Coffee With Greta: Stocks Slip After Worst Day Since June
DJIA Futures: -22 (-0.1%) SPX Futures: -2 (-0.04%) NASDAQ Futures: -4 (-0.03%) Good morning friends! Futures are down slightly following the worst day since June as traders digest a mix of Q2 earnings. Let’s get right to it! Macy’s Tops Q2 Expectations Macy’s (M) shares are up 1.5% ahead of the open after beating fiscal Q2 expectations. The retailer reported adjusted earnings of $1 per share on $5.6 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $0.85 on $5.49 billion in revenue. Despite the strong quarter, Macy’s cut its full-year forecast in anticipation of slowing consumer spending on discretionary items like clothing. The company now expects 2022 revenue between $24.34 billion and $24.58 billion vs its previous outlook for $24.46 billion to $24.7 billion. Macy’s forecast annual adjusted EPS between $4.00 and $4.20, down from $4.53 to $4.95. Analysts were estimating adjusted EPS of $4.51 on $24.36 billion in revenue. Dick’s Sporting Goods Hikes Outlook After Strong Q2 Dick’s Sporting Goods (DKS) shares are up 2.4% in premarket trade after beating Q2 expectations and hiking its full-year outlook. The sporting goods retailer reported adjusted earnings of $3.68 per share on $3.11 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $3.58 on $3.07 billion in revenue. Dick’s now expects full-year adjusted earnings to be between $10 and $12 per share vs its previous forecast of $9.15 to $11.70. The company expects comparable store sales to decline between 6% and 2% this year, down from its previous forecast for an 8% to 2% decline. Zoom Tumbles After Cutting Forecast Zoom Video Communications (ZM) shares are tumbling 11.8% ahead of the open after reporting mixed fiscal Q2 results and cutting its full-year forecast. The video-calling software company reported adjusted earnings of $1.05 per share on $1.10 billion in revenue. That topped analysts’ expectations for adjusted EPS of $0.94 but missed estimates for $1.12 billion in revenue. Revenue rose 8% year over year, down from 12% growth in fiscal Q1. The CFO said, “We have implemented initiatives focused on driving new online subscriptions, which have shown early promise but were not enough to overcome the macro dynamics in the quarter.” Zoom forecast adjusted fiscal Q3 earnings of $0.82 to $0.83 per share on $1.095 billion to $1.100 billion in revenue. That was lower than analysts’ estimates for adjusted EPS of $0.91 on $1.15 billion in revenue. The also lowered its full-year outlook, calling for adjusted earnings of $3.66 to $3.69 per share and $4.385 billion to $4.395 billion in revenue. The mid-range of that forecast would represent revenue growth of just 7% annually. Oil Prices Climb on Supply Concerns Oil prices are climbing higher today as supply concerns take focus again. West Texas Intermediate crude futures are up 1.2% to $91.50 bbl while Brent crude futures are up 1.1% to $97.50 bbl. The jump comes after Saudi Arabia’s energy minister floated the idea of OPEC+ cutting production in the months ahead to support prices. The latest data is also expected to show another drop in U.S. crude inventories. The American Petroleum Institute releases its inventory report today followed by the Energy Information Administration on Wednesday. In Case You Missed It Ford (F) announced plans to cut 3,000 jobs Monday in an effort to reduce costs. The majority of those cuts will be in North America and include 2,000 salaried positions and 1,000 agency jobs. Executives announced the layoffs in a message to employees which said, “Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century.” A new survey found the majority of U.S. economists expect a recession in 2023 caused by the Fed’s response to inflation. 72% of respondents to the National Association of Business Economics survey said the recession will begin by the middle of next year. 19% said the economy is already in a recession. You can learn how to invest the simple and easy way with my brand new course, Today I Learned How to Invest. Learn everything you need to start building the massive nest egg you deserve, in just 45 minutes!
Continue Reading -->Coffee With Greta: Traders Look Ahead to Jackson Hole
DJIA Futures: -342 (-1%) SPX Futures: -52 (-1.2%) NASDAQ Futures: -202 (-1.5%) Good morning friends! Futures are dropping as traders look ahead to Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium this week. Let’s get right to it! Economy, Fed’s Jackson Hole Symposium in Focus Inflation and the Fed are back in focus this week ahead of some key economic data and a speech from Fed Chair Jerome Powell. The Commerce Department releases its second estimate of Q2 GDP on Thursday after the first showed the economy shrank 0.9% last quarter. Economists expect the revision to show a 0.5% contraction. The Bureau of Economic Analysis then releases the July PCE Price Index on Friday, which is the Fed’s preferred inflation gauge. Powell will also speak at the Jackson Hole Symposium on Friday. The market is anticipating he will sound more hawkish during that speech than he did at his press conference following the last Fed meeting. The bank is expected to continue aggressive rate hikes until they see a meaningful reduction in inflation. AMC Shares Tank on Cineworld Bankruptcy Warning AMC Entertainment (AMC) shares are plunging 37.9% ahead of the open after rival Cineworld said today it is considering filing for bankruptcy. Cineworld Group, which owns Regal Cinemas in the U.S., said, “The strategic options through which Cineworld may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process.” The company added that any filing “would be expected to allow the group to access near-term liquidity and support the orderly implementation of a fully funded deleveraging transaction.” AMC also debuted its new class of preferred shares “APE” units today. In a tweet Sunday, the CEO reminded shareholders, “the value of your AMC investment will be the combination of your AMC shares and your new APE units. An AMC share plus a new APE unit added together — compared to just an AMC share previously.” Bed Bath & Beyond Continues to Tumble Bed Bath & Beyond (BBBY) shares are tumbling 17.1% in premarket trade, after plummeting 40.5% on Friday. The recent drop comes after GameStop (GME) Chairman Ryan Cohen sold off his entire stake in the retailer. Bloomberg also reported over the weekend that some suppliers are restricting or halting shipments to Bed Bath & Beyond after the company fell behind on payments. Tesla to Hike Price of Full Self Driving Software Tesla (TSLA) shares are slipping 2.7% ahead of the open after after CEO Elon Musk announced the company will hike prices for its full self driving software. In a tweet Sunday, Musk said, “After wide release of FSD Beta 10.69.2, price of FSD will rise to $15k in North America on September 5th. Current price will be honored for orders made before Sept 5th, but delivered later.” Customers can currently pay $12,000 upfront for FSD or $199 per month on a subscription basis. Musk did not address whether the subscription price would change. Oil Prices Slump on Economic Growth Fears, Surging Dollar Oil prices are lower today on continued fears over a recession and as the dollar surges higher. West Texas Intermediate crude futures are down 0.4% to under $90.50 bbl while Brent crude futures are slipping 0.5% to $96 bbl. The U.S. dollar index popped to a five-week high today after hawkish comments from Richmond Fed President Thomas Barkin on Friday. Aggressive rate hikes from the Fed are expected to cause a slowdown in economic growth, dragging down oil demand. In Case You Missed It You can learn how to invest the simple and easy way with my brand new course, Today I Learned How to Invest. In just 45 minutes, you can go from a total beginner who knows nothing to someone who’s ready to buy their first stock. Start building the massive nest egg you deserve today!
Continue Reading -->Coffee With Greta: Traders Dump $BBBY
DJIA Futures: -262 (-0.8%) SPX Futures: -42 (-1%) NASDAQ Futures: -154 (-1.1%) Good morning friends! Futures are falling with the S&P 500 on track to snap its 4-week winning streak. Let’s get right to it! $BBBY Plunges As Ryan Cohen Sells Stake Bed Bath & Beyond (BBBY) shares are plunging -42.4% ahead of the open after activist investor and GameStop (GME) chairman Ryan Cohen sold off his stake in the company. An SEC filing shows Cohen’s venture capital firm RC Ventures dumped all of its BBBY stock on Wednesday at a range of prices between $18.68 and $29.22 per share. Those shares were originally purchased at an average of roughly $15.34 per share in March. RC Ventures also sold the call options it purchased earlier this week. GM To Reinstate Dividend, Increase Share Buyback Program General Motors (GM) shares are up 1.5% in premarket trade after the automaker announced it is reinstating its quarterly dividend. The company cut that dividend during the early days of the pandemic to preserve cash. GM’s board of directors authorized a $0.09 per share dividend, roughly 76% smaller than the $0.38 per share dividend when it was suspended in April 2020. CEO Mary Barra said progress on “key strategic initiatives has improved our visibility and strengthened confidence in our capacity to fund growth while also returning capital to shareholders.” The first dividend will be paid September 15 to all shareholders of record as of August 31. GM is also resuming its share buyback program and increasing it to $5 billion of common stock, up from $3.3 billion previously. Foot Locker Surges on Strong Earnings, CEO Transition Foot Locker (FL) shares are rallying 21% ahead of the open after beating Q2 expectations. The sneaker retailer reported adjusted earnings of $1.10 per share on $2.07 billion in revenue. That was better than analysts’ expectations for EPS of $0.80 per share and in line with revenue estimates. Foot Locker’s same-store sales fell 10.3% year over year vs analysts’ expectations for a 14.6% decline. The company cut its full-year adjusted EPS outlook to $4.25 to $4.45 down from $4.25 to $4.60. Analysts were estimating $4.42 per share. Foot Locker also announced its CEO will retire Sept 1 and will remain executive chairman until January 31, 2023. Former Ulta Beauty (ULTA) CEO Mary Dillon will become CEO effective September 1. Dillon said, “I am thrilled to be joining Foot Locker, an iconic company that possesses a strong set of values and focus on the customer experience as well as tremendous growth opportunities.” Oil Prices Drop As Recession Fears Take Over Oil prices are lower today as recession fears overpower demand concerns. West Texas Intermediate crude futures are down 1.5% to $89 bbl while Brent crude futures are down 1.8% to under $95 bbl. Both are on track for weekly losses of more than 3% Cryptocurrencies Plunge Major cryptocurrencies are plunging amid a sudden drop across the market after a recent rebound. CoinGecko shows Bitcoin is down 9% in the past 24 hours to $21,425 while Ethereum is down 8.9% to $1,699. That’s Bitcoin’s lowest level in more than three weeks after the coin recently pushed back above $25,000 for the first time in June. Analysts saw no real catalyst for the drop besides continued concerns across risk assets about the Fed’s tightening schedule. The July meeting minutes on Wednesday showed the bank won’t be finished with rate hikes until inflation shows significant signs of improvement across the board. The sudden drop in the crypto market is weighing on Coinbase (COIN) with shares down 9.4% in premarket trade. In Case You Missed It The National Association of Realtors reported existing home sales fell 5.9% in July to a seasonally adjusted annual rate of 4.81 million units. That was in line with expectations and the slowest pace of sales since November 2015. Supply remained tight with 1.31 million homes for sale at the end of July, a 3.3-month supply. Prices cooled a bit as the market slows. The median price of an existing home sold in July was $403,800, down from the record-high in June but up 10.8% year over year.
Continue Reading -->Coffee With Greta: Key Manufacturing Index Rebounds
DJIA Futures: +25 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures: +20 (+0.1%) Good morning friends! Futures are up slightly as the market attempts to resume its recent rally. Let’s get right to it! Philly Fed Manufacturing Index Turns Positive The Philadelphia Fed’s Manufacturing Index unexpectedly turned positive this month. The general activity index rose 18.5 points to 6.2. That was better than economists’ expectations for -5.0. The new orders index jumped 20 points but remained in negative territory for the third month in a row at -5.1. The prices index declined for the 4th consecutive month. Prices paid dropped by 9 points to 43.6, the lowest since December 2020. 56% of firms reported increased input prices. This comes after the New York Fed’s Empire State Manufacturing Index plummeted 42 points to -31.3 earlier this week. That was the second largest decline on record. The two regional reports are seen as barometers for the broader U.S. manufacturing sector. Weekly Jobless Claims Stabilize Weekly jobless claims dipped in mid-August and appear to have stabilized. The Labor Department reported 250,000 Americans filed initial unemployment claims last week, down 2,000 from the revised 252,000 the prior week. The previous week was revised lower from 262,000. The latest increase was smaller than economists’ expectations for new claims to rise to 260,000. Continuing claims rose by 7,000 to 1.44 million in the week ending August 6. Kohl’s Tumbles After Cutting Outlook Kohl’s (KSS) shares are falling 7.4% ahead of the open after topping Q2 expectations but cutting its full-year outlook. The retailer reported adjusted earnings of $1.11 per share on $4.09 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.03 on $3.85 billion in revenue. Kohl’s now expects net sales in 2022 to fall 5% to 6% year over year vs its previous outlook for growth to be flat up to 1%. The company also forecast full-year adjusted EPS between $2.80 and $3.20, down sharply from earlier guidance of $6.45 to $6.85. Kohl’s said its middle-income customers have been squeezed by inflation, putting a damper on discretionary spending. The CEO said the company is adjusted its business plan and taking action to reduce inventory and expenses. Ryan Cohen Reveals Intent to Sell $BBBY Stake Bed Bath & Beyond (BBBY) shares are tumbling 14.5% in premarket trade after investor and GameStop (GME) Chairman Ryan Cohen revealed his intent to sell his stake in the company. A Form 144 filing with the SEC shows Cohen’s investment firm RC Ventures intends to sell 9.45 million BBBY shares. That represents the total amount of shares it holds. Cohen first revealed his more than 10% stake in the company in March and purchased January 2023 call options on more than 1.67 million shares earlier this week. BBBY shares surged 11.8% on Wednesday after those call options were revealed Tuesday. The stock has skyrocketed about 300% so far in August as part of the latest meme stock rally. Oil Prices Rise As U.S. Inventories Drop Oil prices are rising after new data showed much lower inventories than expected in the U.S. West Texas Intermediate crude futures are up 1.4% to over $89 bbl while Brent crude futures are up 1.7% to over $95 bbl. The Energy Information Administration reported a sharp drop in U.S. oil and gas inventories last week. Crude stockpiles fell by 7.1 million barrels vs the 1.7 million barrel decline analysts were expecting. That drop came as U.S. crude exports hit a record-high 5 million barrels per day. Gasoline inventories dropped by 4.6 million barrels as demand rose vs analysts’ expectations for a 1.7 million barrel decline. Existing Home Sales Expected to Fall The National Association of Realtors reports existing home sales for July at 10:00 a.m. ET. That report is expected to show sales dropped again last month to a seasonally adjusted annual rate of 4.81 million units. The housing market has seen a rapid slowdown as mortgage rates pile on top of record-high prices. In Case You Missed It The Fed’s July meeting minutes show the Central Bank is planning on an extended schedule of rate hikes. The report said “moving to a restrictive stance of policy” may be required to lower inflation. Fed officials indicated they would be willing to slow the pace of rate hikes when it becomes apparent inflation is slowing. The Fed continued to say all future decisions will be based on incoming data. Officials said there are few signs inflation is abating at this point and it would “take some time” before rate hikes have a meaningful impact.
Continue Reading -->Coffee With Greta: Retail Sales Fall Flat as Gas Prices Drop
DJIA Futures: -211 (-0.6%) SPX Futures: -34 (-0.8%) NASDAQ Futures: -115 (-0.8%) Good morning friends! Futures are falling after July retail sales missed expectations and Target reported a sharp drop in profits. Let’s get right to it! Retail Sales Fall Flat in July U.S. retail sales were flat in July as gas prices fell and auto sales dropped. The Commerce Department reported retail sales were unchanged last month at $682.8 billion. That missed economists’ expectations for sales to rise 0.1%. The flat sales came as gas station receipts tumbled 1.8% and car sales dropped 1.7%. Excluding autos, core retail sales rose 0.4% vs expectations for no change. That was driven by a strong 2.7% gain in online sales – boosted by Amazon Prime day – and a 1.5% gain at miscellaneous stores. Target Drops as Profits Plunge Target (TGT) shares are down 2.9% ahead of the open after missing profit expectations in the second quarter. The retailer reported earnings of $0.39 per share on $26.04 billion in revenue. That missed analysts’ expectations for EPS of $0.72 but was in line with sales estimates. Profit was down 90% year-over-year and the CFO blamed that plunge on Target’s aggressive efforts to reduce inventory. He said, “If we hadn’t dealt with our excess inventory head-on, we could have avoided some short-term pain on the profit line, but that would have hampered our longer-term potential. While our quarterly profit took a meaningful step down, our future path is brighter.” The company reiterated its full-year forecast, saying it’s now positioned for a rebound after reducing extra inventory. Lowe’s Reports Mixed Q2 Results Lowe’s (LOW) shares are up 1.1% in premarket trade after mixed Q2 earnings. The home improvement retailer reported adjusted earnings of $4.67 per share on $27.48 billion in revenue. That topped analysts’ expectations for EPS of $4.58 but fell short of revenue estimates for $28.12 billion. Comparable sales fell 0.3% year over year but home improvement sales rose 0.2%. The CEO said the home improvement consumer remained healthy in the quarter. “Rather than the DIY consumer trading down like you hear from some retailers, in many cases we were seeing the opposite,” he told CNBC. “The customer’s actually trading up to innovation and trading up for new.” Lowe’s also saw an increase in sales to professionals thanks to its new loyalty programs. The CEO said they saw double-digit growth in Pro sales for the ninth consecutive quarter. The company said it now expects full-year total and comparable sales toward the bottom of its previous outlook range while earnings are expected to be at the top end. Meme Stock Rally Continues Bed Bath & Beyond (BBBY) shares are surging 37.9% ahead of the open after surging 29.1% on Tuesday. The recent jump comes after a regulatory filing showed GameStop (GME) Ryan Cohen purchased call options on BBBY through his venture capital firm. Retail traders poured into the stock, with shares soaring as much as 70% on Tuesday. Cohen purchased call options on more than 1.6 million Bed Bath & Beyond shares with strike prices between $60 and $80. The options expire in January 2023. That means Cohen is betting the stock can rise as high as $80 by that time. BBBY closed at $20.65 per share on Tuesday. Oil Prices Fall to 6-Month Low Oil prices are hovering around 6-month lows today as recession fears weigh on the market. West Texas Intermediate crude futures are flat at $86.50 bbl while Brent crude futures are down 0.4% at $92 bbl. The fears of a global recession are outweighing new data that showed a drop in U.S. crude and gasoline stocks. The American Petroleum Institute reported Tuesday that U.S. crude inventories fell by 448,000 barrels last week vs expectations for a 117,000 barrel drop. Gasoline stockpiles fell by 4.48 million barrels. The Energy Information Administration reports official supply levels today. Analysts expect the EIA to show both crude and gasoline inventories fell by 1.7 million barrels last week. In Case You Missed It President Biden signed the $437 billion Inflation Reduction Act into law Tuesday afternoon. The tax, health, and climate legislation accomplishes several agenda items laid out in his Build Back Better plan. The bill imposes a 15% minimum corporate tax rate and includes $369 billion in funding for climate and energy policies. The legislation was approved along party lines in both chambers of Congress.
Continue Reading -->Coffee With Greta: Homebuilding Plunges in July
DJIA Futures: -45 (-0.1%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -30 (-0.2%) Good morning friends! Futures are slipping as new data shows the housing market slowing further and traders digest key retail earnings. Let’s get right to it! Housing Starts, Building Permits Drop in July New home construction fell more than expected in July as higher mortgage rates put pressure on builders already struggling with high material costs. The Census Bureau reported housing starts tumbled 9.6% last month to a seasonally adjusted annual rate of 1.45 million units. That’s the lowest rate of building since September 2020 and lower than expectations for an SAAR of 1.52 million units. Single-family starts plunged 10.1% while multi-family starts dropped 10% The slowdown will continue as building permits also fell in July. The number of new permits issued fell 1.3% to a seasonally adjusted annual rate of 1.67 million units. That was better than economists’ expectations for permits to fall to an SAAR of 1.63 million units. The drop in permits was focused in single-family homes. Single-family permits fell 4.3% monthly while multi-family permits rose 2.5%. Cancelled Home-Purchase Agreements Surge A record percentage of home-purchase agreements were cancelled in July as the housing market slows rapidly. Redfin reported 63,000 contracts were cancelled last month. That represented 16.1% of homes that went under contract during July, the highest percentage on record excluding March and April of 2020. Redfin said, “The housing market is slowing as higher mortgage rates sideline many prospective homebuyers. With competition declining, the house hunters who are still in the market are enjoying newfound bargaining power–a stark contrast from last year, when they often had to pull out every stop in order to win.” Walmart Tops Q2 Expectations Walmart (WMT) shares are up 4.2% ahead of the open after beating Q2 expectations on the top and bottom line. The retailer reported adjusted earnings of $1.77 per share on $152.86 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.62 on $150.81 billion in revenue. Same-store sales in the U.S. grew 6.5% year over year, better than estimates of 5.9% growth. Online sales rose 12% compared to a year ago and 18%. Walmart’s inventory levels in the U.S. surged 25.6% year over year as the cost of goods jumped. The company reiterated its profit warning from last month. Walmart maintained its forecast for 3% same-store sales growth in the U.S. for the rest of this year and anticipates adjusted EPS will decline between 9% and 11% for the full year. Home Depot Slips Despite Q2 Earnings Beat Home Depot (HD) shares are slipping 1% in premarket trade despite beating Q2 expectations on the top and bottom line. The home improvement retailer reported adjusted earnings of $5.05 per share on $43.79 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $4.94 on $43.36 billion in revenue. Same-store sales rose 5.8% year over year vs expectations for 4.9% growth. Home Depot reiterated its guidance for full-year sales to grow about 3% compared to a year ago. The CEO and President said, “Our team has done a fantastic job serving our customers, while continuing to navigate a challenging and dynamic environment.” Oil Prices Turn Higher Oil prices have reversed earlier losses and turned higher in morning trade. West Texas Intermediate crude futures are up 0.6% to $90 bbl while Brent crude futures are up 0.3% to over $95 bbl. The market is continuing to monitor talks to revive the Iran nuclear deal. If an agreement is reached, that deal is expected to allow Iran to boost its oil production. The American Petroleum Institute will report weekly crude and gasoline inventory levels later today. In Case You Missed It The NAHB’s sentiment index tumbled into negative territory on Monday. The survey dropped 6 points in August to 49, with any reading below 50 considered negative. That was the 8th straight monthly decline and lower than economists’ expectations for 54. NAHB’s Chief Economist said the U.S. has now fallen into a “housing recession” due to tighter monetary policy and persistently high construction costs. Walt Disney (DIS) shares rose 2.2% on Monday after activist investor Dan Loeb bought a new stake in the company. Loeb disclosed that “significant stake” in a letter to Disney’s CEO on Monday. In that letter, he asked the company to consider several initiatives including a spin-off of ESPN and fully acquiring Hulu to integrate it into the Disney+ platform.
Continue Reading -->5 Risky Names I’m Watching
SPX futures are -25 after hitting a high of 4280 Friday. This active sequence has paid traders to buy dips and rotate between sectors. There’s been a ton of participation. SPX took back over half of the corrective phase which was impressive. Today, we’ll see how we digest. The Oscillator hit +59 (overbought is +40). I’d think 4200-4220 holds this week if they want to keep this active sequence intact. Now let’s dig into some of the more speculative names on my radar: GOEV has a decent lower-level chart pattern. Some of these types of names are working. I bought some Friday. It needs to hold $3.90. Above $4.30 and I may add. DNA: I bought some last week and trimmed into the ramp-up. It needs to hold $3.20 PETZ had a few volume spikes. It needs to hold $2.40. See if it clears $3.17 on volume. GROV: I bought some vs. the $4.60 area. Watch here for a volume spike. BLUE was great from the $4.75 area to $7 Friday. I’m smaller but staying with it for now. Scott’s Positions Disclosure
Continue Reading -->Coffee With Greta: Chinese Economy Slows Unexpectedly
DJIA Futures: -186 (-0.6%) SPX Futures: -25 (-0.6%) NASDAQ Futures: -49 (-0.4%) Good morning friends! Futures are falling on concerns over slowing economic growth in China. Let’s get right to it! Chinese Economy Slows Unexpectedly The Chinese economy slowed unexpectedly in July. New data shows industrial production rose 3.8% year over year, down from 3.9% in June and lower than the 4.5% growth expected by economists. Retail sales rose just 2.7% annually vs 3.1% in June and lower than expectations for 5% growth. Fixed asset investment from January through July rose 5.7% year over year vs 6.2% expected. China’s statistics bureau warned of rising “stagflation risks” around the globe. Oil Prices Drop on Chinese Economy Concerns Oil prices are falling today on demand concerns from China after the country’s economy slowed in July. West Texas Intermediate crude futures are down over 5% to $87 bbl while Brent crude futures are down 5% to $93 bbl. Refinery output also slowed in China last month to 12.53 million barrels per day, the lowest since March 2020. Empire State Manufacturing Index Plunges The Empire State manufacturing index tumbled further into negative territory this month. The New York Fed survey plummeted 42.4 points to negative 31.3. That’s the second largest monthly decline on record and one of the lowest reading in survey history. That drop was far below economists’ expectations for a reading of 5 with any reading below 0 signaling deteriorating business conditions. The new orders index plunged 35.8 points to negative 29.6. The shipments index plummeted 49.4 points to negative 24.1 and unfilled orders fell for the third month in a row. This data and the Philadelphia Fed’s manufacturing survey are both seen as early indicators for the health of the entire U.S. manufacturing sector. Retail Sector In Focus Traders will have their focus on earnings from some big retailers this week. Walmart (WMT) and Home Depot (HD) are both scheduled to report Q2 results ahead of the open on Tuesday. Target (TGT) and Lowe’s (LOW) will report during premarket hours on Wednesday, followed by Kohl’s (KSS) Thursday morning. The market will be focused on how each company has been impacted by inflation so far and forward guidance for the business as consumer behavior has shifted. The Commerce Department also reports July retail sales Wednesday morning. Homebuilder Sentiment Expected to Slip The National Association of Homebuilders releases its August sentiment index at 10:00 a.m. ET. That survey is expected to have slipped further to 54 following the historic 12-point plunge to 55 in July. Builders have turned pessimistic about the rapidly slowing housing market as mortgage rates continue to rise. The housing market will be in focus throughout the week with July housing starts and building permits Tuesday morning and July existing home sales on Thursday. In Case You Missed It The House passed the Democrats’ Inflation Reduction Act on Friday. The $430 billion legislation was approved by a 220-207 vote along party lines. It includes funding for climate and energy policies, prescription drug pricing initiatives, boosting the IRS, and new corporate tax laws. President Biden is now set to sign the bill into law.
Continue Reading -->Coffee With Greta: Import Prices Fall as Fuel Prices Tumble
DJIA Futures: +136 (+0.4%) SPX Futures: +18 (+0.4%) NASDAQ Futures: +67 (+0.5%) Good morning friends! Futures are rising as the market is on track for its 4th straight winning week amid bets inflation has peaked. Let’s get right to it! U.S. Import Prices Drop for the First Time This Year U.S. import prices fell 1.4% in July, the first decline seen in 2022. That was steeper than expectations for a 1% drop and the largest since April 2020. The price of imported goods was still up 8.8% year over year, the smallest increase since March 2021. Import prices minus fuel fell 0.5%, the third straight monthly decline. The cost of imported fuel dropped 7.5% as gas prices tumbled from record-highs. But fuel import prices are still up 56.6% over the past year. Export prices fell 3.3% in July and were up 13.1% annually. Rivian Tops Q2 Expectations Rivian (RIVN) shares are up 1.4% ahead of the open after reporting a smaller Q2 profit loss than expected. The electric automaker reported an adjusted loss of $1.62 per share on $364 million in revenue. That was better than analysts’ expectations for a loss of $1.63 per share on $337.5 million in revenue. Rivian confirmed it still expects to produce about 25,000 vehicles this year. The company previously reported it delivered 4,467 vehicles in the second quarter. Rivian said it had 98,000 preorders for its R1-series truck and SUV at the end of Q2. The automaker lowered its full-year outlook, calling for a wider loss than previously forecast. Oil Prices Dip Oil prices are slipping today amid conflicting views for global oil demand. West Texas Intermediate crude futures are down 1.6% to under $93 bbl while Brent crude futures are down 1.3% to just over $98 bbl. OPEC cut its forecast for world oil demand in 2022 on Thursday while the International Energy Agency hiked its 2022 demand growth forecast. OPEC slashed its forecast by 260,000 barrels per day, expecting an increase of 3.1 million bpd. But the IEA raised its forecast to 2.1 million bpd. The group also raised its outlook for Russian oil supply by 500,000 bpd for the second half of this year and said OPEC would struggle to boost production. Gas Prices Slide Further U.S. gas prices slid further below $4 today. AAA shows the price dropped to $3.978/gal. That’s $1.04 lower than the record-high in June but $0.79 higher than the same time last year. The national average for diesel is down to $5.060/gal. That’s $0.76 lower than the record-high and $1.77 higher than a year ago. Consumer Sentiment Expected to Rise The University of Michigan’s preliminary consumer sentiment index for August will be released at 10:00 a.m. ET today. That survey is expected to have improved by 1 point to 52.5 this month. The index also includes consumers’ expectations for inflation over the next five years. Americans have been resilient in the face of surging inflation pressures this year.
Continue Reading -->Coffee With Greta: More Good Inflation Data Boosts Stocks
DJIA Futures: +245 (+0.7%) SPX Futures: +29 (+0.7%) NASDAQ Futures: +91 (+0.7%) Good morning friends! Futures are rallying after the release of more good inflation data. Let’s get right to it! Wholesale Inflation Drops in July Producer side inflation pressures fell unexpectedly in July. The Bureau of Labor Statistics producer price index dropped 0.5% on a monthly basis but was still up 9.8% year over year. That was better than expectations for a 0.2% monthly increase and the lowest annual rate since October 2021. The decline was driven by a 9% drop in energy prices while food prices rose 1%. Excluding food, energy, and trade services the core PPI rose 0.2% monthly and 5.8% annually. The PPI is a leading indicator for CPI, signaling consumer prices will continue to slow in the months ahead. Fed Officials Still Support Aggressive Tightening Two Fed officials spoke about the state of the U.S. economy after the July CPI showed inflation slowing on Wednesday. During an event at Drake University, Chicago Fed President Charles Evans said the data was “positive” but the annual pace of price increases is still “much too high.” The CPI rose 8.5% annually in July, which Evans said is “a big number, so nobody can be happy about that.” He said he expects the Fed to continue rate hikes through the end of this year and into 2023 to bring inflation back down to their 2% target. Evans forecast the Federal Funds Rate will be at 3.25%-3.5% by year-end. Minneapolis Fed President Neel Kashkari echoed that sentiment during a panel discussion at the Aspen Economic Strategy Group’s annual meeting. Kashkari said the July CPI was the “first hint” that inflation might be slowing. But he said the Central Bank is still “far, far away from declaring victory.” Kashkari also scoffed at market expectations the Fed might cut interest rates in early 2023, saying that’s “not realistic”. He said, “There’s a disconnect between me and the market.” CME Group’s FedWatch Tool shows 69.5% of traders expect a 0.5% rate hike in September while 30.5% expect a 0.75% hike. Weekly Jobless Claims Rise Less Than Expected Weekly jobless claims rose less than expected last week as the labor market remains extremely tight. The Labor Department reported 262,000 Americans filed initial unemployment claims, up 14,000 from the previous week. The previous week was also revised lower by 12,000 to 248,000. Continuing claims rose by 12,000 to 1.43 million in the week ending July 30. Disney Rallies On Earnings Beat, Strong Subscriber Growth Disney (DIS) shares are up 9.6% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. The company reported earnings of $1.09 per share on $21.5 billion in revenue. That was better than analysts’ expectations for EPS of $0.96 on $20.96 billion in revenue. The company’s streaming service, Disney+, had 152.1 million subscribers in the quarter, crushing estimates for 147.76 million. But revenue per Disney+ user fell 5% in the U.S. and Canada. Disney also announced price hikes for the streaming service. Starting December 8, Disney+ with commercials will cost $7.99 per month while the ad-free option will jump 38% to $10.99 per month. Revenue in Disney’s parks, experiences and products division surged 72% year over year to $7.4 billion. Oil Prices Turn Higher Oil prices have turned higher after falling earlier this morning. West Texas Intermediate crude futures are up 1% to just under $93 bbl while Brent crude futures are up 0.8% to over $98 bbl. The market has been in a back and forth over higher supply levels in the U.S. but lower demand. The Energy Information Administration reported U.S. crude inventories rose by 5.5 million barrels last week, beating expectations for a 73,000 barrel rise. Gasoline stockpiles tumbled by 5 million barrels vs expectations for a 1.2 million barrel drop. Refinery utilization surged to 94.3% as gasoline demand bounced back. Gas Falls Under $4 The national average for a gallon of gas dropped under $4 for the first time since March. AAA shows the price dropped to $3.99/gal today. That’s down more than $1 from the record-high and June but still $0.81 higher than a year ago. The national average for diesel is down to $5.077/gal. Gasoline demand rose to 9.1 million barrels per day last week, still 6% lower over the past 6 weeks compared to last year. Federal Budget Deficit Tumbles The U.S. federal budget deficit has narrowed by a record amount so far this fiscal year as government spending slowed sharply. The Treasury Department reported a $211 billion deficit in July, down from $302 billion in July 2021. The deficit was $726 billion, through the first 10 months of the fiscal year. That’s down $1.8 trillion from the same time a year ago, which is a record-high drop. So far this fiscal year, receipts are up by $787 billion while spending is down by $1 trillion. But economists say the sharp slowdown in government spending is causing a drag on economic growth. Economists at The Hutchins Center on Fiscal and Monetary Policy estimate it has reduced GDP by 3.8%. In Case You Missed It Boeing (BA) shares rose 2.5% on Wednesday as the planemaker restarted deliveries of its 787 Dreamliner. American Airlines (AAL) said it received a 787 from Boeing’s factory in South Carolina. Deliveries of the jumbo plane were halted in July 2021 to address manufacturing flaws in the fuselage. The FAA cleared Boeing to resume deliveries earlier this week.
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