Coffee With Greta: The Labor Market Is Almost Full
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +119 (+0.4%) SPX Futures: +17 (+0.4%) NASDAQ Futures: +59 (+0.5%) Good morning friends! Futures are rebounding as the market digests fresh jobs data that shows the labor market nearing full employment. Let’s get right to it! Private Job Growth Tumbles In May Private payrolls increased less than expected in May, as the U.S. labor market nears full employment. Payroll firm ADP reported today that private employers added 128,000 workers last month. That was lower than economists’ expectations for a gain of 299,000. April was also revised lower to 202,000 from 247,000. May was the slowest pace of job growth since the beginning of the pandemic. Small businesses actually lost 91,000 employees in May while businesses with 500 or more employees added 122,000 and mid-size businesses added 97,000. The leisure and hospitality sector no longer led job gains last month, adding just 17,000 workers. The Labor Department releases the official May jobs report on Friday. That’s expected to show the U.S. economy added 328,000 jobs last month with the unemployment rate slipping to 3.5%. Weekly Jobless Claims Fall Weekly jobless claims fell more than expected last week. The Labor Department reported 200,000 Americans filed initial claims for unemployment benefits. That was down 11,000 from the previous week and lower than expectations for 210,000. The data indicates the labor market is in a strong position, with layoffs hovering around record lows. Continuing claims fell by 34,000 to 1.31 million in the week ending May 21. Gamestop Slips On Steep Q1 Loss Gamestop (GME) shares are down 0.2% ahead of the open after missing Q1 expectations. The video game retailer reported a loss of $2.08 per share on $1.38 billion in revenue. That was worse than analysts’ expectations for a loss of $1.45 per share but beat revenue estimates of $1.34 billion. It was also a steeper loss than $1.01 per share a year ago. GameStop said its inventories jumped to $918 million at the end of Q1, up from $571 million at the end of Q1 2021. That increased inventory is part of an effort “to meet increased customer demand and offset supply-chain headwinds.” The company ended the quarter with $1.035 billion in cash on hand. Chewy Rallies On Surprise Q1 Profit Chewy Inc (CHWY) shares are jumping 16% in premarket trade after reporting a surprise profit in the first quarter. The online pet-products retailer reported earnings of $0.04 per share on $2.43 billion in revenue. That crushed analysts’ expectations for a loss of $0.11 per share on $2.41 billion in revenue. Chewy warned, “inflationary pressures and supply-chain disruptions are expected to persist and the consumer’s post-pandemic behavior continues to evolve.” The company forecast Q2 revenue between $2.43 billion and $2.46 billion and full-year revenue between $10.2 billion and $10.4 billion. Both were in line with analysts’ expectations. Hewlett Packard Drops On Earnings Miss Hewlett Packard (HPE) shares are down 4% ahead of the open after missing fiscal Q2 expectations. The company reported adjusted earnings of $0.44 per share on $6.7 billion in revenue. That was shy of analysts’ expectations for adjusted EPS of $0.45 on $6.8 billion in revenue. Hewlett Packard’s CFO said, “We are particularly pleased with the resiliency of our gross margins (34%) despite the inflationary environment and ongoing supply-chain disruptions”. The company did incur a $126 million charge during the quarter related to suspending its business in Russia. HPE forecast adjusted fiscal Q3 earnings between $0.44 and $0.54 per share, roughly in line with expectations for $0.51. Meta COO Steps Down Meta Platforms (FB) shares are up 0.7% in premarket trade after the company’s COO announced she is stepping down. Sheryl Sandberg announced her departure in a Facebook post on Wednesday. Meta’s chief growth officer will take over as COO in the fall and Sandberg will remain on the company’s board of directors. CEO Mark Zuckerberg said the company is planning an internal reorganization with her departure. Zuckerberg said, “I don’t plan to replace Sheryl’s role in our existing structure. I’m not sure that would be possible since she’s a superstar who defined the COO role in her own unique way.” Sandberg told CNBC that stepping down from the position will allow her to focus more on her philanthropic work. Oil Prices Slip Oil prices are slipping on reports that Saudi Arabia is prepared to increase its production if Russia’s output falls significantly. West Texas Intermediate crude futures are down over 1% at $114 bbl while Brent crude futures are falling 0.9% at $115 bbl. The Financial Times reported Saudi Arabia would stepup production if the EU’s ban of Russian oil imports caused a severe shortage of supply. Sources say Saudi Arabia has not yet seen genuine oil shortages in the market but it is “not in their interests to lose control of oil prices”. OPEC+, which is led by Saudi Arabia, is holding its monthly meeting today to discuss production goals. U.S. Gas Prices Surge to Fresh Record The national average for a gallon of regular gas jumped sharply again overnight. AAA shows that price jumped to $4.715/gal today. That was an increase of more than 4 cents from yesterday. The state with the lowest average price currently is Georgia, at $4.194/gal. The highest state average is in California at $6.213/gal. U.S. Factory Orders Expected To Slow The Commerce Department reports factory orders for April at 10:00 a.m. ET. That report is expected to show orders rose just 0.6% compared to 1.8% in March, as manufacturers face pressure from rising costs. The ISM Manufacturing PMI rose unexpectedly to 56.1% in May on Wednesday. But that survey also showed manufacturers plan to slow hiring in the next six months with the employment index dropping to 49.6%. Any reading below 50 signals a slowdown. The S&P Global Manufacturing PMI, formerly the IHS Markit PMI, slipped to a 4-month low
Continue Reading -->Coffee With Greta: Will May Gray Lead To June Gloom?
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +230 (+0.7%) SPX Futures: +22 (+0.5%) NASDAQ Futures: +62 (+0.5%) Good morning friends! Futures are higher as traders gear up for a new month of trade. Let’s get right to it! Market May See June Gloom The Dow and the S&P 500 eked out 0.1% monthly gains in May while the Nasdaq fell for the second month in a row. The tech-heavy index ended the month 2.1% lower, still deep in a bear market. “Sell in May and go away” rang true as volatility gripped the market with the Fed hiking rates and the global economy showing signs of slowing. Stocks have historically seen weaker performance between May and October. The Dow logged its first 8-week losing streak since 1932 last month while the S&P and Nasdaq dropped for 7-straight weeks. Now traders are gearing up for another month of potential gloom as June includes another Fed rate hike and the beginning of the bank’s balance sheet reduction. That drawdown of the balance sheet is set to begin today at a pace of $30 billion in Treasury securities and $17.5 billion in mortgage-backed securities. The market has become increasingly worried the U.S. economy will drop into a recession as interest rates move higher. Delta Rises on Upgraded Guidance Delta Airlines (DAL) shares are rising 2% in premarket trade after the company hiked its Q2 revenue forecast. In an SEC filing today, Delta said it expects revenue to return to 2019 levels in the current quarter. That’s up from its previous forecast for revenue to be at 93% to 97% 2019 levels this quarter. The upgraded guidance comes amid a surge in travel demand and higher fares. Salesforce Pops on Earnings Beat, Upgraded Profit Outlook Salesforce (CRM) shares are rallying 8.9% ahead of the open after beating fiscal Q1 expectations and hiking its full-year profit forecast. The software company reported adjusted earnings of $0.98 per share on $7.41 billion in revenue. That topped analysts’ expectations for adjusted EPS of $0.94 on $7.38 billion in revenue. Revenue rose 24% year-over-year while net income was down 94% annually as costs jumped. Salesforce reported $13.64 billion in unearned revenue, which comes from subscriptions. That was just shy of expectations for $13.76 billion. The company forecast adjusted fiscal Q2 earnings between $1.01 and $1.02 per share with revenue between $7.69 billion and $7.70 billion. For the full year, Salesforce sees adjusted earnings of $4.74 to $4.76 per share on revenue between $31.7 billion and $31.8 billion. That was higher than analysts’ estimates for full-year profits of $4.65 per share. HP Inc Rises On Strong Fiscal Q2 Results HP Inc (HPQ) shares are up 0.6% in premarket trade after topping fiscal Q2 expectations. The computer maker reported adjusted earnings of $1.08 per share on $16.5 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.05 on $16.2 billion in revenue. The results were also at the high end of the company’s target for earnings from $1.02 to $1.08 per share. Commercial PC revenue rose 18% year over year while consumer revenue fell 6%. HP bought back $1 billion worth of stock during the quarter, bringing the YTD total to $2.5 billion. The company’s CEO said it remains committed to at least $4 billion in buybacks for the full fiscal year. HP forecast fiscal Q3 non-GAAP earnings of $1.03 to $1.08 per share vs analysts’ expectations for $1.02. The company expects full-year non-GAAP profits of $4.24 to $4.38 per share, up from the previous forecast of $4.14 to $4.38 and better than analysts’ estimates for $4.25. Victoria’s Secret Beats Q1 Profit Expectations Victoria’s Secret (VSCO) shares are jumping 10.2% ahead of the open after beating Q1 profit expectations. The lingerie retailer reported adjusted earnings of $1.11 per share vs expectations for $0.84. The company’s $1.48 billion in revenue was in line with expectations. Sales were down 4.5% year-over-year. Victoria’s Secret warned business will be challenging through the second half of the year as it faces “supply chain headwinds”. The company expects adjusted fiscal Q2 earnings between $0.95 and $1.25 per share vs $1.19 expected. Chinese EV Makers Report May Deliveries Li Auto (LI), Nio (NIO), and XPeng (XPEV) are all rising in premarket trade after the Chinese electric vehicle makers reported strong May delivery numbers. Li Auto said it delivered 11,496 vehicles last month, up 166% compared to a year ago. Nio delivered 7,024 vehicles in May, up just 4.7% year-over-year. Nio’s deliveries through the first 5 months of 2022 are up 11.8% compared to the same time in 2021. Xpeng delivered 10,125 EVs in May, up 78% compared to May 2021. The company’s YTD deliveries are more than double compared to last year. Oil Prices Rise On EU’s Russian Ban, Shanghai Reopening Oil prices are rising further today following the EU’s agreement to ban Russian oil imports and as Shanghai, China lifts Covid restrictions. West Texas Intermediate crude futures are up 1.5% to over $116 bbl while Brent crude futures are up 1.6% to over $117 bbl. Supply fears are being fueled by the EU’s phased in ban of Russian imports. As Shanghai emerges from a Covid lockdown, demand from that country is also expected to rise. U.S. Gas Prices Surge to Fresh Record The national average for a gallon of regular gas surged overnight. AAA shows that price jumped to $4.671/gal today. That’s up nearly 5 cents from just yesterday when the price hit $4.622/gal. $FB To Become $META Meta Platforms (FB) announced Tuesday it will change its ticker symbol from $FB to $META next week. That change will go into effect prior to the start of trade on Thursday, June 9. The company said, “The new ticker symbol aligns with the company’s rebranding from Facebook to Meta.” The Facebook parent company officially changed its name in October 2021. Manufacturing Activity
Continue Reading -->Scott Redler’s Dog Bytes: Top Gun Trading
SPX futures -20 and I think a little digestion would be constructive. If this market is any good, it will stay above 4030. To keep momentum, it has to hold 4075-4090 in the next few days. I participated long here as SPY reclaimed $390 and cleared $395 last week. I put on a hedge on Friday that got a little painful on that strong close. I got converted short from my calls, so this down open is helping me. I already covered a bunch of SPY at $412.50ish. If this market wants to go higher in the week or so ahead, it will hold $404-$408 in the days ahead.AMC: I bought last Wednesday because I predicted Top Gun would be huge. And it was! I bought the stock around $11.88 plus some options. AMC is up another 9% and I’ll trim. $18ish is the next level to watch. $18ish is the next big level. MBIO is a long-term name, not a trade. It’s been tough but has good news and it’s building. Maybe if XBI gets better, this will also act better. CVX is a strong stock in the energy sector. I bought some last Monday and I added as it cleared $173.50. It’s at $180 this morning. I will probably sell my stock and keep my last third of calls. SLB: I bought Tuesday for a break above the $44 pivot. It hit $48.41 and I sold mine. It’s a bit extended here. Trim some if you’re long.Positions Disclosure as of 5/31/2022 at 9:06 a.m. ET
Continue Reading -->Coffee With Greta: Oil Prices Jump, Stocks Slump
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -226 (-0.7%) SPX Futures: -28 (-0.7%) NASDAQ Futures: -51 (-0.4%) Good morning friends! Futures are falling as oil prices pop after the EU agreed to ban most Russian oil imports. Let’s get right to it! Oil Prices Soar On EU’s Russian Import Ban Oil prices are jumping today after EU leaders reached an agreement to ban 90% of Russian crude imports by the end of the year. West Texas Intermediate crude futures are up more than 3%, topping $118/bbl. Brent crude futures are up 1.5% to over $123 bbl. The European Council president said the sanctions package will immediately ban 75% of Russian oil imports. By the end of the year, 90% of current imports will be stopped. The move puts more pressure on global supply levels as more than a third of the EU’s oil imports come from Russia. Oil stocks are rising after the decision with Exxon Mobil (XOM) up 1.2% and Chevron (CVX) trading 0.9% higher ahead of the open. U.S. Gas Prices Hit Fresh Record U.S. gas prices are back on a record-breaking climb after taking a breather on Friday. The national average for a gallon of regular gas hit a new record every day over the holiday weekend and did so again today. AAA shows that price jumped to $4.622/gal overnight. That’s up from $4.598/gal a week ago and $4.178/gal one month ago. Eurozone Inflation Hits Record-High Consumer prices are soaring in Europe. New data shows inflation came in at a record-high 8.1% in May, up from 7.4% in April and higher than 7.4% expected. It’s the seventh straight month inflation pressures have hit a new record high in Europe. German inflation soared to 8.7%, while French inflation hit a record 5.8%, and inflation in Spain soared to 8.5%. The jump comes as energy prices have soared due to Russia’s war in Ukraine. Energy prices surged 39.2% year-over-year in May while prices for food, alcohol, and tobacco jumped 7.5%. Excluding food and energy prices, the Eurozone’s core inflation rate rose to 3.8% in May. President Biden, Fed Chair Meet About Inflation President Biden is set to meet with Fed Chair Jerome Powell today about inflation pressures in the U.S. economy. A White House official said Biden will also congratulate Powell on being confirmed to another term as Fed Chair. The official said they will discuss the “state of the American and global economy and discuss the president’s top economic priority: addressing inflation to transition from an historic economic recovery to stable, steady growth that works for working families.” Fed Governor Christopher Waller said in a lecture over the weekend that he is prepared to take rates past neutral to fight inflation. He also said he believes the bank can continue raising rates without causing a recession. AMC Pops As Top Gun: Maverick Breaks Box Office Record AMC Entertainment (AMC) shares are rallying 12% in premarket trade after Top Gun: Maverick set a new Memorial Day opening 4-day record. The film raked in $156 million in U.S. ticket sales between Friday and Monday. That topped the previous record of $153 million set 15-years ago by Pirates of the Caribbean: At World’s End. Many theater-goers over the weekend were in AMC Theaters. The company said more than 5 million people visited its theaters globally over the weekend. That’s nearly double the 2.6 million attendance over Memorial Day weekend 2021. Imax (IMAX) stock is up 1.2% ahead of the open after the company said the new Top Gun move was its best global four-day Memorial Day weekend opening ever. Consumer Confidence Expected To Fall The Conference Board releases its consumer confidence index for May at 10:00 a.m. ET. That survey is expected to show confidence slipped more than three points this month to 103.9. This comes after consumer sentiment tumbled to a more than 10-year low in May. U.S. consumers have been rocked by skyrocketing inflation pressures as the economy emerges out of the pandemic.
Continue Reading -->Coffee With Greta: Inflation Cools and Stocks Get Hot
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +88 (+0.3%) SPX Futures: +24 (+0.6%) NASDAQ Futures: +120 (+1%) Good morning friends! Futures are rising as new data shows inflation pressures are slowing. Let’s get right to it! PCE Inflation Cools The Bureau of Labor Statistics personal consumption expenditures index shows inflation pressures slowing in the U.S. economy. The headline PCE price index rose 0.2% monthly and 6.3% year-over-year. That was a slowdown from 0.9% monthly and 6.6% annually in March. The core PCE price index, which excludes food and energy, rose 0.3% monthly and 4.9% annually. That was also a slowdown from March and in line with economists’ expectations. The core PCE index is the Fed’s preferred measure of inflation. The data supports the Fed’s theory that inflation may have already peaked and is now trending downward. The PCE index also showed an increase in incomes and consumer spending last month. Personal incomes rose 0.4% monthly, slightly lower than expectations for 0.5%. Consumer spending was up 0.9%. Adjusted for inflation, disposable incomes were flat and consumer spending rose 0.7%. Gap Plunges After Slashing Guidance Gap (GPS) shares are plunging 18.8% ahead of the open after slashing its full-year guidance. The clothing retailer reported a fiscal Q1 loss of $0.44 per share on $3.48 billion in revenue. Revenue was down 13% year-over-year but slightly ahead of analysts’ expectations. Same-store sales dropped 14% year-over-year vs expectations for a 12.2% decline. Online sales were down 17% compared to a year ago and in-store sales fell 10%. Gap sales dropped 11%, Old Navy sales tumbled 22%, Athleta sales fell 7%, and Banana Republic sales rose 27%. The company forecast fiscal 2022 adjusted earnings between $0.30 and $0.60 per share, that’s down from previous guidance for4 $1.84 to $2.05. Analysts were looking for EPS guidance of $1.34. Gap’s CFO said the revised outlook accounts for “executional challenges” at Old Navy, uncertain macroeconomic conditions, and inflationary pressures. Big Lots Tumbles On Surprise Q1 Loss Big Lots (BIG) shares are falling 17.3% in premarket trade after reporting a surprise loss in the first quarter. The retailer reported a loss of $0.39 per share on $1.37 billion in revenue. That was sharply lower than analysts’ expectations for a profit of $0.91 per share on $1.46 billion in revenue. Big Lots said same-store sales slowed in April, prompting it to markdown prices. The CEO blamed that slowdown on inflationary pressures. The company’s gross margin rate shrunk to 36.7% last quarter from 40.2% a year ago. Big Lots expects comparable sales to fall year-over-year in Q2 and its gross margin rate to be in the low-30s as costs rise. Costco Sales Growth Falls Short Costco (COST) shares are down 1.6% ahead of the open after beating fiscal Q3 revenue expectations but missing growth estimates. The big-box retailer reported earnings of $3.04 per share on $52.6 billion in revenue. That was in-line with analysts’ EPS expectations and better than revenue estimates for $51.56 billion. But same-store sales growth fell short. Costco said sales at stores open for at least a year jumped 10.8% year-over-year vs expectations for 11.8% growth. Ulta Rallies On Earnings Beat, Strong Guidance Ulta (ULTA) shares are up 8.1% in premarket trade after beating Q1 expectations and raising its full-year outlook. The beauty retailer reported earnings of $6.30 per share on $2.34 billion in revenue. That was better than analysts’ expectations for EPS of $4.46 on $2.12 billion in revenue. Comparable sales jumped 18% year-over-year, with double-digit increases across all major categories. Ulta also said it has opened 10 new stores this year. The company forecast full-year revenue between $9.35 billion and $9.55 billion with comparable sales growth between 6% and 8%. That was up from the previous forecast for comparable sales growth between 3% and 4% with revenue between $9.05 billion and $9.15 billion. Ulta also expects full-year earnings between $19.20 to $20.10 per share vs the previous outlook for $18.20 to $18.70. The company still plans to open 50 new stores total in 2022. Dell Jumps On Earnings Beat Dell Technologies (DELL) shares are up 11.5% ahead of the open after crushing fiscal Q1 earnings expectations. The laptop maker reported non-GAAP earnings of $1.84 per share on $26.1 billion in revenue. That beat the company’s own forecast for EPS of $1.25 to $1.50. Analysts were expecting $25 billion in revenue. Sales in Dell’s Infrastructure Solutions Group (ISG) jumped 16% year-over-year to $9.3 billion. That was better than Wall Street’s expectations for 5% growth to $8.3 billion. The Client Solutions Group, which is Dell’s PC business, brought in $15.6 billion in revenue. That was up 17% compared to a year ago and higher than consensus estimates for $15.5 billion. Twitter Shareholders Sue Twitter and Musk Twitter (TWTR) shareholders are suing the social media company and Elon Musk over their chaotic handling of Musk’s acquisition deal. The proposed class-action suit accuses Musk of violating California’s corporate laws and engaging in market manipulation by creating doubt he would go through with the deal. It says, “Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or to re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout consideration.” The suit also claims he financially benefitted by delaying the disclosure of his stake. Shareholders allege Musk bought the stock while he knew insider information from private conversations with board members and executives, including former CEO Jack Dorsey. TWTR shares have seen volatile swings since the Tesla (TSLA) boss originally disclosed his investment in early April. The stock popped to a high of $54.57 per share on April 5, the day after Musk revealed his stake.
Continue Reading -->Do You Trust the Fed?
The Fed seems to get a bad rap all the time. It was created to stabilize the U.S. economy and banking system, but it seems like it gets blamed for every bad thing that happens in the economy. So, we asked our audience what they think of the Fed. And this is what we learned Most People Don’t Trust the Fed In our admittedly unscientific and anonymous survey, 75% of respondents said they don’t trust the Fed. Their reasons ranged from the Central Bank being political to being outright corrupt. Let’s take a look at some of the responses: “The Fed is not part of the federal government and has no reserves. All they do is print money, which is the cause of inflation.” “They manipulate the economy, need to let free markets decide.” “Powell is way behind the curve.” “Controlled by politics.” “They manipulate the economy to fit their ideal. We usually pay for it.” “I think the Fed is no longer an independent body; it has become another arm of government.” “Hidden agenda for self-interest.” Some People Do Trust the Fed Since 75% of respondents said they don’t trust the Fed, that means 25% actually do trust the Fed. They seemed to have faith that the Fed is at least trying to do its stated job, even if it seems to fail at times. Take a look at some of the responses: “Jerome Powell will do the best he can under the current environment to get unemployment numbers down and raise rates.” “They tend to be a rather stable hand, especially in comparison to the government.” “I trust they will TRY to act in the best interest of the greatest amount of people but will make mistakes along the way, some bigger than others.” “I trust they know what tools they have in their toolbox and they will use them as they have told us.” What Does the Fed Actually Do? The Central Bank’s mandate from Congress is to “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” The Fed accomplishes these goals by lowering and raising the federal funds rate and manipulating the supply of money in the banking system. But some respondents to our survey had a much different idea of what the Fed actually does: “Buy stocks” “They think of ways to screw the poor and cater to the rich and mainly themselves.” “Mess up the economy.” “Uses the American people like pawns in a game of chess depending on the political wind.” “Cause market volatility during the day – when a press release after hours would suffice.” “Create opportunities for insider trading and front running, amplifying cycles, negating economic theory.” Suggestions For the Fed Many respondents to our survey had suggestions for what the Fed should be doing instead: “They shouldn’t do anything. They need to let markets behave as markets should behave.” “Dissolve itself.” “Setting fiscal policy that does not favor one political party over another one.” “As little as possible, get the hell out of the way and let Americans lead.” “Let the market be, and do its thing. In the end, the market always wins.” “I think the Fed should be abolished.” Most People Think the Fed Will Cause a Recession 75% of respondents to our survey answered “yes” when asked if the Fed will cause a recession in 2022. 25% answered “no”. And this is a big concern for many in the market right now. Even the Fed Chair himself has admitted it is a possibility, although Powell says they’re still confident they can accomplish a “soft landing”. The reason many believe the Fed might cause a recession is that it got behind on inflation. Now the Fed is playing catchup with rates and the May meeting minutes show many officials believe they will have to push past neutral. And pushing monetary policy into a restrictive stance threatens economic growth in the U.S. Most People Don’t Think the Fed Can Control Inflation 68% of respondents to our survey answered “no” when asked if they think the Fed will reduce inflation in 2022. 32% answered “yes” to that question. But the truth is, the Fed will get inflation under control at some point. The question is, at what cost? Overall Trust In the Fed Is Falling It’s not just our audience that doesn’t trust the Fed. Morning Consult found Americans’ trust in the Central Bank tumbled at the end of 2021. Just 52% of U.S. adults said they had “a lot” or “some” trust in the Fed. That was down 12-points from the all-time high of 64% in March 2021. The drop came as inflation surged and Americans felt the Fed was taking too long to respond. So what do YOU think about the Fed? Let us know in the comments!
Continue Reading -->Coffee With Greta: Retail Shocks Boost Stocks
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +167 (+0.5%) SPX Futures: +17 (+0.4%) NASDAQ Futures: +14 (+0.1%) Good morning friends! Futures are higher following a string of strong retail earnings. Let’s get right to it! Macy’s Surges On Earnings Beat, Strong Outlook Macy’s (M) shares are up 13.5% ahead of the open after beating fiscal Q1 expectations and raising its full-year profit outlook. The department store chain reported adjusted earnings of $1.08 per share on $5.35 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $0.82 on $5.33 billion in revenue. Macy’s CEO said, “While macroeconomic pressures on consumer spending increased during the quarter, our customers continued to shop.” Like Nordstrom, Macy’s said it saw an increase of customers shopping for special occasions like weddings. The company now expected adjusted fiscal 2022 earnings of $4.53 to $4.95 per share, up from the prior forecast for $4.13 to $4.52. Macy’s forecast revenue to be flat to up to 1% compared to 2021, which would be between $24.46 billion to $24.7 billion. Dollar Tree Pops After Lifting Forecast Dollar Tree (DLTR) shares are rising 15.9% in premarket trade after reporting better than expected Q1 earnings and lifting its guidance. The discount store reported adjusted earnings of $2.37 per share on $6.9 billion in revenue. That topped analysts’ expectations for adjusted EPS of $2.00 on $6.8 billion in revenue. Same-store sales jumped 4.4% year-over-year vs analysts’ expectations for 2.2% growth. Dollar Tree’s CEO said, “We are taking the necessary actions now to position ourselves for accelerated growth in what I view as the most attractive sector in retail, especially in the current economic environment. Value and convenience are more important than ever to our shoppers and the communities we serve.” The company forecast consolidated net sales will range from $27.8 billion to $28.1 billion this year, up from previous guidance for $27.2 billion to $27.9 billion. Dollar General Jumps On Upgraded Guidance Dollar General (DG) shares are up 11.6% ahead of the open after beating Q1 expectations and hiking its full-year guidance. The discount retailer reported fiscal Q1 earnings of $2.41 per share on $8.75 billion dollars. That was better than analysts’ estimates for EPS of $2.32 on $8.71 billion in revenue. Sales rose 4.2% year-over-year while cost of sales jumped 6.5%. Dollar General maintained its full-year earnings growth guidance at 12% to 14% but raised its same-store sales growth forecast to 3% to 3.5% from 2.5%. The company expects total sales growth of 10% to 10.5%. Dollar General also announced it will repurchase $2.75 billion worth of its shares this year. Nvidia Tumbles On Weak Guidance Nvidia (NVDA) shares are down 4.3% in premarket trade despite beating fiscal Q1 expectations. The chipmaker reported adjusted earnings of $1.36 per share on $8.29 billion in revenue. That topped analysts’ expectations for adjusted EPS of $1.29 on $8.11 billion in revenue. Total sales rose 46% year-over-year with data center sales surging 83% and gaming sales rising 31%. But Nvidia’s outlook was weak. The company forecast fiscal Q2 revenue of $8.1 billion, lower than analysts’ estimates of $8.54 billion. Nvidia’s CEO said the company is facing a “challenging macro environment”. Snowflake Drops On Disappointing Outlook Snowflake (SNOW) shares are tumbling 11.3% ahead of the open after issuing weak guidance for the current quarter. The cloud software company reported a fiscal Q1 loss of $0.53 per share on $422 million in revenue. That was worse than analysts’ expectations for a loss of $0.52 per share but beat revenue estimates of $414 million. $394 million of that was product revenue vs analysts’ expectations for $389 million. Snowflake forecast fiscal Q2 product revenue will be between $435 million and $440 million. Analysts were estimating $440 million. Broadcom to Buy VMware in $61 billion Deal VMware (VMW) shares are up 1.4% in premarket trade after Broadcom (AVGO) announced plans to buy the company in a $61 billion deal. That transaction will be a mix of cash and stock based on Broadcom’s share closing price on May 25. Broadcom is purchasing VMware to diversify its business into enterprise software. VMware’s products are used by enterprises for their servers and cloud servers. AVGO shares are down 0.4% ahead of the open. Elon Musk Ups Personal Commitment In Takeover Bid Twitter (TWTR) shares are up 4.7% ahead of the open after Elon Musk revealed he is planning to fund more of his takeover bid for the company. A new SEC filing shows Musk has increased his personal equity commitment to $33.5 billion. That’s $6.25 billion higher than his previous commitment. The filing also said Musk no longer plans to take out a margin loan against his Tesla (TSLA) stock. He is in talks with Twitter shareholders, including founder and former CEO Jack Dorsey, for additional financing. Weekly Jobless Claims Slip Weekly jobless claims fell more than expected as the U.S. labor market remains tight. The Labor Department reported 210,000 Americans filed initial claims for unemployment benefits last week. That was down 8,000 from the previous week and better than expectations for 215,000. Continuing claims rose unexpectedly by 31,000 to 1.35 million in the week ending May 14. Q1 GDP Contraction Revised Higher The U.S. economy contracted more than originally estimated in the first quarter. The Commerce Department released its first revision of Q1 GDP today, showing a 1.5% annual contraction. That’s an increase from the original estimate of 1.4% and higher than economists’ expectations for the revision to be lower at 1.3%. The Congressional Budget Office boosted its GDP growth estimates on Wednesday. The CBO now sees the U.S. economy expanding 3.1% in 2022, with 2.2% growth in 2023, and 1.5% in 2024. The group also believes inflation will be at 4.7% by the end of this year, 2.7% in 2023, and 2.3% in 2024. The CBO believes the Fed will raise the federal funds rate
Continue Reading -->Coffee With Greta: Nordstrom Bucks the Nasty Retail Trend
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -133 (-0.4%) SPX Futures: -14 (-0.4%) NASDAQ Futures: -49 (-0.4%) Good morning friends! Futures are slipping as traders digest a fresh batch of earnings and anticipate the release of the Fed minutes. Let’s get right to it! Nordstrom Rallies On Upgraded Guidance Nordstrom (JWN) shares are up 5.4% ahead of the open after beating Q1 sales expectations and hiking its full-year outlook. The retailer reported an adjusted loss of $0.06 per share vs analysts’ expectations for $0.05. Nordstrom’s $3.57 billion in revenue topped expectations for $3.28 billion. Net sales at Nordstrom rose 23.5% year-over-year, surpassing pre-pandemic levels. Nordstrom Rack sales rose 10.3% and were still below 2019 levels. CEO Erik Nordstrom said the company has been able to capitalize on higher demand from those shopping for “long-awaited occasions” like weddings. That higher demand prompted Nordstrom to raise its full-year outlook, bucking the recent trend of other retailers like Target (TGT) and Kohl’s (KSS). The company now expects 2022 revenue growth of 6% to 8% vs previous guidance for 5% to 7% growth. Nordstrom expects full-year adjusted earnings to range between $3.20 to $3.50 per share. Dick’s Sporting Goods Sinks After Cutting Outlook Dick’s Sporting Goods (DKS) shares are falling 11.2% in premarket trade despite beating Q1 expectations. The sporting goods retailer reported adjusted earnings of $2.85 per share on $2.7 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $2.48 on $2.59 billion in revenue. But Dick’s cut its full-year outlook as the company struggles with high costs and supply chain issues. The retailer now expects adjusted full-year earnings to be between $9.15 and $11.70 per share vs the previous forecast for $11.70 to $13.10. Analysts were expecting an outlook for EPS of $12.56. Dick’s forecast same-store sales will be down 2% to 8% annually vs prior expectations for a decline between 0% and 4%. Express Jumps On Upbeat Guidance Express (EXPR) shares are rallying 11.3% ahead of the open after reporting a narrower Q1 loss than expected. The clothing retailer reported an adjusted loss of $0.10 per share on $450.9 million in revenue. That beat analysts’ expectations for a loss of $0.13 on $436 million in revenue. Same-store sales rose 31% year-over-year vs expectations for a 26.8% gain. Express forecast same-store sales will rise in the mid-single digits in Q2. The company expects same-store sales to rise 8% to 10% for the full-year vs analysts’ estimates of 8%. Express issued full-year earnings guidance for $0.24 to $0.34 per share vs the consensus estimate for $0.12. Intuit Rises On Strong Earnings Intuit (INTU) shares are up 1.1% in premarket trade after beating fiscal Q3 expectations and hiking its full-year guidance. The tax filing software maker reported adjusted earnings of $7.65 on $5.63 billion in revenue. That topped analysts’ expectations for adjusted EPS of $7.54 on $5.51 billion in revenue. The CEO said, “We had another strong quarter, and we are raising Intuit’s revenue and operating-income guidance for fiscal-year 2022.” Intuit expects fiscal Q4 revenue to fall 8% to 9% annually due to the earlier tax filing deadline this year compared to last. The company forecast full-year revenue between $12.63 billion and $12.67 billion, up from prior guidance for $12.17 billion to $12.3 billion. Intuit expects full-year adjusted EPS to range between $11.68 and $11.74 vs previous guidance for $11.48 to $11.64. Wendy’s Rallies On Potential Takeover By Largest Shareholder Wendy’s (WEN) shares are rising 9.5% ahead of the open after a filing revealed its largest shareholder is exploring a potential deal with the company. In an SEC filing, Trian Partners said it is seeking a deal that “can generate or enhance shareholder value.” Trian owns a 19.4% stake in Wendy’s. The hedge fund said, “Such a potential transaction could include an acquisition, business combination (such as a merger, consolidation, tender offer or similar transaction) or other transaction that would result in the acquisition of control of” Wendy’s. Trian said it has already begun discussions with the board and plans to continue those talks. The fund holds three seats on the Wendy’s board of directors. Lyft Sinks On Plan to Slow Hiring Lyft (LYFT) shares are down 0.2% in premarket trade after the company announced plans to slow hiring. Lyft president John Zimmer made that announcement in a memo to staff late Tuesday. A company spokeswoman said in a statement, “We’re focused on accelerating profitable growth. We’re also being responsible about costs and will significantly slow hiring.” In addition to a hiring pause, Lyft is also reducing the budget of some departments and granting new stock options to some employees to make up for its plunging share price. Rival Uber (UBER) shares are following LYFT in premarket trade, falling 0.3% ahead of the open. Uber previously announced its own plans to slow hiring and cut its spending on marketing, as it focuses on turning a profit. Oil Prices Rise On Tight Supply, High Demand Concerns Oil prices are rising on tight supply concerns as the U.S. enters its peak driving season. West Texas Intermediate crude futures are up 1.1% to $111 bbl while Brent crude futures are rising 0.9% to over $114 bbl. The American Petroleum Institute reported Tuesday that U.S. gasoline stockpiles fell by 4.2 million barrels last week. Those stockpiles are at the seasonally lowest level since 2014. The French foreign minister also said Tuesday was optimistic about the EU securing a deal to ban Russian oil imports. Gas Prices Hit 16th Straight Record-High U.S. gas prices hit a new record high for the 16th straight day today. AAA shows the national average for regular rose to $4.599/gal overnight. Diesel prices are continuing to cool, slipping to $5.544/gal today. The Energy Secretary said Tuesday that the President has not ruled out using export restrictions to ease high gas prices in the U.S. Bill Ackman Slams
Continue Reading -->Prepare for a Rally
The market rallied hard at the end of the day on Friday, leaving a big bottoming tail on the day’s candle. But does Sami think that that means we’ve hit the bottom? Find out what he’s watching to understand the market’s future direction, and what he’s expecting to see this week. In this video, Sami explains: – Why ADI is the only stock of its kind – How he handles uncooperative trades – The changes he’d make to his strategy if he knew the market had bottomed – What sets AUY apart from other gold stocks – Which gap showed up in BROS
Continue Reading -->Coffee With Greta: Snap Collapses on Awful Guidance
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -203 (-0.6%) SPX Futures: -42 (-1.1%) NASDAQ Futures: -204 (-1.7%) Good morning friends! Futures are lower as traders digest a sales warning from a major social media company plus more disappointing retail earnings. Let’s get right to it! Snap Tanks On Q2 Sales Warning Snap (SNAP) shares are plummeting 33.2% ahead of the open after warning it will miss its own revenue and EPS expectations in the current quarter. The company filed an 8-K with the SEC, saying “the macroeconomic environment has deteriorated further and faster than anticipated” since releasing guidance on April 21. The filing said, “we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range.” In a letter to employees, CEO Evan Spiegel also said Snap will slow hiring as they work to lower costs. Spiegel said the company will still recruit new employees and he expects to hire 500 more before the end of the year. That’s a slowdown from the 2,000 employees Snap has hired over the past 12 months. The Snapchat parent company is the latest tech company to slow hiring this year, following the lead of giants like Meta Platforms (FB) and Twitter (TWTR). In a letter to employees, CEO Evan Speigel said the social media company will also slow hiring through the end of 2022. Best Buy Slips On Earnings Miss, Downgraded Outlook Best Buy (BBY) shares are slipping 2.5% ahead of the open after missing Q1 profit expectations. The retailer reported adjusted earnings of $1.57 per share vs expectations for $1.61. $10.65 billion in revenue was better than expectations for $10.41 billion. Best Buy’s same-store sales fell 8% year-over-year, better than analysts’ expectations for an 8.6% decline. The CEO said the economic backdrop has worsened since its investor day and “as a result, we are revising our sales and profitability expectations for the year.” The company forecast full-year revenue between $48.3 billion and $49.9 billion, down from its previous outlook from $49.3 billion to $50.8 billion. Best Buy expects same-store sales to drop between 3% and 6% vs the previous forecast for 1% to 4%. Full-year adjusted earnings are now expected to range between $8.40 and $9.00 per share compared to the prior outlook for $8.85 to $9.15. Abercrombie & Fitch Plunges On Unexpected Q1 Loss Abercrombie & Fitch (ANF) shares are plunging 27.8% in premarket tradea after reporting an unexpected loss in fiscal Q1. The clothing retailer reported an adjusted loss of $0.27 per share vs analysts’ expectations for earnings of $0.08 per share. The company’s $813 million in revenue beat estimates of $799 million. Sales rose 4% year-over-year. The company blamed the profit loss on higher freight and product costs in the quarter. Abercrombie slashed its full-year sales outlook, now expecting year-over-year growth to be flat to up to 2%. The company previously forecast sales growth between 2% and 4% this year and analysts’ were expecting 3.5% growth. Zoom Jumps on Earnings Beat, Strong Guidance Zoom (ZM) shares are up 3.4% in premarket trade after beating Q1 earnings expectations and issuing strong Q2 guidance. The video chat company reported adjusted earnings of $1.03 per share on $1.07 billion in revenue. That was better than analysts’ expectations for $0.87 in EPS and in-line with revenue estimates. Revenue jumped 12% annually last quarter. Zoom forecast Q2 revenue between $1.115 billion and $1.12 billion, which would be up 9.2% year-over-year. Analysts were estimating 8.7% growth to $1.1 billion. The company forecast Q2 EPS between $0.90 to $0.92 vs analysts’ expectations of $0.87. For fiscal 2022, Zoom is expecting revenue between $4.53 billion and $4.55 billion, in-line with expectations. The company sees full-year earnings ranging between $3.70 and $3.77 per share, better than estimates for $3.53. Oil Prices Flat Amid Recession Fears Oil prices are slightly higher amid concerns about a recession and Covid restrictions in China. West Texas Intermediate crude futures are up just 0.1% to over $110 bbl while Brent crude futures are rising 0.2% to over $113 bbl. Beijing is ramping up quarantine restrictions while Shanghai’s lockdown is due to be lifted soon. Although energy traders are worried a recession in the U.S. will cause a decrease in demand, fuel demand remains high now ahead of Memorial Day weekend. Gas Prices Hit 15th Straight Record-High U.S. gas prices hit a new record high for the 15th straight day today. AAA shows the national average for regular rose to $4.598/gal overnight. Diesel prices are continuing to cool, slipping to $5.549/gal today. The national average for a gallon of regular has not fallen for nearly a month. The price has either risen or remained flat every single day since April 24. The average is over $4/gal in every single U.S. state. U.S. Business Activity Expected To Slow S&P Global releases its May purchase managers index for both the services and manufacturing sectors at 9:45 a.m. ET. The manufacturing PMI is expected to fall to 58 this month from 59.2 in April. While the services PMI is expected to drop to 55.4 from 55.6. Any reading above 50 still signals an expansion in business activity. But both manufacturers and service providers have struggled in recent months with rising costs as inflation remains elevated. New Home Sales Expected To Fall The Census Bureau reports new home sales for April at 10:00 a.m. ET. That report is expected to show sales fell to a seasonally adjusted annual rate of 750,000 units last month vs 763,000 in March. Last week, the government reported an unexpected slowdown in housing starts in April. Builders say they’re seeing a drop in demand as rising mortgage rates pile on top of high costs. In Case You Missed It The Fed’s 2021 Survey of Household Economics and Decisionmaking found Americans were already worried about the economy before inflation surged
Continue Reading -->