Coffee With Greta: Election Question Weighs on Stocks
DJIA Futures: -124 (-0.4%) SPX Futures: -13 (-0.3%) NASDAQ Futures: -46 (-0.4%) Good morning friends! Futures are falling as it remains unclear which party will control Congress after Tuesday’s midterm elections. Let’s get right to it! Disney Slumps On Profit Miss Walt Disney (DIS) shares are dropping 8.1% ahead of the open after missing fiscal Q4 profit expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $0.30 vs $0.55 expected Revenue: $20.15 billion vs $21.24 billion expected The company saw revenue growth of 22% in fiscal 2022 and forecast growth of less than 10% in fiscal 2023. Revenue in Disney’s key media and entertainment division fell 3% year over year to $12.7 billion in fiscal Q4, missing expectations for $13.9 billion. Its streaming platform Disney+ grew more than expected, adding 12.1 million subscribers during the quarter. That put total subscribers at 164.2 million vs 160.45 million expected. But Disney warned that growth is expected to slow in fiscal Q1. Disney reported record revenue of $7.4 billion in its parks, experiences, and products segment. That was up 34% year over year but shy of analysts’ expectations for $7.5 billion. AMC Losses Widen AMC Entertainment (AMC) shares are falling 3.7% in premarket trade after reporting losses in Q3. Here’s how the theater chain’s results compared to analysts’ expectations: Adjusted loss per share: $0.20 vs $0.23 expected Revenue: $968.4 million vs $961 million Although those results were better than expected, it was the 12th consecutive quarterly loss for the company. AMC reported an adjusted EBITDA loss of $12.9 million vs $5.4 million a year ago. CEO Adam Aron said, “Our third-quarter results were impacted by a particularly soft industry-wide box office in the latter two-thirds of the 2022 third quarter.” The losses come as AMC’s spending on food and beverages jumped 30% compared to Q3 2019. Roblox Sinks On Big Q3 Loss Roblox (RBLX) shares are tumbling 15.5% ahead of the open after reporting a wider Q3 loss than analysts anticipated. Here’s how the company’s results compared to analysts’ expectations: Loss per share: $0.50 vs $0.35 expected Revenue/Bookings: $702 million vs $686 million expected Bookings were up 10% year over year with average daily active users rising 24% to 58.8 million. But average bookings per daily active user fell 11% to $11.94. Lucid Reservations Drop Lucid Group (LCID) shares are falling 7.8% in premarket trade after missing Q3 expectations. Here’s how the electric automaker’s results compared to analysts’ estimates: Loss per share: $0.40 vs $0.31 expected Revenue: $195.5 million vs $209 million expected Revenue was down from $232 million in Q3 2021. Lucid said it has more than 34,000 reservations for its Lucid Air EV, down from the 37,000 it reported after Q2. The company said it is on track to meet its 2022 production target of 6,000 to 7,000 vehicles. Lucid also announced it will open reservations for its second vehicle, an SUV, in early 2023. Meta Announces Mass Layoffs Meta Platforms (META) shares are up 4.5% after the company announced mass layoffs this morning. In a letter to employees, CEO Mark Zuckerberg said, “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.” Zuckerberg also said Meta is cutting discretionary spending and extending its hiring freeze through Q1 2023. He said the recruiting department will see the largest impact from those moves. Key Earnings After The Close Here are the companies scheduled to report Q3 earnings after the close today: Rivian (RIVN) Unity Software (U)
Continue Reading -->Coffee With Greta: Election Day
DJIA Futures: +107 (+0.3%) SPX Futures: +14 (+0.4%) NASDAQ Futures: +75 (+0.7%) Good morning friends! Futures are rising as the market gears up for today’s midterm election results and traders digest the latest batch of Q3 earnings. Let’s get right to it! Kohl’s CEO to Step Down Kohl’s (KSS) shares are up 7.6% in premarket trade after announcing its CEO will step down. Michelle Gass will leave the company on December 2 to pursue a new opportunity. Levi Strauss (LEVI) separately announced she will serve as president of that company. Kohl’s director Tom Kingsbury will serve as interim CEO. The company has been under pressure from activist investors to remove Gass after terminating takeover talks over the summer. Lyft Sinks On Slowing Growth Lyft (LYFT) shares are plunging 17.8% ahead of the open despite beating Q3 expectations as the report showed growth is slowing. Here’s how the ride share company’s results compared to analysts’ expectations: Adjusted EPS: $0.10 vs $0.07 expected Revenue: $1.054 billion vs $1.056 billion expected Adjusted EBITDA: $66 million vs $62 million expected Lyft had 20.3 million active riders in the quarter, up 2% from Q2 and 7% year over year. That missed analysts’ expectations for 21.3 million. Revenue per active ride rose to a record $51.88, up 14% annually and 4% quarterly. Lyft forecast Q4 revenue between $1.145 billion and $1.165 billion with adjusted EBITDA between $80 million and $100 million. Analysts were estimating revenue of $1.159 billion and adjusted EBITDA of $85 million. TripAdvisor Plummets After Earnings Miss TripAdvisor (TRIP) shares are plummeting 22.4% in premarket trade after missing Q3 expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $0.28 vs $0.39 expected Revenue: $459 million vs $444.3 million TripAdvisor said foreign currency fluctuations impacted revenue by $34 million in Q3. Despite the miss, in its letter to shareholders the company said, “Our results reflect a sustained demand for travel and dining, and another quarter of steady progress to full recovery.” Take-Two Interactive Tanks After Cutting Outlook Take-Two Interactive (TTWO) shares are plunging 17.3% ahead of the open after cutting its full-year outlook. Here’s how the video game company’s fiscal Q2 results compared to analysts’ expectations: GAAP net loss: $1.54 per share Net bookings: $1.5 billion, in line with expectations Bookings were up 53% year over year but Take-Two cut its forecast for full-year bookings. The company now expects fiscal 2023 net bookings to be between $5.4 billion and $5.5 billion. That’s down from $5.8 billion to $5.9 billion previously. Lordstown Rallies On New Foxconn Investment Lordstown Motors (RIDE) shares are rallying 17.3% in premarket trade after announcing a new investment from Taiwanese contract manufacturer Foxconn. The electric truck maker said it still plans to deliver the first models of its Endurance pickup truck before year-end. The company said Foxconn will invest an additional $170 million in Lordstown over three phases. The first $52.7 million is due later this month. Following that investment, Foxconn will own about 18% of Lordstown and be the company’s largest shareholder. Foxconn bought Lordstown’s Ohio factory for $230 million in May, where the company is building its Endurance pickup. Lordstown said it will use part of that investment from Foxconn to develop a new vehicle. The company said it is actively seeking an automaker partner to help it scale up production of the Endurance. Lordstown now expects to build only 30 of the trucks by year-end, down from its previous target for 50. Key Earnings After The Close Here are the companies scheduled to report Q3 earnings after the close today: Walt Disney (DIS) AMC Entertainment (AMC) Lucid Group (LCID) Lordstown Motors (RIDE)
Continue Reading -->Coffee With Greta: New Week Kicks Off Higher
DJIA Futures: +68 (+0.2%) SPX Futures: +7 (+0.2%) NASDAQ Futures: +26 (+0.2%) Good morning friends! Futures are higher as traders kick off a new week. Let’s get right to it! Apple Drops After iPhone 14 Production Warning Apple (AAPL) shares are down 1.3% ahead of the open after the tech giant said Sunday it has temporarily reduced iPhone 14 production. That production cut comes amid Covid-19 restrictions at its main Foxconn plant in China. Apple said the factory is operating at “significantly reduced capacity”. The company said it will ship fewer iPhone 14 units and customers will experience longer wait times. Meta Reportedly Set for Massive Layoffs Meta (META) shares are up 3% in premarket trade following a Wall Street Journal report the company is set to begin large-scale layoffs. Those layoffs are reportedly set to begin as soon as Wednesday and are expected to impact thousands of employees. CEO Mark Zuckerberg hinted toward planned layoffs on Meta’s earnings call last month. He said, “we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.” BioNTech Profit Slides BioNTech (BNTX) shares are down 2.7% ahead of the open despite beating Q3 expectations as profits and sales tumbled year over year. Here’s how the German pharmaceutical company’s results compared to analysts’ expectations: EPS: €6.98 vs €3.42 expected Revenue: €3.461 billion vs €2.065 billion expected Both profit and revenue dropped more than 40% compared to a year ago as Covid vaccine sales slowed. But BioNTech did raise its full-year Covid vaccine sales forecast to between €16 billion and €17 billion from €13 billion to €17 billion previously. Inflation Week Traders are focused on inflation this week with the October consumer price index set to be released Thursday morning. That report is expected to show both headline and core inflation pressures slowed last month. The headline CPI is expected to show a 7.9% annual gain while the core CPI is expected to rise 6.5% year over year. Although both would be a slight slowdown from September, that’s still near a 40-year high. Following last week’s rate hike the Fed Chair said it is “premature” to start thinking about a pause in rate hikes as inflation remains far above the bank’s 2% target.
Continue Reading -->Coffee With Greta: Hot Jobs Report Vindicates Powell
DJIA Futures: +206 (+0.7%) SPX Futures: +33 (+0.9%) NASDAQ Futures: +107 (+1%) Good morning friends! Futures are higher as a hot October jobs report supports the Fed’s continued hawkish stance. Let’s get right to it! Hot Jobs Report Job growth surged higher in October as hiring remains strong. The Labor Department reported the U.S. economy added 261,000 jobs last month vs 205,000 expected. But the unemployment rate unexpectedly increased to 3.7% from 3.5%. Economists were expecting that rate to be unchanged. The rising unemployment rate alongside strong hiring indicates more people have resumed actively looking for work. Average hourly earnings were up 4.7% year over year and 0.4% on a monthly basis. The labor force participation rate ticked lower to 62.2%, still down sharply from 63.4% pre-pandemic. September’s job growth was also revised higher by 52,000 to +315,000 while August was revised lower by 23,000 to +292,000. PayPal Drops On Q4 Outlook PayPal (PYPL) shares are down 5.8% ahead of the open despite beating Q3 expectations as the market focused on its forecast. Here’s how the company’s results compared to analysts’ expectations: Adjusted EPS: $1.08 vs $0.96 expected Revenue: $6.85 billion vs $6.82 billion expected PayPal expects $7.83 billion in Q4 revenue, less than estimates for $7.74 billion. But the company did hike its full-year EPS guidance as it expects to add between 8 and 10 million net new active users this fiscal year. Block Rallies On Earnings Beat Block (SQ) shares are rallying 11.3% in premarket trade after beating Q3 expectations. Here’s how the payments company’s results compared to analysts’ estimates: Adjusted EPS: $0.42 vs $0.23 expected Revenue: $4.52 billion vs $4.49 billion expected Gross profit jumped 38% year over year to $1.57 billion vs $1.53 billion expected. Gross profit at Block’s Cash App business surged 51% annually to $774 million. The company also said over 18 million people were actively using its Cash debit card in September, up 40% compared to a year ago. Its point-of-sale business, Square, brought in gross profit of $783 million, up 29% year over year. Coinbase User Numbers Beat Coinbase (COIN) shares are up 5.7% ahead of the open after topping Q3 user expectations. Here’s how the crypto platform’s results compared to analysts’ expectations: Adjusted loss per share: $2.43 vs $2.40 expected Revenue: $590 million vs $654 million expected Revenue plummeted more than 50% year over year as traders ditched crypto. In its investor letter the company said, “Transaction revenue was significantly impacted by stronger macroeconomic and crypto market headwinds, as well as trading volume moving offshore.” Coinbase said it had 8.5 million monthly transacting users in Q3. That topped analysts’ expectations for 7.84 million but was down from 9 million in Q2 and 9.2 million in Q1. The company expects its monthly user numbers to be “slightly below” 9 million for the full year Starbucks Rallies On Earnings Beat Starbucks (SBUX) shares are up 6% in premarket trade after beating fiscal Q4 expectations. Here’s how the coffee chain’s results compared to analysts’ expectations: Adjusted EPS: $0.81 vs $0.72 expected Revenue: $8.41 billion vs $8.31 billion expected Global same-store sales jumped 7% as U.S. sales surged. Same-store sales in the U.S. jumped 11% as customers paid higher prices. Prices were up 6% year over year but Starbucks said it does not plan to increase prices anymore for the time being. Active membership in the company’s loyalty program jumped 16% to 28.7 million people. Starbucks forecast fiscal 2023 revenue growth of 10% to 12% and global same-store sales growth on the high end of its previous range of 7% to 9%. Carvana Plunges On Big Q3 Loss Carvana (CVNA) shares are plunging 11.8% ahead of the open after reporting a steep loss in Q3. Here’s how the car reseller’s results compared to analysts’ expectations: Loss per share: $2.67 vs $1.94 expected Revenue: $3.39 billion vs $3.71 billion expected Gross profit dropped 31% year over year while retail units sold fell 8%. Gross profit per unit also tumbled by more than $1,100 to $3,500 as used car prices have cooled compared to a year ago.
Continue Reading -->SPY vs. QQQ for Day Traders: What You Need to Know
SPY and QQQ are the two most discussed ETFs in the world. Every single trader out there has bought or sold them at some point. But what are the differences between SPY and QQQ? And are they more similar or different? SPY vs. QQQ: In ShortSPY and QQQ are very similar, but have some important differences. QQQ is more volatile because it is more concentrated in technology and high-growth stocks. It also has no exposure to energy or financials. Many active day traders like QQQ more than SPY because of its increased volatility. So as you’d expect, SPY outperforms when financial and energy stocks are in favor. SPY also has a lower expense ratio and higher dividend yield, which help it appeal to swing traders and long-term investors. The Basics of SPY and QQQSPY is the symbol of the SPDR S&P 500 ETF Trust.It is managed by State Street Global Advisors, one of the largest asset management companies in the United States.SPY tracks the performance of the benchmark S&P 500 index.QQQ is the symbol for the Invesco QQQ ETF, which is managed by Invesco.QQQ is based on the Nasdaq 100 index, not the Nasdaq Composite as commonly thought.Traders never use the full names of these ETFS.You often hear people SPY called simply SPY, SPYs (pronounced like spies), or “spiders” which is a reference to the SPDR brand name.And when you hear a trader say “the Qs” they are talking about QQQ.What SPY and QQQ Have in CommonSPY and QQQ are similar in many ways.They give you instant exposure to a variety of companies, though in different ways, as you will see below.Both ETFs are extremely liquid.At the time of writing, SPY traded 81 million shares per day, while QQQ’s average volume was 58 million. Plus, both have active options markets.So it’s easy to get in and out of positions.SPY and QQQ are also inexpensive. SPY has an annual expense ratio of 0.09% while QQQ’s is 0.2%.Short-term traders love the liquidity of these instruments. And long-term investors like the low expense ratios.SPY and QQQ are also both based on market cap-weighted indices, meaning that the stocks with the biggest market capitalizations have the biggest weightings in the funds.SPY vs. QQQ: A Holdings ComparisonThis is where things get interesting.SPY and QQQ have many holdings in common. In fact, the top 4 holdings in each are identical. And 6 of the top 10 are the same.Here’s each fund’s top 10 holdings by weight. HoldingSPY QQQ#1 Apple (AAPL): 7.0% of the fund Apple (AAPL): 14% of the fund#2 Microsoft (MSFT): 5.3% Microsoft (MSFT): 9.9%#3 Amazon (AMZN): 2.6% Amazon (AMZN): 5.7%#4 Tesla (TSLA): 1.9% Tesla (TSLA): 4.0%#5 Alphabet Class A (GOOGL): 1.7% Alphabet Class C (GOOG): 3.2%#6 Berkshire Hathaway Class B (BRK.B) Alphabet Class A (GOOGL): 3.1%#7 UnitedHealthy (UNH) Nvidia (NVDA): 2.8%#8 Alphabet Class C (GOOG): 1.5% Pepsico (PEP): 2.5%#9 Exxon Mobil (XOM) Costco (COST): 2.1%#10 Johnson & Johnson (JNJ): 1.4% T-Mobile (TMUS): 1.9%Data Source: MorningstarAnd if you notice, the QQQ is much more top heavy. This is because it is comprised of 103 stocks vs. 503 for the SPY. Note: the Nasdaq 100 has 103 stocks in it and the S&P 500 has 503 stocks. This is because some companies like Alphabet (GOOGL) have more than one share class.The top 10 stocks in the QQQ account for 49.2% of the fund, so just 10 out of 103 holdings account for almost half the fund’s performance. Apple (AAPL) is number-one at 14.0%.SPY’s 10 biggest holdings are 26.0% of the fund, with Apple weighing in at 7.0%.Now let’s talk about sectors.People often equate QQQ with technology because 50% of the fund’s assets are in tech stocks vs. 26.2% for the SPY. And interestingly, QQQ has zero exposure to energy, financials, materials, and real estate.SectorSPY QQQConsumer Discretionary 10.8% 15.4%Consumer Staples 6.9% 7.1%Energy 5.4% 0%Financial 11.6% 0%Healthcare 15.4% 7.6%Industrials 8.3% 3.8%Information Technology 26.2% 50.0%Materials 2.6% 0%Real Estate 2.6% 0%Communication Services 7.3% 14.7% Communication Services 3.0% 1.5%SPY vs. QQQ: VolatilityAs you’d expect, the QQQ is more volatile than SPY.Beta is a common measure of volatility for stocks and ETFs.The SPY has a Beta of 1.0, while QQQ’s is 1.10.So for every 1% SPY moves up or down, the QQQ is expected to move 1.1%.For that reason, many active day traders gravitate towards QQQ. They can get more movement, which is critical for day traders..Of course, on any given day, the performance can vary by a wide margin, particularly if there is big movement in tech stocks like Apple, Microsoft (MSFT), and Amazon (AMZN).During earnings season, you can expect dramatic differences between SPY and QQQ when a big name like Apple reports.SPY vs. QQQ: PerformanceSPY and QQQ’s performance is almost always in the same neighborhood because each has significant exposure to major sectors of the economy.However, performance during a given time period varies based on the risk appetite of the public.When markets are in a state of euphoria, expect QQQ to outperform SPY.In 2020, QQQ rose 48.6% because tech stocks like Apple and Tesla rallied so hard after the pandemic bottom.And when the market is bearish, QQQ will underperform because tech stocks get devalued quickly.When the tech bubble burst in 2000, QQQ fell -36.9% vs. a -9.2% drop for SPY.Sectors also play a role at times.In 2021 and 2022, SPY outperformed because of strength in energy stocks, of which there are none in the QQQ.Yes, 2022 is a down year as of this writing, but SPY is down less because of energy exposure.SPY vs. QQQ: Dividend YieldSPY’s dividend yield is 1.61%, more than double the QQQ’s 0.68%.That’s no surprise given that QQQ has no exposure to the highest-yielding sectors like financials, energy, and utilities. SPY vs. QQQ: Which Is Better?So what’s better? SPY or QQQ?The answer is… it depends on what you need and want.If you want more volatility in your portfolio and can stomach of risky technology stocks, QQQ fits the bill. In fact, many traders prefer QQQ because of the volatility.If you want stability, SPY makes more sense. What do you think? Do you trade SPY,
Continue Reading -->Rick March Talks Fibonaccis, Options, and Old School Trading Pits
Get to know Rick Turner one of our Inner Circle moderators, in this in-depth interview. Interview Transcript* *this transcript has been edited for length and clarity Michael Comeau: Rick, tell us about what it was like when you got started in the market, and how that’s different from today. Rick March: When I was 10 years old, my grandfather, who drew charts by hand, gave me his book of charts. It was 500 pages for the S&P 500 stocks. 90% of them don’t exist anymore. But I looked at the charts. And I said “when this crosses over this, it’s a buying indication.” I asked why, and he explained. When I was 13 years old, while my friends were going to camp and having a good time, I was a runner on the floor of the Chicago Mercantile Exchange. I was taking orders from the desks. That was my first experience on the floor. For my first, trade, I bought five December corn at $162.50. I would stand in a pit and trade one or two months of a commodity, or S&P, or the yen, or cattle, And now I sit at a desk and trade any 1 of 500 stocks and options. MC: So it was like Trading Places with people screaming at each other and making those crazy hand gestures? Is it actually more chaotic today than it was when you were on the floor? RM: Everything’s computerized now. And it’s not as fun as standing in a pit with 50 men and women, watching everybody scream and freak out. That was fun. Not because they were freaking out, but because you could read the emotions on their faces. Behind a computer screen, I can’t tell if somebody’s blown out longs. MC: So it seems like you started on charts from a very early age. How has technical analysis changed from then to today? RM: Back then, there were no algos. There were no computers. We drew trend lines and watch the breakouts. And if cattle broke out to a new high, we would tell our clients. We would do this all by hand and on the phone. There was no immediate drawing of a chart and posting it in Inner Circle. So that’s 100% different. And now, there’s easily 500 methods of of price and time analysis. Stuff like WD Gann Theory and Gartley existed, but you couldn’t calculate them quickly enough for the market. There were guys in the options pits, who had their sheets of what X options should be trading at Y desk and Y price. And they would stand there and look at their sheets. They wouldn’t make a trade until something came up on their sheets. MC: So we should be grateful with all the amazing technology we have today that’s basically free. RM: Absolutely, because it enables me as a trader and an analyst. It’s amazing. MC: Let’s talk a little bit about your trading style. How would you describe it? RM: I follow the market flow and the options. I’m very blessed to have two partners at Inner Circle. I don’t mind buying something at a high price thinking it’s going to trade higher. That’s how I do these SPX lotto call traders that you’ve seen there. Kira Turner is great at seeing a day trade coming, and David Prince plans trades better than anybody I’ve ever met in my life. So to answer your question, I swing trades, I do a lot of options trades, and I day trade. MC: Many technicians are pretty loosey-goosey and doing things by feel. So how mechanical is your buying and selling? RM: It depends on what I’m trading. I set alerts in stock where if they get hit, I can buy or sell the stock or option I want to be in. MC: You have no problem just pulling the trigger when that happens? RM: If I’m setting it up in options, then I don’t. Because I say, at $80, I’ll buy this. All right, at $100, I’ll sell this. And that’s what works for me with the stock. For example, I’ve been short Beyond Meat (BYND) for months from significantly higher prices. I want to cover in the single digits, but I haven’t put the order in because it could go lower. When you get to a level where you think you should buy or sell, you need to take action. If you don’t, you’ll regret it after the trade is done. That’s why we trim and trail. MC: Let’s talk about regret because I don’t think people talk about regret enough. When a trade is done, do you just fully put it behind you? RM: It would be nice to put it behind me. The way my brain works is, I pay attention to that stock or option for a couple of weeks after. I don’t necessarily go back into the same price and do the same trade, but I’m aware of it. Because if I made a mistake, I need to learn from it. So I can build my talent and build my equity going forward. MC: Do you worry about algos or HFTs when you are trading? RM: The only thing I worry about during my trading is when the market goes to a standstill. I don’t know what to do in a quiet market. My biggest frustration is a lack of action. MC: Is there ever a time where you just sit on your hands and do nothing? RM: I’m trying to do more and more of that. MC: It seems like people have an urge to take action, to just do something. RM: They absolutely do. For some people, it’s like being at the casino and seeing the craps table. They have to do something. But trading is not a casino. Trading is not gambling. We figure out the possible risk versus the probable or improbable reward. You have to think through risk before you
Continue Reading -->Coffee With Greta: Fed Hangover Weighs on Stocks
DJIA Futures: -238 (-0.7%) SPX Futures: -38 (-1%) NASDAQ Futures: -141 (-1.3%) Good morning friends! Futures are falling after the Fed seemed to strike down market expectations for a pivot in the near future. Let’s get right to it! Fed Dashes Hopes for a Pivot The Federal Open Market Committee approved its fourth consecutive 75bps rate hike on Wednesday. That puts the Federal Funds Rate in a range of 3.75% to 4%, the highest level since January 2008. The FOMC statement also seemed to hint at the bank slowing the pace of its tightening. The Fed said it “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments” when determining future rate hikes. But Chairman Jerome Powell maintained his hawkish tone in the post-meeting press conference, saying inflation is still well above target and the bank will “stay the course until the job is done”. Powell told reporters he doesn’t think they have overtightened and it is “very premature to think about pausing rate hikes”. CME Group’s FedWatch Tool shows 52% of traders expecting a 50bps rate hike at the December meeting with 48% anticipating another 75bps move. Bank of England Approves Large Rate Hike The Bank of England followed the Fed’s lead overnight, hiking its benchmark interest rate by 75 basis points. That’s the largest hike in 33 years and the eighth in a row. U.K. inflation spiked to 10.1% in September and is expected to rise to 11% in Q4. But the economy is also slowing. U.K. GDP is projected to decline 0.75% in the second half of 2022 and continue falling throughout 2023 and early 2024. Weekly Jobless Claims Dip Weekly jobless claims dipped in late October as the labor market maintains strength in the face of the Fed’s inflation fight. The Labor Department reported 217,000 Americans filed initial unemployment claims last week. That was down 1,000 from the week before and better than expectations for an increase to 220,000. Continuing claims rose by 50,000 to 1.49 million in the week ending October 22. Roku Plummets on Outlook Roku (ROKU) shares are plunging 21% ahead of the open despite beating Q3 expectations. Here’s how the streaming platform’s results compared to analysts’ expectations: Loss per share: $0.88 vs $1.29 expected Revenue: $761.4 million vs $696.1 million expected But Roku’s Q4 forecast came in weak, dragging the stock down. The company expects revenue of $800 million this quarter and an adjusted EBIDTA loss of $135 million. That would mark a decline of 8% year over year and missed analysts’ estimates of $899 million in revenue and an adjusted EBITDA loss of $48 million. The stock is on track to open at a new 52-week low. Qualcomm Issues Weak Guidance, Announces Hiring Freeze Qualcomm (QCOM) shares are falling 8.1% in premarket trade after reporting fiscal Q4 results that were in line with expectations and weak Q1 guidance. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $3.13, as expected Revenue: $11.39 billion vs $11.37 billion expected Revenue was up 22% year over year. Qualcomm forecast fiscal Q1 adjusted EPS of $2.25 to $2.45 on $9.2 billion to $10 billion in revenue. That was weaker than analysts’ estimates for adjusted EPS of $3.42 on $12.02 billion in revenue. The company also announced it implemented a hiring freeze at the start of the current quarter due to macroeconomic headwinds. Peloton Collapses on Weak Outlook Peloton (PTON) shares are plunging 15.4% ahead of the open after missing Q3 estimates and issuing weak guidance. Here’s how the exercise device maker’s results compared to analysts’ estimates: Loss per share: $1.20 vs $0.64 expected Revenue: $616.5 million vs $650.1 million expected Revenue fell 23% compared to a year ago. The company lost members during the quarter, reporting 6.7 million total members vs 6.9 million in Q2. But its free cash flow continued to improve to negative $246.3 million vs negative $411.9 million in Q2. Peloton forecast Q4 revenue between $700 million and $725 million. That would mark an increase from Q3 but was sharply lower than analysts’ estimates of $874 million. The company said, “Given macro economic uncertainties we believe near-term demand for Connected Fitness hardware is likely to remain challenged.” Moderna Tumbles After Q3 Miss Moderna (MRNA) shares are tumbling 8.3% in premarket trade after missing Q3 expectations and lowering its full-year guidance for Covid vaccine sales. Here’s how the pharmaceutical giant’s results compared to analysts’ expectations: Adjusted EPS: $2.53 vs $3.29 expected Revenue: $3.36 billion vs $3.53 billion expected Revenue was down 32% year over year while profits plunged 68%, due to lower Covid vaccine sales. Moderna now expects $18 billion to $19 billion in revenue from the vaccine this year, down from previous guidance for $21 billion. Key Earnings After the Close Here are the key companies scheduled to report Q3 results after the close today: Starbucks (SBUX) PayPal (PYPL) Block (SQ) DoorDash (DASH) Coinbase (COIN)
Continue Reading -->Coffee With Greta: Too Many Jobs for the Fed
DJIA Futures: -97 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -11 (-0.1%) Good morning friends! Futures are slipping as traders digest new labor market data and look ahead to today’s Fed decision. Let’s get right to it! Private Job Growth Comes in Hot Private employers in the U.S. added more jobs than expected in October. Payroll firm ADP reported today the U.S. private sector added 239,000 jobs last month vs expectations for just 195,000. That was up from the downwardly revised 192,000 in September. The leisure and hospitality sector saw the strongest growth, adding 210,000 jobs. The report showed wages jumped 7.7% year over year in October This data comes a day after the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) came in hot. That survey showed the number of job openings jumped to 10.7 million in September from a revised 10.3 million in August. That was higher than economists’ expectations for a decline to 9.85 million and is bad news for the Fed as it works to cool the hot labor market. The official October jobs report on Friday is expected to show the U.S. economy added 205,000 jobs with the unemployment rate unchanged at 3.5%. Fed Decision Day Stocks are slipping ahead of the Fed’s latest interest rate hike. The Central Bank releases that decision at 2:00 p.m. ET. CME Group’s FedWatch Tool shows 92.2% of traders expecting another 75 basis point hike, which is in line with the Fed’s dot plot. But the market is more focused on what the bank says about the future. FedWatch shows 47.7% of traders expecting the Fed to pivot to a 50bps hike in December, with 48.7% anticipating another 75bps move. AMD Rallies Despite Q3 Miss Advanced Micro Devices (AMD) shares are up 5.4% ahead of the open despite missing Q3 expectations. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $0.67 vs $0.68 expected Revenue: $5.57 billion vs $5.62 billion expected Revenue was up 29% year over year but even weaker than AMD’s preliminary results from early October. The chipmaker forecast $23.5 billion in full-year revenue, down from $26.3 billion previously and lower than analysts’ expectations for $23.88 billion. Airbnb Slides On Guidance Airbnb (ABNB) shares are down 4.9% in premarket trade despite beating Q3 expectations on the top and bottom line. Here’s how the company’s results compared to analysts’ expectations: EPS: $1.79 vs $1.47 expected Revenue: $2.88 billion vs $2.85 billion expected Gross bookings: $15.6 billion vs $15.37 billion expected Airbnb’s adjusted EBITDA hit a record high $1.5 billion in the quarter. But the company forecast lower revenue in Q4, “consistent with historical seasonality”. Airbnb expects revenue between $1.8 billion and $1.88 billion next quarter, in line with estimates of $1.87 billion. CVS Hikes Outlook CVS (CVS) shares are up 1.4% ahead of the open after beating Q3 estimates and hiking its outlook. Here’s how the pharmacy giant’s results compared to analysts’ estimates: EPS: $2.09 vs $1.99 expected Revenue: $81.16 billion vs $76.75 billion expected Revenue was up 10% year over year and that marked the 3rd straight quarter CVS has beat profit expectations. The company raised its full-year outlook following the beat. CVS now expects adjusted EPS between $8.55 and $8.65, up from $8.40 to $8.60 previously. Mortgage Demand Slides Further U.S. mortgage demand fell last week despite rates dropping for the first time in 2 months. The Mortgage Bankers Association reported overall application volume slipped 0.5%. Purchase applications fell 1% weekly and were down 41% year over year. Refinance applications rose 0.2% weekly but were down 85% compared to a year ago. The average 30-year contract rate decreased to 7.06% from 7.16% the previous week. That’s the first decline in 2 months but still hovering near a 22-year high.
Continue Reading -->Coffee With Greta: New Month, Same Rally?
DJIA Futures: +225 (+0.7%) SPX Futures: +42 (+1.1%) NASDAQ Futures: +158 (+1.4%) Good morning friends! Futures are rising as a new month of trade kicks off on Wall Street and this week’s Fed meeting is set to begin. Let’s get right to it! Can The October Rally Extend? October was the best month for the Dow Jones since January 1976. The blue chip index rallied 14% last month, the S&P 500 jumped 8%, and the Nasdaq rose 3.9%. The new month begins with all eyes on the Fed as the Central Bank kicks off its two-day policy meeting today. CME Group’s FedWatch tool shows 89.8% of traders expecting another 75 basis point hike on Wednesday. Pfizer Tops Q3 Expectations, Hikes Guidance Pfizer (PFE) shares are up 3.9% in premarket trade after beating Q3 expectations and hiking its guidance. Here’s how the pharmaceutical giant’s results compared to analysts’ expectations: Adjusted EPS: $1.78 vs $1.39 expected Revenue: $22.6 billion vs $21 billion expected Covid vaccine sales fell sharply in the quarter to $4.4 billion globally, down 66% from Q3 2021. But the weaker global demand was offset by strong demand in the U.S. where sales jumped 83% year over year due to the rollout of new omicron specific boosters. Pfizer’s antiviral pill Paxlovid also generated $7.5 billion in global sales last quarter. The company now expects EPS of $6.40 to $6.50 in 2022, up from the previous forecast of $6.30 to $6.45. Pfizer raised its full-year guidance for Covid vaccine sales to $34 billion, up $2 billion from the previous forecast. It maintained revenue expectations of $22 billion for Paxlovid. Uber Rallies On Revenue Beat Uber (UBER) shares are rallying 11.7% ahead of the open after beating Q3 revenue expectations. Here’s a look at the ride share giant’s results: Loss per share: $0.61 Revenue $8.34 billion vs $8.12 billion expected Revenue jumped 72% year over year. Uber’s adjusted EBITDA came in at a record $516 million, beating prior guidance for $440 million to $470 million and topping analysts’ estimates for $457.7 million. Gross bookings jumped to $29.1 billion, up 26% compared to a year ago. Uber expects gross bookings to grow between 23% and 27% year over year in Q4 with adjusted EBITDA of $600 million to $630 million. Oil Prices Rise Oil prices are higher today as a weakening dollar offsets demand concerns in China. West Texas Intermediate crude futures are up 2.3% to $88.50 bbl while Brent crude futures are up 2.1% to $94.75 bbl. Both contracts posted their first monthly gains since May in October. September JOLTS On Deck The first piece of this week’s labor market data will be out today. The Labor Department releases its September Job Openings and Labor Turnover Survey (JOLTS) at 10:00 a.m. ET. That survey is expected to show the number of job openings fell to 9.8 million from 10.1 million. Key Earnings After the Close This is the busiest week of Q3 earnings season so far. Here are the companies scheduled to report after the close today: Advanced Micro Devices (AMD) Airbnb (ABNB)
Continue Reading -->4 Stocks I’m Eyeing This Week
We have mostly red arrows around the world after a big four-week rally. Asia still doesn’t act well after China’s NBS PMI’s fell short. Hong Kong’s Q3 GDP report was soft. Developments in Russia/Ukraine are also weighing as Moscow withdrew from the grain agreement. SPX futures are -24. We hit 3905 Friday. I’d think a bit of digestion ahead of the Fed Wednesday makes sense. Holding 3862ish would be very constructive. 3803-3806 is the line in the sand for the active bulls and this active sequence. Now let’s go through 4 names I’m watching: AAPL responded very well to earnings. It gave us a way to be long as it cleared $149 to see $157.50. There is news that Foxconn will shut for Covid, but that shouldn’t change much. A little digestion above $152.50 should be constructive. Holding $154ish would even be better. AMD reports after the close tomorrow. It’s been pressured all year. We uncovered the H&S pattern helping us stay out of the way. I’m long a little into today. We’ll see if it goes green with pivot resistance at $62.72. If not, I’ll be out. COIN is after the close Thursday, We had a decent trade last week. I bought some back on Friday. We’ll see if it gets any more play prior. It needs to hold $5=69 and perhaps we can add over $73.72. TSLA gave us a very tradable move last week with a Red Dog Reversal at $202 and then another entry when it cleared $213.50. It hit the $233 area. For this week, we’ll see if it can hold Friday’s low of $216 or higher for an additional move towards $250. But we’ll take it somewhat slow. I’ll be active here if I get the signals. Positions Disclosure: *As of 8:20am ET October 31, 2022
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