Coffee With Greta: Stocks Slide After More Hot Inflation Data
DJIA Futures: -282 (-0.8%) SPX Futures: -49 (-1.2%) NASDAQ Futures: -186 (-1.5%) Good morning friends! Futures are dropping after the release of more hot inflation data. Let’s get right to it! Wholesale Inflation Runs Hot Wholesale inflation pressures came in way hotter than expected in January. The Bureau of Labor Statistics’ producer price index jumped 0.7% monthly and 6% year over year. That was sharply higher than economists’ expectations for a 0.4% monthly gain and the largest jump since June. Energy prices saw the largest gain, surging 5% monthly. The core PPI also rose more than expected, up 0.5% monthly vs 0.3% expected. This data is bad news for traders hoping for a Fed pivot soon as PPI is a leading indicator for consumer prices in the months ahead. Housing Starts Tumble U.S. home construction slowed more than expected in January. The Census Bureau reported housing starts dropped 4.5% last month to a seasonally adjusted annual rate of 1.31 million units vs 1.35 million expected. That’s the lowest annual rate since June of 2020 and starts were down 21.4% year over year. Single-family starts fell 4.3% while multi-family starts dropped 5.4%. Building permits were relatively unchanged for the month, up just 0.1% to a seasonally adjusted annual rate of 1.34 million units vs 1.35 million expected. That signals the slowdown in building will continue. Weekly Jobless Claims Fall Unexpectedly Weekly jobless claims fell unexpectedly last week, remaining under 200,000 for the fifth straight week. The Labor Department reported 194,000 Americans filed initial claims for unemployment benefits. That was down by 1,000 from the previous week and better than expectations for an increase to 200,000. Continuing claims meantime rose by 16,000 to 1.70 million in the week ending February 4. Roku Rallies After Earnings Beat, Strong Guidance Roku (ROKU) shares are up 9.2% ahead of the open after beating Q4 expectations on the top and bottom line and issuing strong guidance. Here’s how the streaming giant’s results compared to analysts’ expectations: Loss per share: $1.70 vs $1.72 expected Revenue: $867 million vs $803 million expected Roku said it had 70 million active streaming accounts during the quarter, up from 65.4 million in Q3 and better than 69 million expected. Streaming hours also jumped to 23.9 billion from 21.9 billion in Q3 and higher than 23.2 billion expected. Roku forecast Q1 revenue of $700 million beating analysts’ estimates of $692 million. Cisco Tops Earnings Estimates, Hikes Guidance Cisco (CSCO) shares are 3.2% higher in premarket trade after topping fiscal Q2 expectations and hiking its full-year guidance. Here’s how the computer networking company’s results compared to analysts’ expectations: Adjusted EPS: $0.88 vs $0.86 expected Revenue: $13.59 billion vs $13.43 billion expected Total revenue jumped 7% year over year and the CEO said “demand remains stable.” Cisco expects fiscal Q3 adjusted EPS of $0.96 to $0.98 and 11% to 13% revenue growth. That topped analysts’ outlook for adjusted EPS of $0.89 and 6% revenue growth to $13.58 billion. The company also lifted its 2023 guidance, now expecting $3.73 to $3.78 in adjusted EPS and 9$ to 10.5% revenue growth. In Case You Missed It Homebuilder sentiment improved by the largest amount in more than a decade this month. The National Association of Homebuilders’ sentiment index jumped 7 points to 42. That was better than expectations for 37. Anything below 50 is still considered negative but it’s the highest reading since September and largest monthly gain since June 2013. Sentiment about current sales conditions rose 6 points to 46, 6-month sales expectations jumped 11 points to 48, and buyer traffic improved by 6 points to 29. Builders are feeling more confident about the market as buyer demand picks up heading into spring.
Continue Reading -->Momentum Trading 101
JR Romero explains how momentum trading works through a simple series of price action lessons. Learn simple technical analysis methods for: Understanding the true nature of momentum in stocks and etfs How to use past momentum to predict future momentum Why the stock market likes symmetry The law of cause and effect in trading
Continue Reading -->Coffee With Greta: Stocks Slip As Retail Sales Surge
DJIA Futures: -100 (-0.3%) SPX Futures: -13 (0.3%) NASDAQ Futures: -23 (-0.2%) Good morning friends! Futures are falling after the release of more hotter-than-expected economic data. Let’s get right to it! January Retail Sales Smash Expectations Retail sales were stronger than expected at the start of 2023 as consumers remain resilient despite inflation. The Commerce Department reported retail sales jumped 3% in January to $697 billion. That was sharply higher than expectations for a 1.9% increase and was the largest monthly increase since March 2021. Excluding autos, retail sales rose 2.3% vs 0.9% expected. Restaurants and bars saw the largest increase in spending, up 7.2% monthly and 25.2% year over year. Sales at auto dealers jumped 6.4% monthly and 2.5% annually. The data is not adjusted for inflation and the increase is partly due to consumers paying higher prices. The report supports the Fed’s plan to continue raising rates to lower inflation and slow consumer spending. Roblox Rallies On Q4 Earnings Beat Roblox (RBLX) shares are surging 17.7% ahead of the open after beating Q4 expectations. Here’s how the video game company’s results compared to analysts’ expectations: Adjusted loss per share: $0.48 vs $0.50 expected Bookings: $899.4 billion vs $871.2 billion The CFO said, “Bookings accelerated meaningfully in December and January, with year over year growth exceeding 20% in both months. Growth was strong across all geographies and age groups with particular strength among users above 17 years old.” Roblox said that growth has continued in the new year with January’s estimated bookings between $267 million and $271 million, up 22% to 24% from a year ago. Average daily users in January were 65 million vs 61.5 million in December. Airbnb Reports First Profitable Year Airbnb (ABNB) shares are rallying 9% in premarket trade after reporting record Q4 results and strong guidance. Here’s how the company’s results compared to analysts’ estimates: EPS: $0.48 vs $0.26 expected Revenue: $1.9 billion vs $1.86 billion expected Adjusted ebitda: $506 million vs $434 million expected For the full year, Airbnb reported a profit of $1.89 billion on $8.4 billion in revenue. That topped analysts’ expectations for $1.74 billion in profit on $8.36 billion in revenue. In a letter to shareholders, the company said, “All regions saw material growth in 2022 as guests increasingly crossed borders and returned to cities on Airbnb.” Airbnb forecast Q1 revenue between $1.75 billion and $1.82 billion vs $1.68 billion expected. Mortgage Demand Drops Mortgage demand dropped last week as rates jumped higher. The Mortgage Bankers Association reported total application volume fell 7.7% last week. That came as the average 30-year fixed contract rate rose to 6.39% from 6.18%. Refinance applications tumbled 13% weekly and 76% year over year. Purchase applications were down 6% weekly and 43% annually. Homebuilder Sentiment Expected To Improve The National Association of Homebuilders releases its sentiment index for February at 10:00 a.m. ET. That survey is expected to rise to 37 from 35 in January. Although that would still represent negative sentiment among builders, it would be the second straight monthly increase and 12 consecutive months of decline. In Case You Missed It Ford (F) shares slipped 0.9% on Tuesday after the company halted production and shipments of the F150 Lightning. The automaker said that pause was due to a potential battery issue found during pre-delivery quality inspections. A Ford spokeswoman said, “The team is diligently working on the root cause analysis” and the company is “doing the right thing by our customers”.
Continue Reading -->Coffee With Greta: Stocks Fall Flat On Hot CPI
DJIA Futures: +39 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures: +8 (+0.1%) Good morning friends! Futures are flat after the January CPI came in hotter than expected. Let’s get right to it! CPI Runs Hot U.S. inflation pressures rose more than expected at the start of 2023. The Bureau of Labor Statistics’ consumer price index jumped 0.5% in January and 6.4% year over year. That was higher than economists’ expectations for a 0.4% monthly and 6.2% annual gain. But it was still cooler than the 6.5% annual gain in December. Rising shelter costs drove that gain, up 0.7% monthly and 7.9% year over year. Consumers also paid higher prices for food and energy. Grocery prices were up 0.4% monthly and 11.3% annually while gas prices rose 2.4% monthly and 1.5% year over year. The core CPI, which excludes food and energy, rose 0.4% monthly and 5.6% annually. That was also hotter than expectations for 0.3% monthly and 5.5% annually. The higher prices translated into a loss in real pay for workers. Average hourly earnings fell 0.2% monthly and 1.8% year over year when adjusted for inflation. Higher Prices Boost Coca-Cola Earnings Coca-Cola (KO) shares are up 0.3% ahead of the open after topping Q4 expectations. Here’s how the beverage giant’s results compared to analysts’ expectations: Adjusted EPS: $0.45, as expected Revenue: $10.13 billion vs $10.02 billion expected Coke said its unit case volume fell 1% in Q4 as higher prices hurt demand. Prices were up 12% year over year and the company sold a more expensive mix of drinks during the quarter. The company forecast comparable revenue growth of 3% to 5% in 2023 and EPS growth of 4% to 5%. The revenue outlook was in line with expectations while the earnings outlook was better than expected. Palantir Reports First Profitable Quarter Palantir Technologies (PLTR) shares are surging 15% in premarket trade after beating Q4 expectations and reporting its first profitable quarter ever. Here’s how the software company’s results compared to analysts’ expectations: Adjusted EPS: $0.04 vs $0.03 expected Revenue: $509 million vs $502 million expected Revenue jumped 18% year over year with U.S. commercial revenue up 12%. Palantir grew from 80 U.S. commercial customers a year ago to 143 in Q4. The CEO said, “With this result, Palantir is profitable. This is a significant moment for us and our supporters.” The company forecast Q1 revenue between $503 million and $507 million and full-year revenue between $2.18 billion and $2.23 billion. Marriott Beats Q4 Expectations, Issues Strong Guidance Marriott (MAR) shares up 0.5% ahead of the open after beating Q4 expectations on the top and bottom line and issuing strong guidance. Here’s how the hotel chain’s results compared to analysts’ expectations: Adjusted EPS: $1.96 vs $1.83 expected Revenue: $5.9 billion vs $5.37 billion expected Revenue per available room was up 5% compared to pre-pandemic levels and jumped 29% year over year. That increase was driven by an 11% jump in the average daily room rate in the U.S. and Canada. Marriott’s CEO said, “As we look ahead, while concerns about the macroeconomic environment persist around the world, booking trends remain robust and we have significant momentum in our business.” The company forecast Q1 EPS of $1.82 to $1.88 vs $1.65 expected. For the full year, Marriott forecast a profit of $7.23 to $7.91 per share vs $7.44 expected. In Case You Missed It Americans’ short-term inflation expectations remained stable at the start of 2023. The New York Fed’s released its January survey of consumer expectations on Monday. Respondents said they believe inflation will be at 5% 1-year from now, unchanged from December. Consumers expect inflation to be at 2.7% 3-years from now vs 2.9% in December. But the 5-year projection ticked higher to 2.5% from 2.4%. Ford (F) shares jumped 2.8% on Monday after the company unveiled plans to build a new EV battery plant. The automaker announced it will spend $3.5 billion to build that plant in Michigan with a Chinese supplier, CATL. The plant is expected to create 2,500 jobs and begin production in 2026. Ford will manufacture lithium iron phosphate batteries at the facility and says it will be the first U.S. automaker to make those batteries in the U.S.
Continue Reading -->3 New Names on the Radar
We have flattish markets around the world ahead of the CPI tomorrow. Markets are trying to get comfortable with Fed expectations of a ceiling at 5.19% and a year-end 4.9% target. So far it seems like the world is handling 5% rates okay. Most experts predicted a big recession by now. SPX pulled back 100 handles of fthe 4195 highs. Does it start a downside active sequence, or is it just a digestion phase? That’s the question. We should know more tomorrow after the CPI tomorrow. L SPY hit a high of $418.31 on Feb 2 and made a low of $405 Friday. A bit of momentum was lost, but the more intermediate trend is still intact. Tomorrow’s CPI will be important. There’s risks to both longs and shorts. $410-$411 will be resistance if we rally. Now let’s dig into 3 individual names I typically don’t cover in the Morning Note: SMCI seems like it has a decent setup. Some are long vs. the 8 day down near $82ish. Others are waiting for a move and hold above $93.90ish. SSTK has a decent setup. Some are long vs. $72. Others are waiting for it to get and stay above $81.25. GILD has a nice chart. Some are long vs. $85. Others are waiting for it to get and stay above $87.18 Scott Redler’s positions disclosure as of 2023-02-13 at 8.35.09 AM
Continue Reading -->Coffee With Greta: CPI Week Begins
DJIA Futures: +1 (+0.01%) SPX Futures: +6 (+0.1%) NASDAQ Futures: +50 (+0.4%) Good morning friends! Futures are mostly higher as traders look to rebound from the worst week since December and look ahead to key inflation data. Let’s get right to it! Inflation Week Begins It’s inflation week yet again with traders awaiting the January CPI. That data will be released by the Bureau of Labor Statistics Tuesday morning at 8:30 a.m. ET. Headline inflation is expected to have risen 0.4% monthly and 6.2% annually at the beginning of 2023. The core CPI is expected to rise 0.3% monthly and 5.4% year over year. The data will give traders more insight on the impact of the Fed’s rate hikes so far after the Fed chair said the “disinflationary process has begun”. The first piece of key inflation data will come later today with the release of the New York Fed’s survey of consumer expectations at 11:00 a.m. ET. The market is focused on the 1-year and 5-year inflation expectations in that survey. Another Big Earnings Week On top of the inflation data in focus this week, the market will also continue to digest more Q4 earnings. Here’s some of the key companies scheduled to report: Tuesday AM: Coca-Cola (KO), Marriott (MAR) Tuesday PM: Airbnb (ABNB) Wednesday AM: Kraft Heinz (KHC), Roblox (RBLX) Wednesday PM: Cisco (CSCO), Shopify (SHOP), Roku (ROKU) Thursday AM: Hasbro (HAS) Thursday PM: DoorDash (DASH), DraftKings (DKNG) Meta Planning More Layoffs Meta Platforms (META) shares are up 2.3% ahead of the open amid reports the company is planning another round of layoffs. The Financial Times reported the social media giant has delayed finalizing the budgets of several teams as it prepares for more layoffs. Those cuts would be on top of the 11,000 employees let go by Meta in November. Meta has not confirmed the report and it’s unclear how big the next round of cuts could be. Ford EV Announcement Coming Up Ford (F) shares are 0.1% higher in premarket trade ahead of an EV announcement today. The automaker announced Sunday that it had something to say about “its plan to rapidly scale EVs and make them more accessible to customers”. Ford is scheduled to host a streaming event at 1:45 p.m. ET. Analysts are betting the company will announce a new battery plant with Contemporary Amperex Technology Co. Ford said last summer it was exploring batteries based on the company’s technology and it planned to localize lithium iron phosphate battery production in North America.
Continue Reading -->Coffee With Greta: Slide Continues
DJIA Futures: -93 (-0.3%) SPX Futures: -17 (-0.4%) NASDAQ Futures: -85 (-0.7%) Good morning friends! Futures are falling with the S&P 500 on track for its worst week in 2 months. Let’s get right to it! PayPal Beats Q4 Expectations, CEO Retiring PayPal (PYPL) shares are up 1% ahead of the open after beating Q4 profit expectations and announcing its CEO’s departure. Here’s how the digital payment company’s results compared to analysts’ estimates: Adjusted EPS: $1.24 vs $1.20 expected Revenue: $7.38 billion vs $7.39 billion expected The results were in line with PayPal’s previous outlook. The company forecast 7.5% revenue growth in Q1 and adjusted EPS to range between $1.08 to $1.10. It expects to book an estimated restructuring charge of $100 million in Q1 related to layoffs it announced in late January. PayPal also announced its CEO Dan Schulman will leave the company at the end of 2023 but will stay on as a member of the board. Schulman said, “I’m proud of what we have accomplished at PayPal and of the incredibly talented and committed people I work with every day. Together, we have reimagined financial services and e-commerce, and worked to improve the financial health of our customers.” Lyft Tanks On Weak Guidance Lyft (LYFT) shares are tumbling 31.1% in premarket trade despite reporting record Q4 revenue as the company’s outlook came in weak. Here’s how the rideshare giant’s Q4 results compared to analysts’ estimates: Adjusted loss per share: $0.74 vs $0.13 EPS expected Revenue: $1.18 billion vs $1.15 billion expected But the company said it only expects $975 million in Q1 revenue, falling short of analysts’ expectations for $1.09 billion. The CFO said, “Our Q1 guidance is the result of seasonality and lower prices, including less Prime Time.” Expedia Tumbles After Q4 Miss Expedia (EXPE) shares are falling 2.3% ahead of the open after missing Q4 expectations on the top and bottom line. Here’s how the company’s results compared to analysts’ expectations: Adjusted EPS: $1.26 vs $1.71 expected Revenue: $2.62 billion vs $2.69 billion expected Gross bookings: $20.51 billion vs $20.96 billion expected But Expedia blamed those weak results on severe weather seen across the U.S. at the end of Q4. The CEO said, “While our Q4 results were negatively impacted by severe weather, demand was otherwise strong and accelerating, and has been markedly stronger since the start of the year.” The company did not provide guidance. Coming Up: Consumer Sentiment The University of Michigan releases the early February reading of its consumer sentiment index at 10:00 a.m. ET today. That index is expected to improve to 65.1 from 64.9 at the end of January. The survey also includes consumers’ 1-year and 5-year inflation expectations. Those expectations have been a key metric both the market and the Fed are watching. In Case You Missed It Yahoo became the latest tech company to announce mass layoffs on Thursday. The company unveiled plans to cut 20% of its staff by year-end, including 1,000 layoffs by the end of this week. The Yahoo for Business unit will be slashed in half. GlobalFoundries (GFS) shares rallied 3.5% Thursday after signing a long-term supply agreement with General Motors (GM). That agreement makes GlobalFoundries GM’s exclusive semiconductor maker. GFS will establish dedicated production capacity for GM’s suppliers at its facility in upstate New york. GM said the agreement “will help establish a strong, resilient supply of critical technology in the U.S. that will help GM meet this demand while delivering new technology and features to our customers.”
Continue Reading -->Coffee With Greta: Disney Pops
DJIA Futures: +214 (+0.6%) SPX Futures: +32 (+0.8%) NASDAQ Futures: +156 (+1.2%) Good morning friends! Futures are higher with Disney shares popping after strong earnings. Let’s get right to it! Disney Beats Fiscal Q1 Expectations, Unveils Restructuring Walt Disney (DIS) shares are rallying 6.1% ahead of the open after beating fiscal Q1 expectations. Here’s how the entertainment giant’s results compared to analysts’ estimates: Adjusted EPS: $0.99 vs $0.78 expected Revenue: $23.51 billion vs $23.37 billion expected Disney+ Subscriptions: 161.8 million vs 161.1 million expected This is the first earnings report released by Disney since CEO Bob Iger resumed his executive role. In a statement, Iger said, “We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.” Disney also announced plans to reorganize into three segments and cut thousands of jobs. Those divisions will be: Disney Entertainment ESPN Parks, Experiences, and Products Unit The company is also laying off 7,000 employees, representing about 3% of its workforce. Affirm Drops On Earnings Miss, Company Announces Layoffs Affirm (AFRM) shares are tumbling 15.4% in premarket trade after missing fiscal Q2 earnings on the top and bottom line. Here’s how the buy now, pay later company’s results compared to analysts’ expectations: Loss per share: $1.10 vs $0.95 expected Revenue: $400 million vs $416 million expected The CEO said, “A key operational misstep contributing to these results is that we began increasing prices for our merchants and consumers later in the year than we should have, and this process has taken us longer than we anticipated.” Affirm also announced it is cutting 19% of its workforce, effective immediately. The company expects $360 million to $380 million in fiscal Q3 revenue vs $418 million expected. For the full year, Affirm forecast $1.475 billion to $1.550 billion in revenue, down from its previous outlook for $1.6 billion to $1.675 billion. Price Hikes Boost PepsiCo Earnings PepsiCo (PEP) shares are up 1.5% ahead of the open after beating Q4 expectations on the top and bottom line. Here’s how the beverage maker’s results compared to analysts’ estimates: Adjusted EPS: $1.67 vs $1.65 expected Revenue: $28 billion vs $26.84 billion expected That beat came even as sales volume fell but consumers paid higher prices for PepsiCo snacks and drinks. Volume dropped 7% at Quaker Foods North America and fell 2% at its North American beverage division. PepsiCo expects 8% growth in earnings this year vs analysts’ expectations for 7.3% growth. The company also announced a 10% increase to its annual dividend and plans to repurchase $1 billion worth of shares this year. Weekly Jobless Claims Rise More Than Expected Weekly jobless claims rose more than expected in early February. The Labor Department reported 196,000 Americans filed initial claims for unemployment benefits last week. That was a 13,000 person increase from the week before and higher than 190,000 expected. Continuing claims also rose by 38,000 to 1.69 million in the week ending January 28. In Case You Missed It Alphabet (GOOGL) shares tumbled 7.7% on Wednesday after holding an event to showcase its new artificial intelligence chatbot called Bard. Google said it will begin rolling out the new technology in the coming weeks. The event also highlighted new AI improvements in other Google products like Maps and Lens. The reveal came one day after Microsoft (MSFT) hosted a similar AI event to unveil new updates to its Bing search engine.
Continue Reading -->Coffee With Greta: Focus Turns To Earnings
DJIA Futures: -114 (-0.3%) SPX Futures: -20 (-0.5%) NASDAQ Futures: -58 (-0.5%) Good morning friends! Futures are slipping as traders digest earnings and gear up for more Fed speakers today. Let’s get right to it! CVS Beats Q4 Expectations, Confirms Oak Street Acquisition CVS Health (CVS) shares are up 2.9% ahead of the open after beating Q4 earnings expectations and confirming it is buying Oak Street Health (OSH). Here’s how the healthcare giant’s results compared to analysts’ estimates: Adjusted EPS: $1.99 vs $1.92 expected Revenue: $83.85 billion vs $76.32 billion expected Revenue was up 9.5% year over year. CVS expects adjusted EPS of $8.70 to $8.90 in 2023, in line with estimates of $8.84. The company also announced an all-cash $10.6 billion deal to purchase primary-care provider Oak Street Health. CVS will pay $39 per share for the company, OSH shares are up 5% ahead of the open. CVS’s CEO said, “2022 was a year of progress, and we continue to build on that momentum with bold moves that will improve the health care experience.” Oak Street will become part of CVS’s Health Care Delivery organization and the company’s current CEO will continue to lead the unit. Uber Rallies On Earnings Beat Uber (UBER) shares are 7% higher in premarket trade after beating Q4 expectations on the top and bottom line. Here’s how the ride share giant’s results compared to analysts’ expectations: EPS: $0.29 vs $0.18 per share loss expected Revenue: $8.6 billion vs $8.49 billion expected Mobility gross bookings: $14.9 billion vs $14.8 billion expected Delivery gross bookings: $14.3 billion as expected Revenue jumped 49% year over year. The CEO said it was Uber’s “strongest quarter ever” capping off its “strongest year.” The company also hit 2 billion trips in a single quarter for the first time. Uber expects gross bookings to grow between 20% and 24% this quarter. Chipotle Falls On Disappointing Q4 Earnings Chipotle Mexican Grill (CMG) shares are falling 4.2% ahead of the open after reporting disappointing Q4 earnings. Here’s how the restaurant chain’s results compared to analysts’ estimates: Adjusted EPS: $8.29 vs $8.90 expected Revenue: $2.18 billion vs $2.23 billion expected It’s the first time Chipotle has missed expectations on the top and bottom line since Q3 2017. Same-store sales rose just 5.6% vs analysts’ expectations for 6.9%. The CFO said, “As we got around the holidays, we just didn’t see that pop, that momentum, that we normally see … frankly, we started the quarter soft, and we ended the quarter soft.” But the CEO said those weaker restaurant traffic trends have already reversed in the new year. Chipotle said it expects same-store sales growth in the high single digits this quarter while analysts are estimating 6.7% growth. The CFO said the company is not planning anymore price hikes this year. Mortgage Demand Jumps Mortgage demand jumped last week as rates fell for the fifth week in a row. The Mortgage Bankers Association reported total application volume jumped 7.4%. That was led by a surge in refinance applications, which rose 18% weekly but were still 75% lower year over year. Purchase applications rose 3% weekly and were 37% lower annually. The increase came as the average 30-year fixed contract rate fell to 6.18% from 6.19%. But those rates jumped sharply at the start of this week after the hot January jobs report on Friday and comments from the Fed chair that the bank could continue raising rates. More Fed Speakers Several Fed officials are scheduled to speak today, keeping the market on edge about the bank’s future plans. New York Fed President John Williams, Fed Governor Lisa Cook, Fed Vice Chair Michael Barr, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, and Fed Governor Christopher Waller are all speaking at some point in the day. These speeches come after Fed Chair Jerome Powell spoke to the Economic Club of Washington on Tuesday. He said, “The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy.” But he also said that process still “has a long way to go.” Powell highlighted the strong January jobs report as an issue saying, “if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.” In Case You Missed It Zoom (ZM) shares rallied 9.9% on Tuesday after announcing layoffs. The CEO made that announcement in a blog post. Zoom plans to cut about 15% of its workforce, impacting 1,300 employees. The CEO said the company needs to adapt to the “uncertainty of the global economy” and “its effect on our customers.” The stock is down 1.9% ahead of the open.
Continue Reading -->Coffee With Greta: Traders Await Powell
DJIA Futures: -114 (-0.3%) SPX Futures: -7 (-0.2%) NASDAQ Futures: -1 (-0.01%) Good morning friends! Futures are mostly lower as traders await a speech by Fed Chair Jerome Powell. Let’s get right to it! Powell On Deck Fed Chair Jerome Powell is scheduled to speak at an event at the Economic Club of Washington today. Powell’s speech is expected to begin around 12:40 p.m. ET. The market is monitoring this speech after the chairman struck a more dovish tone after last week’s rate hike. But after the January jobs report came in hot on Friday, Powell’s tone may shift back to be more hawkish. Minneapolis Fed President Neel Kashkari maintained his hawkish stance in an interview with CNBC this morning. Kashkari said, “We have a job to do. We know that raising rates can put a lid on inflation. We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.” He sees the federal funds rate peaking at 5.4% later this year, from the current range of 4.5% to 4.75%. But other Fed officials see the terminal rate around 5.1%. Kashkari highlighted the continued strength in the labor market as an issue. He said that data “tells me that so far we’re not seeing much of an imprint of our tightening to date on the labor market.” Pinterest Slips On Q4 Revenue Miss, Weak Outlook Pinterest (PINS) shares are falling 1% ahead of the open after missing Q4 sales expectations and issuing weak guidance. Here’s how the social media company’s results compared to analysts’ estimates: EPS: $0.29 vs $0.27 expected Revenue: $877 million vs $886.3 million expected Q4 revenue was up 4% year over year while overall sales for the year rose 9%. For the full-year, Pinterest logged a net loss of $96 million. The company forecast Q1 sales growth in the “low single digits” vs analysts’ expectations of 6.9% growth. But the CEO remains optimistic about the turnaround. He said, “While the industry as a whole is facing headwinds, we are adapting quickly to a changing macro environment and are committed to creating a more positive online experience for our users and advertisers.” Bed Bath & Beyond Collapses Bed Bath & Beyond (BBBY) shares are plummeting 37.5% in premarket trade after the company announced a new public offering to raise more than $1 billion. The company will be offering shares of Series A convertible preferred stock, warrants to purchase Series A shares, and warrants to buy the common stock. Analysts see this as a last ditch effort to raise cash before a bankruptcy filing. Wedbush analysts lowered their price target on the stock to $0 after the announcement. Oak Street Health Rallies On CVS Acquisition News Oak Street Health (OSH) shares are surging 34.6% ahead of the open on news CVS (CVS) is nearing a deal to buy the company. The Wall Street Journal reported today that CVS is close to an agreement to acquire Oak Street for about $10.5 billion including debt. That would price the company around $39 per share, the stock closed at $25.96 on Monday. Oak Street operates more than 160 primary-care centers across 21 states and focuses on patients enrolled in Medicare. Annual Trade Deficit Hits Record The U.S. trade deficit widened less than expected in December but the annual gap hit a record-high. The Commerce Department reported that gap increased 10% to $67.4 billion at the end of 2022. That was better than economists’ expectations of $68.5 billion. Meantime, the annual deficit jumped 12.2% to $948 billion in 2022. Exports rose 17.7% last year to $3 trillion while imports rose 16.3% to $4 trillion.
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