed to hint last week that it was ready to pause rate hikes. But the Fed Chair emphasized that the bank will remain data-dependent for future decisions. Yellen’s Debt Ceiling Warning Treasury Secretary Janet Yellen continued to call on Congress over the weekend to raise the debt ceiling. She warned that a failure to do so would cause a “steep economic downturn” in the U.S. Yellen said, “Our current projection is that in early June, a day will come when we’re unable to pay our bills unless Congress raises the debt ceiling, and it’s something I strongly urge Congress to do.” She said the Treasury Department is already using “extraordinary measures” to avoid default. President Biden has invited the House Speaker, House Minority Leader, Senate Majority Leader, and Senate Minority Leader to a meeting at the White House on Tuesday to discuss an agreement on the debt ceiling.
Continue Reading -->Key ETF Levels This Week
We have mixed markets around the world with a slight positive feel. Friday’s solid jobs report quieted the recession debate. AAPL’s solid report with the tech action also helped the indices reclaim the 8/21 day moving averages again. We have the CPI and PPI this week. There’s some concern that they will stay elevated but that probably doesn’t alter the Fed’s course. The debate is over cutting rates in the second half of 2023, not if they need to continue to raise. We’ll see if 4084-4114 holds to clear 4147-4164 later this week. SPY reclaimed the 8/21 day again on Friday. Now we’ll see if it can hold $411ish to clear $413.74 to see the high of the range again. We’ll probably need benign CPI and PPI numbers to have it clear that. Tech continues to act best. QQQ’s cleared $318 fast to see $323 again. Now we’ll see if it can hold the $320 area to keep upper momentum. Now let’s look at some of the big index ETFs I watch: XLE hasn’t been special all year as I’ve mentioned many times. It broke $83 to see a low of $77.87. See if it can hold the $79 pivot now. XLF bounced Friday after four down sessions. I’d trim into early strength. Watch JPM for clues. I’d stay away aside from quick range trades. KRE: regional banks are still a problem. 3 banks went to zero. PACW cut the dividend and it’s up 32%. I would not chase it. KRE has resistance at $40.67-$41.28. IWM is choppy and lags but worth a look at times. It’s only a headwind when making lows. I guess it has room to the $179 area. ARKK had a rare gap up that held on Friday. Perhaps it can continue towards the $38 resistance downtrend line. That spot will be important. Scott Redler Positions Disclosure as of 2023-05-08 at 8.10.19 AM
Continue Reading -->What’s On Tap for Traders: May 8-12
Welcome to your weekly trading preview! We added a Table of Contents to help you jump around: Table of Contents This Week’s Trading CalendarThe Week in Review…It’s Inflation Time!Earnings Season Slows Down But It’s Not OverSo How Has Earnings Season Been?Traders Are in a Rotten MoodA Look at Sector Performance in 2023:Factoid of the WeekGet to Know Sami Abusaad This Week’s Trading CalendarClick the calendar image to enlarge it, then scroll down to see what’s coming down the pipe the week of May 8: The Week in Review…What a week! We survived:Big earnings from Apple (AAPL), AMD (AMD), Starbucks (SBUX), Shopify (SHOP), and Qualcomm (QCOM)The FOMC and ECB Rate DecisionsThe Nonfarm Payrolls ReportThe regional bank collapseAnd with Apple leading a big Friday surge, our big 4 horsemen ETFs recovered some of the midweek damage, with the QQQ’s even getting in the green for the week:Year-to-date, the QQQ’s are still crushing the other big ETFs thanks to huge moves in names like Apple, Nvidia (NVDA), and Microsoft (MSFT). The QQQ’s also have no exposure to banks or energy, which have underperformed. So it’s been smooth sailing in 2023:Now let’s look forward to next week. By the way, Scott Redler is hosting a free week in the Alpha Team VTF®, and he can walk you through all the events we’ll talk about. It’s Inflation Time!We’re walking into a big week for inflation… and it’s worldwide thing. Yes, the US has CPI on Wednesday and PPI on Thursday. Traders will be looking for evidence inflation is breaking down to support expectations that the Fed will pause after this past week’s 25 bps rate hike. The CME FedWatch Tool implies a 96.1% probability that the Fed does not hike at the June 14 Feed meeting. FedWatch also shows the market is pricing in a 38.1% chance of a 25 bps cut in July. We’ll see if the CPI/PPI numbers sway these expectations. And overseas, we get:Wednesday: Germany CPI, China CPI & PPIThursday: New Zealand Inflation ExpectationsFriday: France, Spain, Brazil, and Russia CPIEngland in particular has a busy economic calendar next week with:Monday: Retail SalesTuesday: House Price IndexThursday: Bank of England Rate Decision & Meeting Minutes, Industrial ProductionFriday: GDP, Manufacturing Production Earnings Season Slows Down But It’s Not Over85% of the S&P 500 have reported earnings (more on this below), but we’ve still got some notable reports hitting the tape this week. Several consumer names report, including PayPal (PYPL) on Monday, AirBnB (ABNB) and UnderArmour (UAA) Tuesday, and Disney (DIS) on Wednesday. Even with high inflation, The consumer seems to have unlimited money for things they desire (like iPhones and McDonald’s fries), so it will be interesting to see if these companies show strength or strain. AirBnB and Disney will also give us reads into travel demand. Electric vehicle enthusiasts will be watching Lucid Group (LCID) on Monday and Rivian Automotive (RIVN) on Tuesday. Tesla (TSLA) got slapped on earnings in April because of margin pressure, and Ford (F) is losing buckets of money in its EV business. We’ll find out if Lucid and Rivian do any better. And don’t forget about Carl Icahn! His company Icahn Enterprises LP (IEP) moved its report to Wednesday, May 10. IEP got smashed this week after Hindeburg Researched accused Icahn of accounting irregularities. Look at this rollercoaster of a chart — we’re all eager to see how this one turns out: So How Has Earnings Season Been?According to FactSet… not bad — at least relative to expecations. 85% of S&P 500 companies have reported, and so far:79% of companies beat EPS estimates75% of companies have beaten sales estimates.Earnings have declined by -2.2% vs. expectations for a -6.7% declineNobody’s celebrating a -2.2% decline in earnings but it’s not as bad as -6.7%. Remember, the market’s about expectations, and expectations were too low coming into earnings season. Speaking of low expectations… Traders Are in a Rotten MoodInvestors and traders remain remarkably bearish despite the market’s stability. According to AAII, just 24.1% of investors are bullish. That’s well below the 37.5% long-term average. Plus, AAII said “bullish sentiment is unusually low for the 50th time out of the past 70 weeks,” and “bearish sentiment is still above its historical average of 31.0% for the 71st time out of the past 76 weeks.” This is despite the SPY’s 7.8% gain in 2023 and the QQQ’s 21.2% rally. Now let’s dig below the surface to see what’s been working this year: A Look at Sector Performance in 2023:2023’s been a bizarre year. It’s almost like we’re risk on and risk off at the same time. On the risk on side: Housing (ITB) is leading the market despite a slowdown in housing, Tech (XLK, SMH) is booming and ARKK rebounded from a messy 2022. And on risk off, gold (GLD) is outperforming and Treasuries (TLT) are up. Who could have imagined both ARKK and gold outperforming? Factoid of the Week According to Bespoke Investment Group, nonfarm payrolls have exceeded economists’ estimates for 13 straight months.This chart is bonkers. Non Farm Payrolls has now exceeded expectations for a record 13 straight months. https://t.co/UaURbFdG6a pic.twitter.com/4urENerxmy— Bespoke (@bespokeinvest) May 5, 2023 Maybe we should stop trusting economists’ long-term predictions? After all, they can’t predict anything even one month out… Get to Know Sami AbusaadHow did Sami achieve greatness as a trader? Find out here:
Continue Reading -->Coffee With Greta: Hot Labor Market, Apple Beats
DJIA Futures: +221 (+0.7%) SPX Futures: +33 (+0.8%) NASDAQ Futures: +87 (+0.7%) Good morning friends! Futures are higher as traders digest a hot jobs report and key earnings. Let’s get right to it! Hot Labor Market The U.S. economy added far more jobs than expected in April. The Labor Department reported a gain of 253,000 jobs last month vs expectations for 180,000. The unemployment rate also fell unexpectedly to 3.4% vs expectations for an increase to 3.6%. That tied for the lowest level since 1969. Average hourly earnings rose 0.5% monthly and 4.4% annually vs 0.3% monthly and 4.2% annually expected. The data shows the labor market maintaining strength amid the Fed’s fight against inflation. Apple Tops Fiscal Q2 Expectations Apple (AAPL) shares are up 2.9% ahead of the open after reporting better-than-expected fiscal Q2 results, driven by strong iPhone sales. Here’s how the iPhone maker’s results compared to analysts’ estimates: EPS $1.52 vs $1.43 expected Revenue: $94.84 billion vs $92.96 billion expected Gross margin: 44.3% vs 44.1% expected Here’s how Apple’s revenue broke down by product: iPhone revenue: $51.33 billion vs $48.84 billion expected Mac revenue: $7.17 billion vs $7.80 billion expected iPad revenue: $6.67 billion vs $6.69 billion expected Other products revenue: $8.76 billion vs $8.43 billion expected Services revenue: $20.91 billion vs. $20.97 billion expected Apple did not provide official guidance. The company’s board authorized up to $90 billion in shares buybacks and hiked its dividend 4% to $0.24 per share. Coinbase Rallies On Q1 Beat Coinbase (COIN) shares are rallying 9.6% in premarket trade after beating Q1 expectations. Here’s how the crypto exchange’s results compared to analysts’ estimates: Loss per share: $0.34 vs $1.45 expected Revenue: $772.53 million vs $655 million expected Consumer trading volume plunged 71% year over year but subscription and services revenue more than doubled to $361.7 million. Coinbase forecast $300 million in Q2 subscription and services revenue and said it plans to focus on cost reduction efforts. Block Tops Q1 Revenue Expectations Block (SQ) shares are up 2.8% ahead of the open after beating Q1 revenue expectations. Here’s how the payments company’s results compared to analysts’ estimates: Loss per share: $0.40 vs $0.35 earnings per share expected Revenue: $4.99 billion vs $4.6 billion expected That higher than expected revenue was driven by Block’s Cash App mobile payments platform. Cash App’s gross profit grew 49% year over year and monthly active card actives jumped 34%. Block’s point-of-sale system Square’s gross profit increased just 16%. The company raised its full-year adjusted ebitda forecast to $1.36 billion from $1.3 billion previously. Lyft Plunges On Weak Guidance Lyft (LYFT) shares are plunging 15.2% in premarket trade after mixed Q1 results and weak Q2 guidance. Here’s how the ride-hailing company’s results compared to analysts’ estimates: Loss per share: $0.07 vs $0.06 expected Revenue: $1 billion vs $981 million expected Lyft expects Q2 revenue between $1 billion and $1.02 billion vs analysts’ projections for $1.08 billion. The company anticipates adjusted ebitda between $20 million and $30 million vs analysts’ estimates of $49.3 million. DoorDash Jumps After Earnings DoorDash (DASH) shares are up 4.4% ahead of the open after reporting strong Q1 results. Here’s how the delivery platform’s results compared to analysts’ estimates: Loss per share: $0.41 vs $0.58 expected Revenue: $2.04 billion vs $1.93 billion expected Total orders jumped 27% year over year to 512 million vs 493 million expected. DoorDash hiked its full-year guidance for gross order value to between $63 billion and $64.5 billion, up from $60 billion to $63 billion previously.
Continue Reading -->Coffee With Greta: Is Another Bank Failing?
DJIA Futures: -69 (-0.2%) SPX Futures: -11 (-0.3%) NASDAQ Futures: -13 (-0.1%) Good morning friends! Futures are falling as regional bank fears return. Let’s get right to it! PacWest Plunges PacWest Bancorp (PACW) shares are plunging 37.7% ahead of the open amid concerns it will be the next regional bank to fail. In a statement this morning, the bank confirmed reports that the bank is reviewing “strategic options”, including a potential sale. PacWest said it “will continue to evaluate all options to maximize shareholder value.” The statement also said it had not experienced “out-of-the-ordinary deposit flows” after the failure of First Republic Bank earlier this week. The news is dragging down other regional banks as well with the SPDR S&P Regional Banking ETF (KRE) down 3.9%, Western Alliance Bancorp (WAL) dropping 14.4%, and Comerica (CMA) sliding 7%. PacWest reported Q1 earnings last week, which showed total deposits declined by $5 billion in the first quarter to $28.2 billion. But the bank said it was already seeing a rebound in deposits at the end of the quarter and into the beginning of Q2. The turmoil for PacWest comes after the Fed said on Wednesday that the U.S. banking system is sound and resilient. Qualcomm Falls On Weak Guidance Qualcomm (QCOM) shares are falling 7.5% in premarket trade after reporting fiscal Q2 results that were in line with expectations but issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $2.15 as expected Revenue: $9.28 billion vs $9.1 billion expected Total revenue dropped 17% year over year, driven by a slowdown in demand for its cellphone chips. That drop is expected to continue with Qualcomm forecasting $8.5 billion in fiscal Q3 revenue, missing expectations of $9.14 billion. The company also forecast EPS of $1.80 vs analysts’ estimates of $2.16. Moderna Reports Surprise Q1 Profit Moderna (MRNA) shares are up 1.8% ahead of the open after reporting a surprise profit in the first quarter. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: EPS: $0.19 vs a loss of $1.77 per share expected Revenue: $1.86 billion vs $1.18 billion expected That profit surprise came despite lower demand for the company’s Covid vaccine. Revenue was down 30% year over year. Moderna maintained its full-year guidance for around $5 billion in Covid vaccine revenue. Weekly Jobless Claims Climb Weekly jobless claims rose more than expected last week as the labor market continues to slowly tighten. The Labor Department reported 242,000 Americans filed initial unemployment claims. That was up by 13,000 from the previous week and higher than 236,000 expected. Continuing claims though fell by 38,000 to 1.81 million in the week ending April 22. Q1 Productivity Tumbles Worker productivity dropped more than expected in the first quarter. The Bureau of Labor Statistics reported productivity fell 2.7% annually vs expectations for a 1.9% decrease. Output during the quarter rose just 0.2% while hours worked rose 3%. And labor costs picked back up as well. Unit-labor costs rose 4.5% in Q1, up from 3.3% in Q4. Over the past 12-months, unit labor costs have risen 5.3%. Those rising wages have been a problem for the Fed in its fight against inflation. Trade Deficit Narrows The U.S. trade deficit narrowed in March as exports rose. The Commerce Department reported the deficit dropped by $6.4 billion to $64.2 billion. The decline came as exports rose by $5.3 billion to $256.2 billion. Imports fell by $1.1 billion to $320.4 billion. The goods deficit with China fell by $2.3 billion to $22.9 billion in March. In Case You Missed It The Federal Reserve hiked rates as expected by 25 basis points on Wednesday. That puts the federal funds rate in a range of 5% to 5.25%, the highest since August 2007. The FOMC statement seemed to hint this will be the last rate hike as it removed language about future policy tightening being appropriate. But Fed Chair Jerome Powell said in his press conference, “A decision on a pause has not been made today.” Powell emphasized that “the process of getting inflation back down to 2% has a long way to go.”
Continue Reading -->Coffee With Greta: Fed Day
DJIA Futures: +25 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures:+18 (+0.1%) Good morning friends! Futures are up slightly as traders look ahead to this afternoon’s Fed decision. Let’s get right to it! Fed Day The Federal Reserve releases its latest interest rate decision at 2:00 p.m. ET today. CME Group’s FedWatch Tool currently shows 82.8% of traders anticipating another 25 basis point rate hike. But the real focus will be on the language in the Fed statement about future hikes and the Fed Chair’s tone during his 2:30 p.m. press conference. Traders will also be listening for what Powell has to say about the regional banking crisis after the failure of First Republic Bank earlier this week. Private Job Growth Surges Private sector job growth was way hotter than expected in April. Payroll firm ADP reported that private employers added 296,000 jobs last month. That was sharply higher than 133,000 expected and up from the downwardly revised 142,000 in March. It was the highest monthly increase since July 2022. But annual pay growth continued to slow, up 6.7% year over year. The leisure and hospitality sector led April’s gains, adding 154,000 jobs. Education and health services added 69,000, construction added 53,000, natural resources and mining added 52,000, and trade, transportation, and utilities added 32,000. The financial services sector lost 28,000 jobs while manufacturing lost 38,000. This data comes ahead of the Labor Department’s official April jobs report on Friday which is expected to show the U.S. economy added 180,000 jobs last month with the unemployment rate ticking higher to 3.6%. AMD Tops Q1 Estimates, Issues Weak Guidance Advanced Micro Devices (AMD) shares are falling 7.4% ahead of the open after beating Q1 expectations on the top and bottom line but issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted EPS: $0.60 vs $0.56 expected Revenue: $5.35 billion vs $5.3 billion expected Although the results topped analysts’ estimates, revenue was down 9% year over year and AMD’s Q2 guidance was weaker than expected. The company expects $5.3 billion in Q2 revenue vs $5.48 billion expected. Ford Smashes Q1 Expectations, Maintains Outlook Ford (F) shares are down 1.1% in premarket trading after solidly beating Q1 expectations but reiterating its full-year guidance. Here’s how the automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.63 vs $0.41 expected Revenue: $39.09 billion vs $36.08 billion expected The CFO said Q1 was a “peek at what’s possible to generate value and growth.” Ford reiterated its forecast for full-year adjusted earnings between $9 billion and $11 billion. It also still expects to lose about $3 billion from its EV operations this year after the segment lost $722 million in Q1. But Ford’s traditional car business earned $2.6 billion in profit while its fleet operations reported $1.4 billion in earnings. Starbucks Earnings Top Expectations Starbucks (SBUX) shares are down 5.3% ahead of the open after beating fiscal Q2 expectations on the top and bottom line. Here’s how the coffee giant’s results compared to analysts’ estimates: Adjusted EPS: $0.74 vs $0.65 expected Revenue: $8.72 billion vs $8.4 billion expected Global same-store sales were up 11% from a year ago vs expectations of 7.1%. Same-store sales jumped 12% in the U.S. and 3% in China, which is Starbucks’ second-largest market. It was the first sales increase in China since Q3 2021. But the stock is sinking after Starbucks reaffirmed its full-year outlook. The company still expects revenue growth of 10% to 12% and EPS growth on the low end of 15% to 20%. CVS Slips On Lower Outlook CVS (CVS) shares are down 2.6% in premarket trade after beating Q1 expectations but lowering its profit outlook. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $2.20 vs $2.09 expected Revenue: $85.28 billion vs $80.81 billion expected Revenue was up 11% year over year. But CVS lowered its 2023 adjusted EPS guidance to a range of $8.50 to $8.70, down $0.20 from its previous forecast. The company said that lower guidance was due to costs associated with its acquisitions of Signify Health and Oak Street Health. In Case You Missed It Job openings fell more than expected in March. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) shows there were 9.6 million available jobs in March vs 9.7 million expected. That was down from 9.9 million in February and the lowest number of openings since April 2021.
Continue Reading -->Coffee With Greta: Fed Meeting Begins
DJIA Futures: -85 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -5 (-0.03%) Good morning friends! Futures are slipping as the Fed meeting kicks off. Let’s get right to it! Focus On The Fed The Federal Reserve kicks off its two-day policy meeting today with the rate hike decision set to be released at 2:00 p.m. ET on Wednesday. CME Group’s FedWatch Tool shows nearly 91% of traders expecting another 25 basis point rate hike. There will be a lot of focus on Fed Chair Jerome Powell’s press conference following the meeting to see whether he shifts to a more dovish tone or stays hawkish. The Fed’s dot plot previously showed this will be the last rate hike with the bank planning to then hold rates higher until 2024. Pfizer Rises After Earnings Beat Pfizer (PFE) are up 0.9% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: Adjusted EPS: $1.23 vs $0.98 expected Revenue: $18.28 billion vs $16.59 billion expected Sales were down 29% year over year with Covid vaccine sales tumbling 75%. Excluding Covid product sales, Pfizer’s revenue was up 5% year over year driven by products from recently acquired companies. The company reiterated its full-year forecast for both earnings and revenue. Uber Rallies On Revenue Beat Uber Technologies (UBER) shares are rallying 9.4% in premarket trade after reporting better-than-expected Q1 results. Here’s how the ride hailing giant’s results compared to analysts’ estimates: Loss per share: $0.08 vs $0.09 expected Revenue: $8.82 billion vs $8.72 billion expected Revenue was up 29% year over year. Uber’s CEO said the company is already starting to use AI to improve its business. He said, “We are still in the early stages of using large data models to power improved user experiences and efficiencies across our platform, with much more to come.” Uber also reported $31.4 billion in gross bookings during the quarter, up 19% from a year ago. Here’s how those bookings broke down between its business segments: Mobility gross bookings: $14.98 billion, up 40% year over year Delivery gross bookings: $15.02 billion, up 8% year over year The company expected to report between $33 billion and $34 billion in Q2 gross bookings Morgan Stanley Planning More Layoffs Morgan Stanley (MS) shares are flat ahead of the open following a report the company is planing more layoffs. Bloomberg first reported the investment bank is planning to eliminate roughly 3,000 positions by the end of June. That would represent about 5% of the bank’s workforce. Morgan Stanley’s wealth management division, which includes financial advisers, would reportedly be excluded from the cuts. Tesla Hikes Prices Tesla (TSLA) shares are up 0.2% in premarket trade after raising prices on several of its cars in the U.S. and China. In China, the Model 3 now starts at 231,900 Chinese yuan vs 229,900 yuan previously. The Model Y price was also raised by 2,000 yuan to 263,900 yuan. In the U.S., the Model 3 and Model Y prices were hiked by $250 to $40,240 and $47,240 respectively. Tesla’s prices are still lower than at the start of the year following several price cuts ahead of these increases. In Case You Missed It Manufacturing activity improved more than expected in April. The Institute for Supply Management’s manufacturing PMI rose to 47.1% from 46.3%. That was better than expectations for 46.7% but still below the key 50% level which signals contraction across the sector.
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