2 Levels to Watch in Apple Right Now
We have mixed markets around the world ahead of the CPI Tuesday and FOMC Wednesday. China is dismantling their restrictive controls, but FXI went 30% off the lows already. We have about $43 billion worth of deals with HZNP and COUP getting bought to show there are some bargains out there. SPX is about 10% off the lows, and 17% off the highs with about 3 weeks left in 2022 We’ll see if we get one more move to 4052-4100 or if we move towards 3818 or below into Christmas The CPI and FOMC will set the tone for that and we will try and react accordingly. Know your time frame and risk into big binary events. Now let’s dig into some names: AAPL will be important this week. The $145 area rejected price on Friday. $140ish is key support. It probably doesn’t do much today. But the action for the rest of the week will be key. Above $145.50 it helps the tape and below $140 it’s a headwind. TSLA did a tactical Red Dog Reversal Thursday around the $172.22 pivot. On Friday, it gave us some upside cash flow to $182.50. I sold mine. It’s not very compelling here, but will be important this week. Can it stay out of the danger zone? The weekly chart says it hits $150-$129 next year, but can it see $187 first? NFLX has been a go-to name since October. Some revisited it on Wednesday as it did a Red Dog Reversal long around the $303.13 pivot, and then sold strength into the $329 area. It did reverse to get most out. If you are still long, use $319.55 as key support. MSFT isn’t special but acts better than some other names recently. It’s worth knowing what’s happening here this week for complexion. It’s getting tighter again. $242ish is active support. $249ish is pivot resistance. GOOGL stopped out most active longs when it broke $98.90 and hit a low of $92.75 Friday. It’s an avoid. Scott’s Positions Disclosure as of 2022-12-12 at 8.39.43 AM
Continue Reading -->Coffee With Greta: Sticky Inflation Pushes Down Stocks
DJIA Futures: -147 (-0.4%) SPX Futures: -23 (-0.6%) NASDAQ Futures: -75 (-0.6%) Good morning friends! Futures are sliding following the release of hotter-than-expected wholesale inflation data. Let’s get right to it! Wholesale Inflation Runs Hot Wholesale prices rose more than expected in November, dampening the market’s hope for falling inflation. The Bureau of Labor Statistics’ producer price index rose 0.3% monthly and 7.4% year over year. That was higher than economists’ expectations for a 0.2% monthly gain and the third straight month that headline PPI has risen 0.3%. But the annual gain was a cooldown from 8.1% in October. Energy costs fell 3.3% but that was offset by a 3.3% jump in food costs. The trade index rose 0.7% while transportation and warehousing fell 0.9%. The core PPI, which excludes food and energy, also rose 0.3% monthly vs 0.2% expected. On an annual basis, the core PPI did cool to 4.9% from 5.4% in October. That was the lowest year over year gain since April 2021. Treasury Yields Pop After Hot Inflation Data Treasury yields have turned higher as stocks drop following that hotter-than-expected inflation number. The 2-year yield is up 4 basis points to 4.33% while the 10-year yield is up 2 basis points to 3.51%. CME Group’s FedWatch Tool still shows 74.7% of traders expecting the Fed to pivot to a smaller 50bps rate hike next week. Costco Earnings Disappoint Costco (COST) shares are falling 1.1% ahead of the open after missing fiscal Q1 expectations. Here’s how the big box retailer’s results compared to analysts’ estimates: EPS: $3.07 vs $3.12 expected Revenue: $54.44 billion vs $58.36 billion Same-store sales: +6.6% vs +6.4% expected Online sales declined 3.7% in the quarter. Costco already reported slowing November sales last week, in a bad sign for the key holiday shopping season. Lululemon Inventories Soar Lululemon (LULU) shares are dropping 6.8% in premarket trade following mixed Q3 results. Here’s how the athleisure retailer’s results compared to analysts’ expectations: Adjusted EPS: $1.62 vs $1.97 expected Revenue: $1.9 billion vs $1.81 billion expected Same-store sales: +22% vs +19.1% expected Inventories soared in the quarter, up 85% year over year. That prompted concerns among analysts that Lululemon will have to slash prices to clear the excess inventory. But the CEO said during the earnings call that core styles made up around 45% of that inventory and it carried “limited seasonal markdown risk”. He said, “As we discussed, our inventory levels were too lean last year, and we made the strategic decision to build inventories this year, which enabled the strong top-line growth we have delivered.” Lululemon forecast Q4 adjusted EPS between $4.20 and $4.30 on revenue between $2.605 billion and $2.655 billion. The company sees full-year EPS between $9.87 and $9.97 on $7.944 billion to $7.994 billion in revenue. Analysts were estimating full-year EPS of $9.92 on $7.935 in revenue. Consumer Sentiment Coming Up The University of Michigan releases its early December consumer sentiment index at 10:00 a.m. ET. That index is expected to slip to 56.5 from 56.8 at the end of November. But the market is focused on the consumer inflation expectations included in the index. The Fed has previously raised concerns about rising consumer inflation expectations. In November, Americans hiked their 5-year forecast for inflation to 3%. In Case You Missed It The FTC filed an antitrust case against Microsoft (MSFT) Thursday, attempting to block the company’s acquisition of Activision Blizzard (ATVI). Microsoft announced the $68.7 billion acquisition in January with the goal of closing the deal by June 2023. Microsoft has vowed to defend the deal with the vice chair and president saying, “We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers.”
Continue Reading -->Coffee With Greta: Traders Still Assessing Economic Risks
DJIA Futures: +151 (+0.5%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +68 (+0.6%) Good morning friends! Futures are higher as traders continue to assess the risk of an economic downturn. Let’s get right to it! GameStop Reports Steeper Loss, Weaker Sales Than Expected GameStop (GME) shares are up 0.4% ahead of the open despite reporting weaker-than-expected Q3 results. Here’s how the video game retailer’s results compared to analysts’ expectations: Adjusted loss per share: $0.31 vs $0.28 expected Revenue: $1.186 billion vs $1.345 billion expected Revenue was down 9% year over year and this marked GameStop’s seventh consecutive quarterly loss. The CEO said the company remains focused on achieving profitability in the near term and growth in the long term. He said, “We’re seeking to transform a legacy brick-and-mortar business that was on the brink of bankruptcy. The company is a stronger business today than at any time in the recent past.” Rent the Runway Sales Jump Rent the Runway (RENT) shares are rallying 14.8% in premarket trade after reporting strong Q3 sales than expected. Here’s how the fashion rental and subscription company’s results compared to analysts’ expectations: Loss per share: $0.56 as expected Revenue: $77.4 million vs $72.9 million expected Revenue was up 31% year over year while active subscribers jumped 15%. Rent the Runway’s CEO told CNBC that inflation is making the company more appealing to customers. She said, “Rent the Runway’s business model is fundamentally about delivering an enormous amount of financial value to the consumer. So there’s no other place that the consumer can go to get as much financial value as she receives from our offering.” The company forecast Q4 revenue of $72 million to $74 million, higher than analysts’ estimates of $72 million. Rent the Runway also hiked its full-year revenue forecast to between $293 million and $295 million vs $285 million to $290 million previously. Weekly Jobless Claims Jump Weekly jobless claims rose as expected last week as the U.S. labor market remains relatively stable. The Labor Department reported 230,000 Americans filed initial claims for unemployment benefits. That was up by 4,000 from the previous week and in line with economists’ expectations. But continuing claims hit the highest level since February, rising by 62,000 to 1.671 million in the week ending November 26. Gas Prices Continue Decline U.S. average gas prices are now lower than they were at this same time one year ago. AAA shows the national average for a gallon of regular gas dipped to $3.329 today. That’s lower than $3.343 a year ago and down sharply from the record $5.01 per gallon earlier this year. The latest drop in gas prices comes as refineries are running at high capacity because of the diesel shortage in the U.S. That is resulting in excess regular gas with demand down about 7% compared to a year ago. But diesel prices are still high, with the national average at $5.00 per gallon. Analysts expect the national average for regular gas to fall below $3 a gallon by Christmas. Oil Prices Rebound Oil prices are rebounding today on fresh demand hopes in China and signs of Russian oil tankers being delayed. West Texas Intermediate crude futures are up more than 4% to over $75 bbl while Brent crude futures are up 2.3% to just under $79 bbl. China announced the most significant relaxation of its Covid restrictions on Wednesday. The country will now allow infected people with mild symptoms to quarantine at home and dropped testing requirements for those traveling domestically. China is the second-largest crude importer in the world. Tesla Slides On Report Of Slowdown At Shanghai Plant Tesla (TSLA) shares are falling 1.3% ahead of the open following a Bloomberg report the company is shortening shifts and delaying hiring at its Shanghai plant. The electric automaker is reportedly cutting shifts by about two hours as the plant grapples with elevated inventory levels due to slowing demand in the Chinese auto market. The China Passenger Cars Association reported a 10.5% drop in car sales in November from October. Sales were down 9.2% year over year. But Tesla’s Shanghai factory still delivered a record 100,291 electric vehicles in the month. In Case You Missed It The CEOs of Bank of America (BAC) and Wells Fargo (WFC) warned of a slowdown in consumer spending Wednesday. Speaking at a financial conference, both executives said they have seen slowing growth in both credit card and debit card purchase volumes. Both joined JPMorgan Chase (JPM) CEO Jamie Dimon in predicting a recession in 2023. Carvana (CVNA) shares plummeted 42.9% on Wednesday amid growing bankruptcy concerns. Bloomberg reported the online used car retailer’s largest creditors signed a deal that binds them to act together in negotiations with the company. That agreement will last 3 months and such deals are usually viewed as a way to streamline negotiations around debt restructurings.
Continue Reading -->Coffee With Greta: Recession Fears Still Rattling Traders
DJIA Futures: -68 (-0.2%) SPX Futures: -15 (-0.4%) NASDAQ Futures: -78 (-0.7%) Good morning friends! Futures are sliding as traders continue to be rattled by recession fears. Let’s get right to it! Mortgage Demand Slides Despite Lower Rates Mortgage demand fell again last week even as rates dropped. The Mortgage Bankers Association reported overall application volume fell 1.9% on a weekly basis. Purchase applications fell 3% weekly and 40% year over year. While refinance applications actually rose 5% weekly but were still down 86% annually. The average loan size for homebuyer applications fell to $387,300. That was consistent with an increase in FHA and USDA loan applications as well as cooling home prices. The average 30-year contract rate decreased to 6.41% last week from 6.49% the previous week. Toll Brothers Tops Fiscal Q4 Expectations Toll Brothers (TOL) shares are up 1.1% in premarket trade after beating fiscal Q4 expectations. Here’s how the luxury homebuilder’s results compared to analysts’ expectations: EPS: $5.63 vs $4.01 expected Revenue: $3.71 billion vs $3.17 billion expected Home sales revenue: $3.6 billion, up 21% year over year But the company’s CEO warned higher mortgage rates are still a challenge for the housing market, saying, “Many homebuyers are on the sidelines, waiting for clarity on the direction of mortgage rates and the overall economy.” Despite those higher rates, Toll Brothers sold more homes in the quarter. The company delivered 3,765 units in fiscal Q4, up from 3,341 units a year ago. Campbell Soup Beats Fiscal Q1 Expectations, Raises Outlook Campbell Soup (CPB) shares are up 3.6% ahead of the open after beating fiscal Q1 expectations and raising its full-year outlook. Here’s how the company’s results compared to analysts’ expectations: EPS: $0.99 vs $0.88 expected Net sales: $2.58 billion vs $2.45 billion expected The CEO said, “Through a combination of inflation-driven pricing actions and productivity improvements, we have substantially mitigated significant inflationary pressure in the quarter while continuing to provide quality and value to consumers.” Campbell Soup now expects 7% to 9% net sales growth in fiscal 2023 vs its previous forecast of 4% to 6%. The company also forecast $2.90 to $3.00 in full-year adjusted EPS vs $2.85 to $2.95 previously. Southwest Reinstates Dividend Southwest Airlines (LUV) announced this morning it is reinstating its quarterly dividend after nearly 3 years. The company suspended those payments at the start of the pandemic in 2020. Then, federal aid provided to airlines for payroll during the pandemic prohibited dividends and share buybacks. But those restrictions have been lifted. Southwest said the 18-cent dividend will be paid after the market closes on January 31. CEO Bob Jordan said, “Today’s announcement reflects the strong return in demand for air travel and the Company’s solid operating and financial results since March 2022,” The airline reiterated its Q4 guidance for revenue to be up as much as 17% over 2019. LUV shares are slipping 0.5% in premarket trade. Pinterest Adds Elliott Management Executive To Its Board Pinterest (PINS) shares are up 2.1% ahead of the open after revealing it is adding an executive from activist investor group Elliott Management to its board. Marc Steinberg, a senior portfolio manager at Elliott, will join the board of directors on December 16. Pinterest’s CEO said, “I view this as an extraordinarily positive collaboration. Throughout my career across several businesses that I’ve built and led I’ve seen really great value from having the right thoughtful investor perspective at the table.” Elliott Management is Pinterest’s largest shareholder, owning 20 million shares as Q3. Steinberg said, “Over the past several months, we’ve forged a productive partnership and the company has made significant progress on its strategic objectives. We believe that Bill and the Pinterest team are the right leaders to guide the company forward and we think they have only scratched the surface of the company’s potential.” In Case You Missed It Morgan Stanley (MS) reportedly cut about 2% of its global staff on Tuesday. Sources told CNBC those layoffs impacted about 1,600 employees across all divisions in the company. The report came after CEO James Gorman told Reuters last week the bank was gearing up for “modest cuts”.
Continue Reading -->Kira Turner Talks Trading, Skydiving, Scubadiving, and Rodeos
Inner Circle’s Kira Turner appeared on the Madam Trader podcast to talk her trading career, and her fascinating history in high-stakes sports like rodeos and skydiving: After you listen, check out Inner Circle.
Continue Reading -->Coffee With Greta: Recession Fears Grip Wall Street
DJIA Futures: -39 (-0.1%) SPX Futures: -1 (-0.02%) NASDAQ Futures: +12 (+0.1%) Good morning friends! Futures are flat as traders remain on edge following Monday’s rout. Let’s get right to it! October Trade Deficit Jumps Less Than Expected The U.S. trade deficit rose less than expected in October. The Commerce Department reported that gap jumped 5.4% to $78.2 billion. That was lower than economists’ expectations for the deficit to rise to $80 billion. Exports fell 0.7% while imports rose 0.6%. Jamie Dimon Predicts Recession in Mid-2023 JPMorgan Chase (JPM) CEO Jamie Dimon is expecting inflation to push the U.S. economy into a recession next year. In an interview with CNBC this morning, Dimon said consumers are currently in good shape with $1.5 trillion in excess savings from pandemic stimulus. Currently, consumers are spending 10% more than they did in 2021. But Dimon said, “Inflation is eroding everything I just said, and that trillion and a half dollars will run out sometime mid year next year.” He predicted that “may very well derail the economy and cause a mild or hard recession that people worry about.” United CEO Warns of Business Travel Slowing United Airlines (UAL) CEO Scott Kirby told CNBC today that business travel demand has “plateaued”. But Kirby said revenue is still rising thanks to strong demand for leisure travel and capacity restraints keeping prices high. He said, “It feels like business travel, and this probably is indicative of pre-recessionary kind of behavior, has plateaued even though our total revenues are still going up.” Kirby said the airline’s data currently shows no signs of a recession, but they are forecasting a “mild recession induced by the Fed.” Traders Anticipate Rate Hike Pivot CME Group’s FedWatch Tool shows more traders are expecting the Fed to pivot to a smaller rate hike next week. That tool shows 79.4% now anticipating a 50 basis point move with 20.6% expecting another 75 basis point hike. That prediction comes despite the release of hot economic data in recent days, including the November jobs report. The Fed Chair said earlier this month that it may be appropriate to start slowing the pace of rate hikes at the December meeting. But he also warned they still have a long way to go to reach price stability. Oil Prices Fall On U.S. Dollar Strength, Recession Fears Oil prices are lower this morning as the U.S. dollar continues to strengthen and economic fears grip the market. West Texas Intermediate crude futures are down 1.5% to $75.75 bbl while Brent crude futures are down 1.5% to $81.50 bbl. Both contracts recorded their largest daily drop in two weeks on Monday following hot data on the U.S. services sector. The recent release of hot economic data has prompted more fears the Fed will drive the economy into a recession. In Case You Missed It The ISM Services PMI rose unexpectedly in November. The index rose to 56.5% from 54.4% vs expectations for a drop to 53.7%. That data shows the services side of the economy maintaining strength in the face of the Fed’s rate hikes.
Continue Reading -->Coffee With Greta: Chinese Stocks Jump, Oil Prices Rally
DJIA Futures: -164 (-0.5%) SPX Futures: -20 (-0.5%) NASDAQ Futures: -50 (-0.4%) Good morning friends! Futures are dropping as traders await more key economic data this week. Let’s get right to it! U.S.-Listed Chinese Stocks Rally Shares of Chinese companies listed in the U.S. are rallying ahead of the open as the country continues to relax Covid restrictions. Beijing and Shenzhen both said over the weekend they would relax a rule that required negative Covid tests for travel. The Invesco Golden Dragon China ETF (PGJ), which tracks the Nasdaq Golden Dragon China Index, is up 5.2% ahead of the open. Alibaba (BABA) shares are up 4.6%, Pinduoduo (PDD) is up 4.1%, while Bilibili (BILI) is surging 17.1%. Reuters reported China is set to announce a nationwide reduction in Covid testing requirements as the country moves away from its zero-Covid policy. Treasury Yields Start New Week Mixed Treasury yields are mixed this morning as traders look ahead to more economic data this week. The 2-year yield is up 6 basis points to 4.30% while the 10-year yield is down 1 basis point to 3.52%. The market is awaiting the latest ISM services PMI after the manufacturing PMI contracted for the first time in more than 2 years last week. This is also a blackout week for Fed speakers ahead of the bank’s meeting next week. CME Group’s FedWatch Tool shows 74.7% of traders still anticipating a 50 basis point hike at that meeting while 25.3% expect a 75 basis point move. Oil Prices Rise After OPEC+ Maintains Output Oil prices are rallying this morning after OPEC+ agreed to hold their output targets steady. West Texas Intermediate crude futures are up 3% to over $82 bbl while Brent crude futures are up 3% to over $88 bbl. OPEC+ met on Sunday and agreed to stick to the October plan to cut daily output by 2 million barrels from November through 2023. G7 countries and Australia also agreed last week on a $60 bbl price cap on seaborne Russian oil that takes effect today. The EU’s ban of Russian crude oil also goes into effect today. In Case You Missed It Ford (F) became the number 2 EV maker in the U.S. last week. The automaker reported Friday that it sold 53,752 all-electric vehicles in the U.S. through November, up nearly 103% year over year. That put its share of the U.S. EV market at 7.4% vs 5.7% a year earlier. That pushed Ford past Hyundai as the second-largest EV seller and maker in the U.S., behind Tesla (TSLA).
Continue Reading -->Coffee With Greta: Hot Job Growth Is Bad News For Traders
DJIA Futures: -426 (-1.2%) SPX Futures: -64 (-1.6%) NASDAQ Futures: -274 (-2.3%) Good morning friends! Futures are tumbling after the release of hot jobs data. Let’s get right to it! November Payroll Growth Runs Hot Job growth stayed hot in November despite the Fed’s rate hikes. The Labor Department reported the U.S. economy added 263,000 jobs last month. That as higher than expectations for 200,000 but still a decrease from the revised 284,000 in October. The unemployment rate was unchanged at 3.7%, in line with expectations. The labor force participation rate remained well below pre-pandemic levels at 62.1%. The leisure and hospitality sector added 88,000 jobs in November, led by a 62,000 worker gain in restaurants and bars. Healthcare employers added 45,000 workers, while government added 42,000 jobs. Only two major sectors saw declines last month. Retail trade lost 30,000 workers in November while transportation and warehousing employment declined by 15,000. Wages continued to increase more than expected last month with average hourly earnings up 0.6% monthly and 5.1% year over year vs 0.3% monthly, 4.6% annually expected. Job growth in October was revised higher by 23,000 while September was revised down by 46,000. Treasury Yields Jump After Hot Jobs Report Treasury yields are popping higher this morning after the release of that hot employment data. The 2-year yield is up 12 basis points to 4.35% while the 10-year yield is up 9 basis points to 3.60%. The strong job growth is not good news for traders who are hoping for a Fed pivot later this month. The Central Bank has said a weaker labor market will be key to lowering inflation. The Fed has raised particular concern about wage inflation, which continued to push higher in November. CME Group’s FedWatch Tool shows 69.9% of traders still anticipating a 50 basis point hike at the next meeting while 30.1% expect a 75 basis point move. Oil Prices Fall Flat Oil prices are flat this morning but still on track for weekly gains. West Texas Intermediate crude futures are up just 0.1% at $81 bbl while Brent crude futures are up 0.1% at $87 bbl. Easing Covid restrictions in two Chinese cities are helping to pare losses from rising strength of the U.S. dollar. The dollar edged higher this morning after dropping to 16-week lows. Ulta Crushes Q3 Expectations, Hikes Outlook Ulta (ULTA) shares are slightly lower today despite beating Q3 expectations. Here’s how the beauty retailer’s results compared to analysts’ expectations: EPS: $5.34 vs $4.15 expected Revenue: $2.34 billion vs $2.21 billion expected Comparable sales soared 14.6% year over year as shoppers continue to spend on makeup. The CEO said the results “reflect the sustained resilience of the beauty category and the strong emotional connection and loyalty we have cultivated with our guests.” Ulta hiked its full-year earnings forecast to between $22.60 and $22.90 per share. That’s was up from $20.70 to $21.20 per share previously. The company also expects revenue to be between $9.95 billion and $10 billion vs $9.65 billion and $9.75 billion previously. That higher guidance also topped analysts’ expectations for $21.40 EPS o $9.77 billion in revenue. Ulta expects full-year comparable sales growth of 12.6% to 13.2% year over year. In Case You Missed It The U.S. manufacturing sector contracted for the first time since the beginning of the pandemic last month. The Institute for Supply Management’s Manufacturing PMI fell to a 30-month low of 49% in November. That was down from 50.2% in October and lower than expectations for 49.2%. Any reading below 50% signals a contraction in factory activity.
Continue Reading -->Coffee With Greta: Fed’s Favorite Inflation Gauge Cools
DJIA Futures: +40 (+0.1%) SPX Futures: +13 (+0.3%) NASDAQ Futures: +35 (+0.3%) Good morning friends! Futures are rising as new data shows hot inflation pressures continuing to cool and a new month of trade is set to kick off. Let’s get right to it! PCE Inflation Cools Hot inflation pressures continued to cool in October. The Bureau of Economic Analysis’ PCE price index rose 0.3% monthly and 6% year over year. That was in-line with economists’ expectations and a slowdown from 6.2% annual inflation in September. The Fed’s favorite inflation gauge, the core PCE price index, slowed more than expected. That index was up 0.2% monthly vs 0.3% expected and 5% annually vs 5.1% in September. This new data comes after Fed Chair Jerome Powell made dovish comments about rate hikes during a speech at the Brookings Institution on Wednesday. Powell said, “The time for moderating the pace of rate increases may come as soon as the December meeting.” But he also warned, “we have a long way to go in restoring price stability.” The market rallied on those comments with CME Group’s FedWatch Tool now showing 79.4% of traders anticipating a 50bps hike at the December 14 meeting. Weekly Jobless Claims Tumble Weekly jobless claims fell more than expected last week. The Labor Department reported 225,000 Americans filed initial unemployment claims, a 16,000 person decrease from the previous week. That was better than expectations for 235,000. Continuing claims rose by 57,000 to 1.61 million in the week ending November 19. But claims are expected to begin rising soon in the wake of new layoff announcements in recent weeks. Salesforce Tops Q3 Expectations, Co-CEO Steps Down Salesforce (CRM) shares are falling 7% ahead of the open after the company beat Q3 expectations but its co-CEO stepped down. Here’s how the cloud software company’s results compared to analysts’ expectations: Adjusted EPS: $1.40 vs $1.22 expected Revenue: $7.84 billion vs $7.83 billion expected Sales of its subscription and support segment rose 13% to $7.23 billion while professional services sales jumped 25% to $604 million. Co-CEO Bret Taylor also announced he will step down from his position January 31, 2023. That will leave Marc Benioff as Chair and CEO of the company. Taylor is the second co-CEO with Benioff to leave Salesforce. Dollar General Slashes Growth Outlook Dollar General (DG) shares are dropping 5.7% in premarket trade after missing Q3 expectations and cutting its outlook. Here’s how the discount retailer’s results compared to analysts’ expectations: EPS: $2.33 vs $2.54 expected Revenue: $9.46 billion vs $9.42 billion Dollar General forecast Q3 earnings of $3.15 to $3.30 per share, lower than analysts’ estimates of $3.66. That implies Q4 EPS growth of 7% to 8% vs 12% to 14% previously forecast. Dollar General cited higher supply-chain costs for that weaker outlook. Kroger Hikes Full-Year Outlook Kroger (KR) shares are up 3.4% ahead of the open after beating Q3 expectations and hiking its full-year outlook. Here’s how the supermarket chain’s results compared to analysts’ expectations: Adjusted EPS: $0.88 vs $0.83 expected Revenue: $34.2 billion vs $33.9 billion expected Same-store sales jumped 6.9% year over year in the quarter vs analysts’ estimates for 4% growth. Kroger hiked its full-year outlook following the earnings beat. The company now expects full-year earnings of $4.05 to $4.15 per share vs $3.95 to $4.05 per share previously. In Case You Missed It The number of job openings in the U.S. economy fell more than expected in October. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed there were 10.3 million available jobs in the month. That was down from 10.7 million in September and lower than 10.5 million expected. Vacancies still outnumber available workers 1.7 to 1. Pending home sales fell less than expected in October. The National Association of Realtors reported pending home sales dropped 4.6% monthly and plunged 37% year over year. That was better than economists’ expectations for a 5.5% decline and improved from the 8.7% drop in September. Pending sales represent purchase contracts expected to close within 30 to 60 days.
Continue Reading -->Coffee With Greta: Economic Data Sends Mixed Signals
DJIA Futures: -6 (-0.02%) SPX Futures: +1 (+0.03%) NASDAQ Futures: +11 (+0.1%) Good morning friends! Futures are flat as traders digest mixed economic data ahead of the Fed Chair’s speech today. Let’s get right to it! Private Sector Hiring Cools Private sector job growth came in lighter-than-expected in November. Payroll firm ADP reported private employers added 127,000 workers. That was lower than economists’ expectations for 190,000 and down sharply from 239,000 in October. The leisure and hospitality sector saw the largest gain, adding 224,000 workers. But that increase was offset by large losses in other sectors. Manufacturing lost 100,000 workers in November, professional and business services lost 77,000, financial activities lost 34,000 and information services lost 25,000. Pay increased 7.6% year over year, down from 7.7% in October. This is the first piece of key jobs data this week. The Labor Department releases the October job openings and labor turnover survey at 10:00 a.m. ET today. Then the official November jobs report will be out Friday morning. Economists expect that to show a gain of 200,000 jobs with the unemployment rate unchanged at 3.7%. Q3 GDP Growth Revised Higher The U.S. economy expanded more than initially estimated in the third quarter. The Bureau of Economic Analysis’ first revision of Q3 GDP came in at 2.9% vs 2.6% initially. That revision reflects increases in exports, consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending. But residential fixed investment and private inventory investment were both lower than initially estimated. DoorDash Announces Layoffs DoorDash (DASH) shares are up 2.9% ahead of the open after the company announced new corporate layoffs. In a message to employees, the CEO said DoorDash is laying off 1,250 corporate employees as part of a continued cost-cutting effort. That represents about 15% of the company’s workforce. DoorDash is offering 17 weeks of severance to the impacted employees and healthcare benefits will continue through March 2023. Fed Chair Set to Speak Fed Chair Jerome Powell is scheduled to speak at the Brookings Institution at 1:30 p.m. ET today. Traders are hoping for more insight on the Fed’s plans to pivot to smaller rate hikes starting at the December meeting as recent data shows inflation cooling. CME Group’s FedWatch Tool shows 69.9% of traders expecting a 50 basis point hike at the December 14 meeting while 30.1% are anticipating another 75 basis point move. In a tweet this morning, Tesla (TSLA) CEO Elon Musk said the Fed must cut rates “immediately” to stop a severe recession. He said, “Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.” The Fed Chair has previously said the U.S. will have to experience some economic pain in order to lower inflation. But he has also insisted there is still a path to lower inflation without plunging the economy into recession. The Fed also releases its latest Beige Book at 2:00 p.m. ET today. Overall Mortgage Demand Drops Despite Lower Rates Total mortgage demand fell last week despite rates dropping for the third week in a row. The Mortgage Bankers Association reported total application volume decreased 0.8% last week. Purchase applications rose 4% weekly but were still down 41% year over year. Refinance application dropped 13% weekly and 86% annually. The average 30-year contract rate fell to 6.49% from 6.67%. Pending Home Sales Expected to Fall The National Association of Realtors reports October pending home sales at 10:00 a.m. ET. That report is expected to show a 5.5% decline following the 10.2% decline in September. Existing home sales slumped 5.9% last month as high mortgage rates squeeze buyers. It’s also a traditionally slower time of year for home sales.
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