Coffee With Greta: Stocks Are In A Free Fall
DJIA Futures: -32 (-0.1%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -28 (-0.3%) Good morning friends! Futures are lower with tech stocks sliding further after the Nasdaq closed at a fresh 2-year low on Monday. Let’s get right to it! Bank of England Steps In Again The Bank of England announced an expansion of its emergency bond-buying operation today as it looks to stabilize the bond market. The BOE said it will widen its purchases of U.K. government bonds to include index-linked gilts through the end of this week. The move comes after the bank also increased the limit for its daily purchases on Monday. The Bank of England said, “Dysfunction in this market, and the prospect of self-reinforcing ‘fire sale’ dynamics pose a material risk to UK financial stability.” U.K. 10-year index-linked gilt yields surged 64 basis points on Monday as prices tumbled 5.5% while 30-year index-linked gilt prices tumbled 16%. The sell-off stabilized after the Bank of England’s announcement. U.S. Treasury yields are mixed today after the bond market was closed on Monday. The 2-year yield is down 1 basis point to 4.31% while the 10-year yield is up 3 basis points to 3.92%. Coinbase Rallies on Google Partnership Coinbase (COIN) shares are up 5.4% ahead of the open after Google announced it will use the platform to allow some customers to pay for cloud services with crypto in early 2023. The partnership was announced at Google’s Cloud Next conference. Coinbase will also use Google’s cloud infrastructure for its business. The crypto platform will move data-related applications from the Amazon Web Services cloud to Google. Google’s Cloud Platform will start by accepting crypto payments from a handful of customers in Web3. Those payments will be made possible by integrating with the Coinbase Commerce service, which supports 10 different cryptocurrencies. Coinbase will earn a percentage of all transactions that go through that service. GM Reveals New Energy Unit General Motors (GM) shares are slipping 0.2% in premarket trade after the automaker announced a new energy business. GM Energy will provide stationary battery packs, solar panels, EV chargers, and more to homes and businesses. The commercial operations are already underway with the home energy systems set to be available next year as the Chevy Silverado EV goes on sale. GM said the goal is to assist the automaker in controlling the customer experience when they purchase a new EV and create a sustainable business. The vice president of GM’s EV growth operations said the total market of products and services being targeted by the new unit is between 125 billion and $250 billion. The new business comes at a time of increased power grid issues across the U.S. American Airlines Hikes Q3 Revenue Forecast American Airlines (AAL) shares are up 4.5% ahead of the open after hiking its Q3 sales outlook. The airline now expects last quarter’s sales to be 13% higher than Q3 2019, up from its previous forecast of a 10% to 12% increase. American also expects a pretax margin of 4.5% vs the prior estimate of no more than 4%. But the carrier said it still flew 9.6% fewer flights than in Q3 2019, showing passengers are just paying higher prices for flights. American will report Q3 results before the market open on October 20. Recession Fears Grip Oil Market Oil prices are sliding further today as recession fears and worries about Covid restrictions in China take over. West Texas Intermediate crude futures are down 1.2% to $90 bbl while Brent crude futures are down 1% to $95 bbl. The World Bank President and the IMF Managing Director both warned Monday that the global economy is at growing risk of a recession. Demand is also expected to fall further in China as a flare-up in Covid cases prompts new restrictions. In Case You Missed It JPMorgan Chase (JPM) CEO Jamie Dimon warned Monday that the U.S. economy would likely be in a recession by mid-2023. He told CNBC the economy is “actually still doing well” currently and said consumers are in better shape for this recession vs the 2008 financial crisis. Dimon said the Fed “waited too long and did too little” as inflation soared early on but now the central bank is “clearly catching up”. He said the S&P 500 could fall by “another easy 20%” and “the next 20% would be much more painful than the first”.
Continue Reading -->Coffee With Greta: Inflation Jitters Grip Traders
DJIA Futures: +32 (+0.1%) SPX Futures: +1 (+0.03%) NASDAQ Futures: -11 (-0.1%) Good morning friends! Futures are flat as traders gear up for a big week of inflation data and the beginning of Q3 earnings season. Let’s get right to it! Inflation Week Begins This is a key week of economic data for the market as traders look ahead to the latest inflation data. The Bureau of Labor Statistics releases the September producer price index on Wednesday morning followed by the consumer price index Thursday morning. Economists expect the CPI to show inflation pressures rose 0.3% monthly and 8.1% year over year. The core CPI is expected to have risen 0.5% monthly and 6.6% annually. The market is looking for a slowdown in inflation to force a Fed pivot on rate hikes earlier than planned. But officials have insisted in recent speeches that the Central Bank will stay its course even if it pushes the economy into a recession. Several more Fed officials will speak at events this week including Chicago Fed President Charles Evans and Fed Vice Chair Lael Brainard today. Rivian Issues Massive Recall Rivian (RIVN) shares are tumbling 6.5% ahead of the open after issuing a massive recall over the weekend. The electric automaker voluntarily recalled 13,000 vehicles due to a loose fastener that could cause a driver to lose steering control. The company has produced just 14,317 vehicles this year, meaning the recall impacts nearly all of the already delivered vehicles. Rivian’s CEO sent a letter to customers saying, “In rare circumstances, the nut could loosen fully… It’s important not to minimize the potential risks involved and why we are volunteering to conduct this recall.” Tesla’s China Sales Hit Record Tesla (TSLA) shares are up 0.1% in premarket trade after reporting record-high China sales. The China Passenger Car Association said the electric automaker sold 83,135 of its China-made vehicles in wholesale in September. That was up 8% from August and a record for Tesla. Tesla produces the Model 3 and Model Y vehicles at the Shanghai plant. Oil Prices Dip Oil prices are taking a breather, slipping from 5-week highs. West Texas Intermediate crude futures are down 0.4% at $92 bbl while Brent crude futures are down 0.5% to under $97.50 bbl. The dip comes after China’s services activity contracted in September for the first time in four months. That slowdown came as fresh Covid restrictions put pressure on the economy. China is the world’s second-largest oil consumer and any slowdown in demand will put pressure on oil prices.
Continue Reading -->Coffee With Greta: Good News is Bad News
DJIA Futures: -252 (-0.8%) SPX Futures: -42 (-1.1%) NASDAQ Futures: -179 (-1.6%) Good morning friends! Futures are dropping as Treasury yields pop after an unexpected drop in unemployment in September. Let’s get right to it! Mixed September Jobs Report Good news is bad news for Wall Street this morning. Job growth came in slightly weaker than expected in September but the unemployment rate fell unexpectedly. The Labor Department reported the U.S. added 263,000 jobs last month vs 275,000 expected. That was the smallest expansion since April 2021. The unemployment rate fell to 3.5% vs expectations for it to be unchanged at 3.7%. The labor force participation rate edged lower to 62.3% from 62.4% in August. Average hourly earnings rose 0.3% month to month and 5% year over year. Job growth in July was revised higher by 11,000 workers to +537,000 while August was unchanged at +315,000. Today’s report shows the U.S. labor market maintaining strength amid the Fed’s fight against inflation, giving the bank more room to stay aggressive on rate hikes. Treasury Yields Pop After Jobs Report Treasury yields are rising after the release of that September jobs report. The 2-year yield is up 7 basis points to 4.33% while the 10-year yield is up 7 basis points to 3.90%. The unexpected drop in unemployment and continued wage gains pushed off the possibility of a Fed pivot sooner than planned. The Central Bank has said it expects to see a weakening in the labor market before it changes course on rate hikes. Judge Delays Twitter, Musk Trial Twitter (TWTR) shares are down 0.7% ahead of the open after a judge delayed the trial between Twitter and Elon Musk. The judge pushed that trial to October 28 from the original date of October 17. Twitter had previously asked to proceed with the trial, accusing Musk of refusing to accept the “contractual obligations” of his agreement to buy the company. The delay now gives Musk more time to complete that takeover. He revived the purchase offer on Monday but said he needed time to get financing in order. In a statement after the judge’s ruling, Twitter said, “We look forward to closing the transaction at $54.20 by October 28th.” AMD’s Preliminary Results Disappoint Advanced Micro Devices (AMD) shares are down 6.2% in premarket trade after releasing weak preliminary Q3 results on Thursday. The chipmaker reported preliminary revenue of $5.6 billion vs prior guidance of $6.7 billion. The company also said its non-GAAP gross margin is expected to come in around 50% vs guidance of 54%. AMD blamed the miss on “weaker than expected PC market and significant inventory correction actions across the PC supply chain.” Samsung Warns of Large Q3 Profit Drop Samsung is anticipating a large drop in its Q3 operating profit. The chipmaker said today it expects operating profit to be between 10.7 trillion and 10.9 trillion South Korean won. That would be down 32% and the first drop since 2019. The company blamed weaker memory pricing and demand for that plunge. Oil Prices Rise Further Oil prices are up again today and on track for weekly gains after OPEC+ voted to cut production. West Texas Intermediate crude futures are up 0.8% to over $89 bbl while Brent crude futures are up 0.7% to over $95 bbl. Analysts expect prices to return to $100 bbl as the OPEC+ cut takes effect in November. But those gains will be capped by lower demand as the global economy slows.
Continue Reading -->Coffee With Greta: Nothing More Than a Bear Market Rally
DJIA Futures: -53 (-0.2%) SPX Futures: -6 (-0.2%) NASDAQ Futures: -1 (-0.01%) Good morning friends! Futures are slightly lower as this week’s big rally appears to have been nothing more than a bear market bounce. Let’s get right to it! Weekly Jobless Claims Jump This week’s jump in jobless claims is the largest since June. The Labor Department reported 219,000 Americans filed initial claims for unemployment benefits last week. That was up by 29,000 from the week before and higher than 203,000 expected. Continuing claims also rose by 10,000 to 1.36 million in the week ending September 24. This is the final piece of jobs data this week before the official September jobs report on Friday. Economists expect that to show the U.S. economy added 275,000 jobs last month with the unemployment rate unchanged at 3.7%. Peloton Slashes 500 More Jobs Peloton (PTON) shares are up 1.8% after announcing more job cuts. The exercise equipment maker is cutting 500 more jobs, which amounts to about 12% of its workforce. CEO Barry McCarthy told CNBC, “The restructuring is done with today’s announcement. Now we’re focused on growth.” McCarthy took over as CEO earlier this year and has pushed for drastic changes to the business model to return to growth. He said, “I’m feeling about as optimistic as I’ve ever felt” and that Peloton is on track to meet its cash flow goals for this fiscal year. Ford Hikes F-150 Lightning Price Ford (F) shares are down 0.3% in premarket trade after the automaker hiked the starting price for its F-150 Lightning electric pickup on Wednesday. The entry-level price for the 2023 model year will rise by $5,000 to $51,974. That’s up nearly 11% from the previous price hike and 30% from the original price in May 2021. The F-150 Lightning will top out at $97,000. Ford said the price hike is ““due to ongoing supply chain constraints, rising material costs and other market factors. We will continue to monitor pricing across the model year.” Oil Prices Hover Near 3-Week High Oil prices are up slightly this morning after OPEC+ voted for its largest supply cut since 2020 on Wednesday. West Texas Intermediate crude futures are up 0.1% to just under $88 bbl while Brent crude futures are up 0.1% to just over $93 bbl. OPEC+ voted to decrease output by 2 million barrels per day starting in November. The move is meant to support oil prices as crude prices are down sharply from the high of over $130 bbl in the spring. The White House denounced the decision in a statement saying the President was, “disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.” The statement said Biden has ordered the release of another 10 million barrels from the Strategic Petroleum Reserve next month and “will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices.” Meanwhile, the Energy Information Administration reported U.S. crude inventories fell by 1.4 million barrels last week vs 1.5 million expected. Gasoline stockpiles fell by 4.7 million barrels vs 2.3 million expected. In Case You Missed It Activity in the U.S. services sector slowed less than expected in September. The Institute for Supply Management’s services PMI fell to 56.7% from 56.9% in August. That was higher than expectations for a drop to 56%. New orders and employment both rose while production and prices paid fell.
Continue Reading -->Coffee With Greta: This Is Not What the Fed Wants to See
DJIA Futures: -292 (-1.0%) SPX Futures: -37 (-1.0%) NASDAQ Futures: -120 (-1.0%) Good morning friends! Futures are falling after a big two-day rally as new data shows the labor market maintaining strength amid the Fed’s inflation fight. Let’s get right to it! Private Sector Adds More Jobs Than Expected in September Private employers added more workers than expected in September in a sign of the labor market maintaining strength in the face of the Fed’s aggressive tightening. Payroll firm ADP reported the U.S. private sector added 208,000 jobs last month vs 200,000 expected. That was up from the revised 185,000 in August. Trade, transportation, and utilities saw the largest growth adding 147,000 workers. Wages also continued to rise with annual pay up 7.8% year over year. This data is not what the Fed wants to see in its fight against inflation. Central Bankers have previously said they need to see a slowdown in the labor market for inflation to slow. The Labor Department releases the official September jobs report on Friday. That’s expected to show the economy added 275,000 jobs last month with the unemployment rate unchanged at 3.7%. Trade Deficit Hits 15-Month Low The U.S. trade deficit fell to a 15-month low in August. The Commerce Department reported the U.S. ran a deficit of $67.4 billion. That was down 4.3% from July, the fifth monthly decline in a row. It was also lower than economists’ expectations for $67.7 billion. Exports fell 0.3% to $258.9 billion while imports dropped 1.1% to $326.3 billion. Mortgage Demand Plummets Mortgage demand plummeted last week as higher rates and Hurricane Ian pressured buyers. The Mortgage Bankers Association reported total application volume dropped 14.2% weekly, to the lowest level since 1997. Purchase applications fell 13% weekly and 37% year over year. Refinance applications were down 18% weekly and 86% annually. The drop came as the average 30-year fixed contract rate rose to 6.75% from 6.52%, the highest since 2006. The higher rates pushed more homebuyers to turn to adjustable-rate mortgages. ARMs made up 11.8% of the mortgage applications last week, up from 8.5% a month ago and around 3% at the start of 2022. Oil Prices Flat as OPEC+ Meets Oil prices are flat today as OPEC+ meets to consider a production cut. West Texas Intermediate crude futures are just above $86.50 bbl while Brent crude futures are just under $92 bbl. Sources told Reuters OPEC+ will consider output cuts as large as 2 million barrels per day at today’s meeting. The American Petroleum Institute reported Wednesday that U.S. crude inventories fell by 1.8 million barrels last week and gasoline inventories dropped by 3.5 million barrels. The Energy Information Administration reports official supply levels later today. In Case You Missed It Twitter (TWTR) shares surged 22.2% on Monday after Tesla (TSLA) CEO Elon Musk agreed to go through with his purchase of the company. In a statement, Twitter said it had received a letter from Musk’s lawyers saying he intends to proceed with the transaction. The deal is expected to close as soon as Friday with Musk purchasing Twitter at the agreed-upon price of $54.20 per share. TWTR shares are down 1.4% ahead of the open while TSLA is down 2%.
Continue Reading -->Coffee With Greta: Traders Extend Monday’s Relief Rally
DJIA Futures: +359 (+1.2%) SPX Futures: +55 (+1.5%) NASDAQ Futures: +203 (+1.8%) Good morning friends! Futures are up following Monday’s big relief rally. Let’s get right to it! Traders Look to Extend Rally Stocks are set to rally at the open after surging on Monday. The Dow Jones jumped 2.7% on Monday for its best day since June 24. The S&P 500 rose 2.6%, its best day since July 27. And the Nasdaq closed up 2.3%. Many analysts expect volatility to continue in the weeks ahead as the Fed continues its aggressive campaign against inflation. Treasury Yields Slide Further Treasury yields are sliding again today as stocks rally. The 2-year yield is down 5 basis points to 4.06% while the 10-year yield is down 4 basis points to 3.60%. Yields seem to have hit a ceiling last week when the 10-year briefly topped 4% before retreating. Sentiment across the market seems to be leaning toward a Fed pivot in the near future. Several Fed officials will speak today and give more insight into whether that is an appropriate anticipation from the market. Rivian On Pace for 2022 Production Goal Rivian (RIVN) shares are up 7.4% after reporting Q3 production data on Monday. The electric automaker said it produced 7,363 vehicles last quarter, its highest quarterly total yet. The company delivered 6,584 vehicles to customers during the quarter. Rivian confirmed it’s on track to produce 25,000 vehicles in 2022. Year to date the automaker has produced 14,317 vehicles. Poshmark Rallies On Takeover Deal Poshmark (POSH) shares are rallying 13.5% in premarket trade after South Korean internet giant Naver announced it will buy the company for roughly $1.2 billion. Naver will pay $17.90 per share for Poshmark. The companies said this deal will widen Naver’s reach in online retail and allow Poshmark to expand to international markets. Poshmark went public in January 2021 at $42 a share but has since tumbled alongside the rest of the tech sector. Oil Prices Rise Ahead of OPEC+ Meeting Oil prices are rising further ahead of Wednesday’s OPEC+ meeting. West Texas Intermediate crude futures are up 1.9% to over $85 bbl while Brent crude futures are up 2.1% to just under $91 bbl. OPEC+ is expected to cut output by more than 1 million barrels per day on Wednesday. But the impact of that cut may not be that severe as the group has failed to meet its planned production increases in recent months. Production fell short by 3.6 million bpd in August. In Case You Missed It General Motors (GM) shares rose 2.4% after the automaker reported strong sales growth in Q3. GM sold 555,580 vehicles last quarter, up 24% year over year. That was higher than analysts’ expectations for growth of at least 21.6%. The company said it plans to increase production of its Chevrolet Bolt EV and EUV after selling 14,709 of the vehicles in Q3.
Continue Reading -->Coffee With Greta: Can Wall Street Shake Off September?
DJIA Futures: +296 (+1.0%) SPX Futures: +34 (+0.9%) NASDAQ Futures: +71 (+0.7%) Good morning friends! Futures are rebounding as the market looks to start off the new quarter on a positive note. Let’s get right to it! Stocks Rise, Yields Fall Ahead of Big Week Stocks are rising as Treasury yields are dropping ahead of new economic data. The 2-year yield is down 14 basis points to 4.13% with the 10-year yield falling 12 basis points to 3.71%. The biggest data on the schedule today is the S&P Global and ISM manufacturing PMI’s at 10:00 a.m. ET. This week also includes key labor market data for the Fed. That starts with the August job openings and labor turnover survey (JOLTS) on Tuesday. ADP releases its private payroll report for September on Wednesday, with weekly jobless claims on Thursday, and the official September jobs report on Friday. Tesla Slides Despite Record Q3 Deliveries Tesla (TSLA) shares are down 5% ahead of the open despite reporting record deliveries in the third quarter. The electric automaker delivered 343,000 vehicles last quarter. That was an all-time high for quarterly deliveries but fell short of analysts’ expectations for 364,660. Total production rose to 365,000 vehicles from 258,580 in Q2. That included nearly 20,000 Model S and X vehicles and more than 345,000 Model 3 and Y vehicles. Credit Suisse Drops On Concerns Over Financial Health Credit Suisse (CS) shares are falling 4.6% in premarket trade amid concerns over the lender’s financial health. The Financial Times reported overnight that executives spent the weekend calling major investors to reassure them the business is fine. This comes after spreads of the bank’s credit default swaps jumped sharply on Friday. That jump came after reports the lender is looking to raise capital. Credit Suisse told CNBC it will provide updates on its strategy when it reports earnings October 27. Sources say part of that strategy may be pulling out of the U.S. market entirely. The share price has hit record lows this year and the lender has struggled amid higher borrowing costs. Peloton Reaches Deal With Hilton Peloton (PTON) shares are up 4.8% ahead of the open after announcing a partnership with Hilton (HLT). As part of the deal Peloton will put its bikes in all 5,400 Hilton-owned hotels across the United States. Hilton Honors members will also receive a free 90-day trial of the Peloton app. The majority of locations will be equipped by the end of the year with rollout beginning in the coming weeks. Oil Prices Jump Ahead of OPEC+ Meeting Oil prices are higher today as the market remains on edge for this week’s OPEC+ meeting. West Texas Intermediate crude futures are up 4.9% to over $83 bbl while Brent crude futures are up 4.2% to just under $89 bbl. OPEC+ meets on Wednesday and is said to be considering an output cut of more than 1 million barrels per day. The cuts would be an effort to support prices amid the declining global demand outlook. U.K. Reverses On Tax Cuts for High Earners The U.K. government reversed its plan to cut the top rate of income tax which caused extreme market turmoil last week. The government had previously announced a plan to cut the top rate paid on incomes over £150,000 ($166,770) from 45% to 40%. Following that announcement, the pound plunged to a record-low, mortgage deals were pulled from the market, and the U.K. bond market collapsed. That caused the Bank of England to step in and buy government bonds in an effort to stabilize the market. The Finance Minister said today, “It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our economy. As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened.” The British pound rose sharply after that announcement, up 0.8% against the dollar at one point, but has since settled to around $1.12. 10-year gilt yields are also down sharply, with those moves trickling into the U.S. bond market as well.
Continue Reading -->Credit Suisse = New Lehman?
We have mixed markets around the world after an erratic SPX futures night. Europe is off the lows. The UK government reversed course and abandoned a plan to scrap the top 45% tax rate. Gilts aren’t moving much. Brent prices are up with OPC cuts, and Putin didn’t do anything crazy. Ukraine took back some stolen land. Credit Suisse remains in a news doom loop. Some are saying it’s not a Lehman moment. But let’s focus on levels first and headlines second. SPX futures are +25 after they were down 35 last night. We’ll see if new flows try and bounce the tape. There’s resistance at 3610-3636. The bears need to reject price there to keep active pressure on. Now let’s go through the major ETF’s I’m watching today: ARKK didn’t make new lows on the year. We’ll see if that means anything when this market wants to bounce. $37ish is pivot support to watch. Biotech acts better than most sectors but it’s hard to get excited. Active support is XBI $77.57. Resistance is $82ish. XLE acted better over the past two sessions as most sectors made new lows on the year. Oil is up this morning on news of an OPEC cut. There’s a gap to fill up to $75ish. It’s probably a better sale than add. XLF is trying to create a lower tight pivot area to resolve at some point. There is lots of talk about CS and comparisons to Lehman or Bear. This sector doesn’t act compelling. Watch $30.12 for market clues. Positions Disclosure
Continue Reading -->How Bear Markets Work – David Prince Talks Anxiety, Pain, and the Light at the End of the Tunnel
Want to learn how to trade through a bear market while keeping your sanity and wallet intact? Then check out this interview with David Prince, Founder of our Inner Circle community. David delivers the cold, hard truth about bear markets, including: What a bear market is beyond a mere 20% decline in the SPX The psychological toll the market takes on your brain How to keep your head screwed on straight when volatility is high Where he is finding opportunity The stocks he is watching for 2023 and 2024 What’s different about the oil sector What he sees in the semiconductor and housing markets What a bottom really looks like And more! FULL INTERVIEW TRANSCRIPT Note: this interview has been edited for length and clarity. Michael Comeau: David, I’ll start by asking you a simple question: What is a bear market? David Prince: There’s the classic definition of a being 20% down from the highs. But the way I see it, a bear market is a market that is trending lower and has not hit a bottom, and doesn’t have one in the foreseeable future. MC: Can you talk about the psychological impact of a bear market? What is that doing to people’s minds right now? DP: Sure. You have the initial reaction: “Oh my God, it’s not easy anymore the way it used to be.” Then you have the “Okay ,I hope it gets better” phase. Then you’re in the “hope didn’t work, I’ve lost money, and this is starting to get painful” phase. Then you have the “I need to find a new career” phase. Finally, you have the panic and distaste and lack of interest. It’s a long process that many people don’t adjust to or recognize until they’re halfway through. Sometimes you have angry people. And course, there are happy aggressive traders that love downside momentum because things go down much faster than they go up. For some people, bear markets are great. MC: How do you view the temperature out there now? The VIX is up about 65% in the last few weeks and all the sentiment indicators are very negative. Are people pessimistic enough? DP: No. We saw so many bullish extremes in 2021 and I expect more of the same on the downside. I’ve been around for a while and I’ve seen a lot of crazy things happen, but nothing like JPEGs selling for millions of dollars or Plug Power (PLUG) hitting $70. And cockamamie companies that have been around for decades losing money becoming hot stocks. You had names like Snowflake (SNOW) come off the lows from earnings and go up something like 70-80%. That’s not indicative of everyone being despondent and it’s not anywhere near the way you bottom. There is not that ever-present fear, like people waking up and asking “how much money am I going to lose?” I haven’t seen that yet. MC: So let’s talk about the silly stuff. We saw a boom in things like NFT’s, Rolex watches, sports cars, electric guitars, trading card games, cryptos. Has that stuff bottomed? DP: It’s sort of irrelevant to me. I won’t judge Where we are in the marketplace by really like how far Bitcoin has dropped. It Doesn’t have to go to $10,000 or $12,000 to create a bottom in risk assets. I almost don’t care. I don’t think the lows are in for the art market and the watch market. I’m into collectables, like sneakers, art, you name it. The point is that market has only barely come up. The car market is just beginning to implode. There will be upside down Lamborghinis everywhere you look over the next couple of years. You’ll be able to buy them for pennies on the dollar. There’s further to go, but I don’t paint them all with the same brush. MC: Months ago, inside Inner Circle, you talked about the semiconductor industry moving into a state of oversupply. Now JP Morgan is talking about oversupply of everything. Do you think that’s priced in? DP: It’s a process and it’s not a one-quarter deal. It’s often two to three quarters. And the difference this time is the amount of orders – the that double and triple catch-up to what they thought demand could be. The downside here might be longer and more severe than we normally see. These stocks will bottom before the news flow changes. But I don’t think they’ve hit bottom yet because of the ordering that every major chip company did in 2020 and 2021. MC: It feels like a lot of high-profile market people are catching flack. Like Cathie Wood wrote that letter to the Fed and people laughed. And Jim Cramer has been catching a lot of flack with the inverse ETF and those sorts of things. It seems like we’re in hero-killing mode, symbolically. Do you think that’s fair to them? DP: When you put yourself out there publicly, it comes with the territory, right? Movie stars complain about not having privacy, but then they make $20 million on their next film. So the direct answer is how they handle it. I think, in both instances, neither has humility. I think Cramer is beyond bright. If he was just a little bit more humble and talked about his mistakes, it would be better. And Cathie never said “I probably made a mistake here.” Neither of them had any humility, and that’s why they’re so attacked. I make mistakes all the time, but at least I come clean. Josh Brown made a bad call on the CPI and he came clean and said he was wrong. No one thinks about it anymore because he was humble about it. So I think they deserve it because they pretend they don’t make mistakes. MC: Let’s talk about humility. I felt like a genius in 2020, less smart in 2021, and a moron this year because I see an awful lot of red in my account. What advice do
Continue Reading -->Coffee With Greta: Fed’s Fave Inflation Gauge Comes in Hot
DJIA Futures: +7 (+0.02%) SPX Futures: +5 (+0.1%) NASDAQ Futures: +8 (+0.1%) Good morning friends! Futures are swinging between positive and negative territory as traders gear up for the final day of Q3. Let’s get right to it! PCE Inflation Pushes Higher in August Another hot inflation reading is not what the Fed wants to see. The Bureau of Economic Analysis’ personal consumption expenditures (PCE) price index rose 0.3% monthly and 6.2% year over year in August. That was up from the -0.1% monthly reading in July but a slowdown from 6.4% annually. The core PCE price index, which excludes food and energy and is the Fed’s preferred measure, rose 0.6% monthly and 4.9% annually. That was also up from 0.1% monthly and 4.7% annually in July. The jump in core inflation pressures shows rising prices extending past just oil, gas, and food. Treasury Yields Slip Treasury yields are slipping this morning as stocks try to rebound. The 2-year yield is down 4 basis points to 4.18% while the 10-year yield is off 8 basis points to 3.71%. Bonds have seen a volatile week alongside stocks as the market remains on edge about the Fed’s plans to continue aggressive rate hikes. Several more Fed officials are set to give speeches today including the Richmond and New York Fed Presidents, as well as Fed Vice Chair Lael Brainard. Eurozone Inflation Jumps to Record High New data from Eurostat shows inflation jumped to a record high of 10% across Europe in December. That’s up from 9.1% in August and higher than 9.7% expected. Nearly all segments of the economy saw increases in prices. Energy prices soared 40.8% year over year vs 38.6% in August. Food and alcohol prices saw the second largest increase at 11.8% vs 10.6% in August. Core inflation rose just 4.8% annually, up from 4.3% the prior month. This new data increases pressure on the European Central Bank to hike rates aggressively at its meeting in October. Nike Drops As Supply Chain and Inventory Issues Weigh on Earnings Nike (NKE) shares are down 12.3% ahead of the open despite topping fiscal Q1 expectations. Here’s how the sneaker giant’s results compared to analysts’ expectations: EPS: $0.93 vs $0.92 expected Revenue: $12.69 billion vs $12.27 billion expected Earnings were down 22% year over year while revenue rose 4%. Sales in China dropped 16% compared to a year ago while sales in North America increased 13%. The company continued to struggle with supply chain issues like higher shipping costs and longer shipping times. That caused inventory on its balance sheet to swell 44% to $9.7 billion. The company said it will offer more discounts this holiday season in an effort to reduce those inventory levels. Nike said its direct sales grew by 8% in the quarter and its digital-brand sales rose 16%. The company has been focusing on selling its products directly to consumers and scaling back on wholesale partners like Foot Locker (FL). Nike’s wholesale business sales rose by just 1%. Oil on Track for First Quarterly Loss Since 2020 Oil prices are mixed this morning but on track to post their first quarterly loss since 2020. West Texas Intermediate crude futures are down 0.5% to under $81 bbl while Brent crude futures are up 0.1% to under $89 bbl. The market is looking ahead to next week’s OPEC+ meeting. The group is expected to discuss cutting its output in order to support prices that have been hit by lower demand. OPEC+ is said to be considered a 500,000 barrel per day reduction to production. In Case You Missed It Apple (AAPL) shares tumbled 4.9% on Thursday after the stock got hit with a rare analyst downgrade. Bank of America analysts downgraded the stock from buy to neutral and cut the price target to $160 from $185 per share. The group said they anticipate “weaker consumer demand” over the next year. The drop prompted a broader tech sell-off with Alphabet (GOOGL) and Microsoft (MSFT) both hitting fresh 52-week lows.
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