Coffee With Greta: More Inflation, More Problems
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: -157 (-0.5%) SPX Futures: -30 (-0.8%) NASDAQ Futures: -177 (-1.5%) Good morning friends! Futures are falling as selling continues to wreak havoc on Wall Street. Let’s get right to it! Producer Inflation Surges The Bureau of Labor Statistics’ producer price index jumped 0.5% monthly in April and surged 11% year-over-year. That was in line with economists’ expectations on a monthly basis and a slowdown from 11.5% annual inflation in March. That’s the first decline in annual price changes since the pandemic started. The core PPI, which excludes food, energy, and trade services, rose 0.6% monthly and 6.9% annually. That was also in line with expectations. Producer prices are leading indicator for consumer prices as the increases are passed down to shoppers. The CPI also came in hotter than expected in April. Consumer prices rose 0.3% monthly and 8.3% year-over-year last month vs expectations for 0.2% and 8.1% respectively. The Core CPI jumped 0.6% monthly and 6.2% annually. Weekly Jobless Claims Rise Unexpectedly The Labor Department reported 203,000 Americans filed initial claims for unemployment benefits last week. That was an increase of 1,000 from the previous week and missed economists’ expectations for claims to fall to 194,000. The previous week was also revised higher to 202,000 from 181,000. That was the biggest weekly increase since July 2021. Continuing claims fell by 44,000 to 1.34 million in the week ending April 30, the lowest level since early 1970. Oil Prices Fall, Gas Prices Hit Record Oil prices are slipping today on fears of an impending recession in the U.S. West Texas Intermediate crude futures are down 1.3% to $104 bbl with Brent crude futures falling 1.4% to $106 bbl. The International Energy Agency also warned Thursday that soaring gas prices will hurt demand. And U.S. gas prices just hit a new record high. Data from AAA shows the national average for a gallon of regular is $4.418, this is the third record set just this week. Diesel prices are also sitting at a record $5.557 per gallon. Cryptocurrencies Collapse More than $200 billion has been wiped off the global crypto market cap over the past day. Bitcoin is down 8.4% in the past 24 hours, hovering around $28,000. The coin plunged as low at $25,919 earlier this morning, which is the first time its dropped below $27,000 since December 2020. Ethereum has lost 17.4% in the past 24 hours, falling under $2,000. The global crypto market cap is down 14.8% to $1.26 trillion. Investors have been fleeing crypto amid the intense selling on Wall Street. Disney Shakes Off Earnings Miss, Rallies On Subscriber Growth Walt Disney (DIS) shares are sliding 5.2% ahead of the open after missing fiscal Q2 expectations. The company reported adjusted earnings of $1.08 per share on $19.25 billion in revenue. That missed analysts’ expectations for adjusted EPS of $1.19 on $20.1 billion in revenue. But Disney+ had 137.7 million total subscribers last quarter, beating expectations for 135 million. That subscriber beat is pumping up the stock. Disney’s theme parks business is also seeing a solid recovery from the pandemic. Theme parks and product sales nearly doubled year-over-year to $6.65 billion, better than expectations for $6.3 billion. Rivian Rallies On Outlook Rivian Automotive (RIVN) shares are down 4.1% in premarket trade after missing Q1 expectations. The electric automaker reported a loss of $1.77 per share and a $1.6 billion operating loss on $95 million in sales. That was worse than analysts’ expectations for a loss of $1.45 per share and a $1.5 billion operating loss on $131 million in sales. But the stock is up after Rivian maintained its previous 2022 production guidance. The company still expects to deliver 25,000 vehicles this year after producing 2,553 in Q1. Rivian said it had more than 90,000 reservations at the end of the quarter and nearly $17 billion in cash. Beyond Meat Tumbles On Disappointing Q1 Results Beyond Meat (BYND) shares are tumbling 23.6% ahead of the open after reporting a wider-than-expected first-quarter loss. The alternative meat company reported an adjusted loss of $1.58 per share on $109.5 million in revenue. That was worse than analysts’ expectations for a $1.01 per share loss on $112.3 million in revenue. Beyond Meat executives warned of “near-term uncertainty” due to inflation, rising interest rates, and the supply chain. The company forecast full-year revenue between $560 million and $620 million vs analysts’ expectations for $580.7 million. WeWork Earnings WeWork (WE) shares are up 2.9% in premarket trade after reporting a narrower Q1 loss than expected. The office-sharing company reported a loss of $0.57 per share on $765 million in revenue. That was better than analysts’ expectations for a loss of $0.72 per share on $768 million in revenue. Revenue rose 28% year-over-year. WeWork’s total expenses fell to $1.12 billion vs $2.1 billion a a year ago. The company forecast Q2 revenue between $800 million and $825 million and full-year sales between $3.4 billion and $3.5 billion. Instacart Files For IPO Grocery delivery platform Instacart isn’t letting the tech rout scare it off. The company announced it has filed a draft registration statement with the SEC, in its first step toward going public through an IPO. Instacart previously raised $265 million and was valued at $39 billion in March 2021. But the company cut its own valuation to $24 billion in March, citing the 2022 sell-off in tech stocks. Record-High Federal Budget Surplus The U.S. government ran a record-high budget surplus in April as tax revenue surged. The Treasury Department reported a surplus of $308 billion last month. Tax revenue nearly doubled year-over-year to a record-high $864 billion. Part of that huge annual increase was because last year’s tax filing deadline was delayed to May. Government spending fell to $555 billion, down $110 billion from a year ago. Through the first seven months of fiscal 2022,
Continue Reading -->Coffee With Greta: Inflation Is Still Poisoning the Market
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: -138 (-0.4%) SPX Futures: -25 (-0.6%) NASDAQ Futures: -137 (-1.1%) Good morning friends! Futures are lower following the release of hotter than expected inflation data. Let’s get right to it! Inflation Is Still Hot U.S. inflation pressures rose more than expected in April, remaining at the highest level in nearly 40-years. The Bureau of Labor Statistics’ consumer price index jumped 0.3% monthly and 8.3% year-over-year. That was higher than economists’ expectations for a monthly gain of 0.2% and 8.1% annually. But it was a slowdown from March. Grocery prices jumped 10.8%, oil soared 80.5%, gas surged 43.6%, electricity rose 11%, utility gas jumped 22.7%, and used vehicle prices were up 22.7%. The Core CPI, which excludes food and energy prices, also rose more than expected. That index was up 0.6% on a monthly basis, an increase from 0.3% in March. The Core CPI jumped 6.2% annually. Terra Coins Collapse The two main stablecoins of crypto firm Terra are collapsing. Data from CoinGecko shows the TerraUSD stablecoin UST is down nearly 52% in the past 24 hours, at just $0.44. The coin is meant to be pegged to the US Dollar and should be steady at a value of $1. UST plunged as low as $0.31 today. Its sister token, Luna is also crumbling. Luna is down about 95% over the past 24 hours, at $1.68. Coinbase Plunges On Revenue Drop Coinbase (COIN) shares are tumbling 19.6% ahead of the open after revenue fell sharply in the first quarter. The crypto trading platform reported a net loss of $1.98 per share on $1.17 billion in revenue. That was worse than analysts’ expectations for a loss of $0.01 per share on $1.48 billion in revenue. Coinbase’s revenue tumbled 27% year-over-year. The drop came as crypto trading slowed sharply. The company had 9.2 million monthly transacting users in Q1 vs 11.4 million in Q4. Q1 trading volume fell to $309 billion vs $547 billion in Q4 and $335 billion in Q1 2021. Costs also rose sharply in Q1. Coinbase’s overall operating expenses jumped to $1.72 billion in the quarter, outstripping revenue for the first time. The weak results pushed the stock to a record low after COIN plunged 12.6% in regular trading Tuesday. Unity Software Collapses on Weak Guidance Unity Software (U) shares are falling 28.4% in premarket trade after releasing weak Q2 guidance and cutting its full-year outlook. The video game development company reported an adjusted loss of $0.08 per share on $320.1 million in revenue. That was in line with analysts’ expectations. But the market soured on Unity’s Q2 guidance. The company forecast revenue between $290 million and $295 million this quarter vs analysts’ estimates for $360.97 million. Unity also cut its full-year guidance to between $1.35 billion and $1.425 billion vs the previous forecast for $1.485 billion to $1.5 billion. The CEO struck an optimistic tone on the earnings call saying, “Unity delivered record quarterly revenue in the first quarter of 2022, the highest in the company’s history, up 36% compared with the first quarter of 2021… We remain focused on the massive opportunity we see in front of us long-term.” But traders don’t seem to agree. Roblox Sinks on Weak Q1 Roblox (RBLX) shares are down 4% ahead of the open after missing Q1 expectations. The video game company reported a loss of $0.27 per share on $631.2 million in revenue. That was worse than analysts’ expectations for a loss of $0.21 per share on $636.6 million in revenue. Roblox had 54.1 million average daily active users during the quarter, up 28% year-over-year but weaker than analysts’ estimates for 55 million. In a letter to shareholders, the company said, “While Covid and the subsequent re-opening have contributed to slowing growth in several of our metrics, based on third party data we believe we are gaining share on both users and hours relative to certain other companies in gaming and social media that compete for our users’ attention.” SoFi’s Big Oops SoFi (SOFI) shares are slipping 0.2% in premarket trade after accidentally releasing its Q1 results early on Tuesday. The fintech company reported a loss of $0.14 per share on $322 million in revenue. That was better than analysts’ expectations for a loss of $0.15 per share on $286 million in revenue. SoFi blamed “human error” for its Q1 results being released during the trading day instead of after-hours on Tuesday. And the stock tanked as the Q2 forecast came in weak. Trading was halted on SOFI at 11:19 a.m. ET Tuesday, as the stock tumbled 18%. Trading reopened 3 hours later and SOFI closed 12.1% lower Tuesday. SoFi forecast Q2 revenue between $330 million and $340 million vs analysts’ expectations for $343.7 million. Adjustable-Rate Mortgage Demand Jumps Demand for adjustable-rate mortgages is on the rise, as rates soar. The Mortgage Bankers Association reported overall mortgage demand rose 5% last week but applications were still down 8% year-over-year. The increase came despite the average 30-year fixed rate rising to 5.53% from 5.36%. But more buyers are turning to adjustable-rate mortgages, with the average 5-year rate at 4.47%. ARMs represented 11% of all mortgages last week, up from just 3% at the start of 2021. That’s the highest share since March 2008. Refinance applications fell 2% last week and were down 72% compared to a year ago. Oil Prices Jump Oil prices are rising today after tumbling nearly 10% in the past two days. West Texas Intermediate crude futures are up 4% to $103.75 bbl while Brent crude futures are up 3.6% to $106 bbl. The rally comes as the EU works to gain support for its proposed Russian oil ban. The Energy Information Administration will release its weekly report on U.S. crude supplies today. Apple Kills the iPod The Apple (AAPL) iPod is dead. The tech giant announced Tuesday it is discontinuing the
Continue Reading -->Coffee With Greta: Can Stocks Find a Parachute?
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: +295 (+0.9%) SPX Futures: +225 (+1.9%) NASDAQ Futures: +46 (+1.2%) Good morning friends! Futures are higher after the S&P 500 tumbled to its lowest level in more than a year on Monday. Let’s get right to it! Stocks Rise, Yields Dip Stock futures are rising for the first time in 3 days as Treasury yields pull back. The yield on the 10-year Treasury note fell 10 basis points to 2.98% while the 30-year yield is down 11 basis points to 3.10%. The rebound comes after the major indexes plummeted on Monday. The S&P 500 closed below 4,000 for the first time since April 2021, while the Dow shed more than 600 points, and the Nasdaq plunged more than 4%. Bitcoin Follows Stocks Bitcoin is still down 3.6% in the past 24 hours, sitting at $31,800 after plunging more than 10% on Monday and dropping below $31,000. That was Bitcoin’s lowest level since July 2021. Ethereum is up 0.3% at $2,416, after falling more than 11% to under $2,300. The crypto market has recently been tracking the stock market instead of moving independently of Wall Street. Peloton Plummets on Huge Loss, Weak Outlook Peloton (PTON) shares are are plunging 21.4% in premarket trade after reporting a massive fiscal Q3 loss. The exercise bike maker reported a loss of $2.27 per share on $964.3 million in revenue. That was worse than analysts’ expectations for a loss of $0.83 per share on $972.9 million in revenue. The stock is set to open at a fresh all-time low. Peloton said it’s seen a steep drop in customer demand as pandemic lockdowns were lifted. But it did see higher treadmill sales in the quarter. Peloton added 195,000 connected fitness subscribers in the quarter, bringing the total to 2.96 million. The company forecast fiscal Q4 revenue between $675 million and $700 million vs analysts’ estimates for $821.7 million. AMC Rallies on Earnings Beat AMC Entertainment (AMC) shares are up 3.8% ahead of the open after reporting a narrower Q1 loss than expected. The theater chain reported an adjusted loss of $0.52 per share on $785.7 million in revenue. That was better than analysts’ expectations for an adjusted loss of $0.63 per share on $743 million in revenue. CEO Adam Aron said, “Our results for the first quarter of 2022 represent AMC’s strongest first quarter in two full years.” AMC had $1.3 billion in available liquidity at the end of Q1. Novavax Falls on Earnings Miss Novavax (NVAX) shares are down 26.6% in premarket trade despite reporting its first-ever profitable quarter. The biotech company reported earnings of $2.56 per share on $704 million in revenue. But that was still shy of analysts’ expectations for EPS of $2.69 on $845 million in revenue. Novavax touted the “successful” launch of its Covid vaccine globally and said it’s on track to expand its label use. The company reiterated its full-year guidance for revenue between $4 billion and $5 billion. Upstart Plunges After Cutting Guidance Upstart Holdings (UPST) shares are plummeting 58.9% ahead of the open after beating Q1 expectations but cutting its full-year outlook. The company reported adjusted earnings of $0.61 per share on $310 million in revenue. That topped analysts’ expectations for adjusted EPS of $0.53 on $300 million in revenue. But Upstart forecast Q2 revenue between $295 million and $305 million vs analysts’ estimates for $335 million. The company also slashes its full-year outlook, expecting $1.25 billion in revenue vs its previous forecast for $1.4 billion. Oil Prices Extend Losses Oil prices are down again today on continued concerns about global economic growth and the strong dollar. West Texas Intermediate crude futures are down 0.4% to $102.60 bbl while Brent crude futures are down 0.6% to $105.20 bbl. Both posted their largest daily decline since March on Monday. The energy market is concerned about rising recession risks in the U.S. as the Fed tightens its policy. Upcoming Economic Data The National Federation of Independent Business releases its April small business optimism index at 9:00 a.m. ET. Economists expect that survey to show optimism among business owners fell by 0.3 points to 92.9 last month. Small businesses have been squeezed by rising costs due to inflation as it’s more difficult for them to hike prices compared to large corporations. Business owners have also sounded the alarm on the current labor shortage in the U.S. economy. The New York Fed releases its Q1 report on real household debt at 11:00 a.m. ET. In Case You Missed It Rivian (RIVN) shares plummeted 20.9% Monday after Ford (F) announced plans to sell part of its stake in the electric automaker. The stock hit a record low at $22.45 per share before closing at $22.78. Ford’s sale comes after Rivian’s IPO lockup period expired Sunday. Rivian’s early 2022 stock plunge dented both Ford and Amazon’s (AMZN) Q1 earnings. Rivian reports earnings Wednesday morning. The New York Fed’s consumer expectations survey showed a cooldown in inflation forecasts in April. Respondents to the survey said they see inflation at 6.3% 1-year from now. That was down 0.3% from March. But consumers still expect household spending to surge 8% over the next 12 months. 3-year inflation expectations increased by 0.2% in April to 3.9%.
Continue Reading -->Scott Redler’s Dog Bytes: Why I Bet Against Apple and Microsoft
SPX futures are -65, giving big downside follow-through to the recent technical damage. We’ll see if SPX stay belows the 4060ish area, or if it gets reclaimed. I positioned for a down open with SPY, MSFT, and AAPL puts since I’ve been concerned about a capitulation move towards 3850.Tech has led us lower for most of 2022. See if the QQQ’s can stay below $305.11 or if that gets reclaimed to relieve some pressure. Watch key leading stocks like AAPL, MSFT, TSLA, and AMD for clues on the action. LastAAPL will be interesting. Last Thursday I bought $150 puts in case it plays downside catch-up. I’ll trim some and hold some. See if it stays below $153-$154 to keep pressure on. If it stays weak $150 is below.MSFT: I went out short which will help my morning. I covered some below $268. I am also long puts for Friday. We’ll see if it stays below $270 or reclaims it to relieve some pressure. (Editor’s Note: Scott covered the rest of his MSFT short at 9:28 a.m. this morning. He also sold some of his AAPL puts after the open) AMZN’s upper channel resolved lower well before the earnings report. Now the comps are bad, growth has decelerated, and they waited too long to announce the split. If the SPX sees the 3850 area in the weeks ahead, it could hit $2050, where I’d revisit options. It’s been weaker than most F.A.N.G.-type names over the past few weeks. See if it reclaims $2261. If we stay under pressure all day, I might sell some lower strike puts for a trade. ARKK has been in an accelerated downtrend since the $159 top. It then tried to form a channel but broke it around $113. It’s been below the 8/21 day since then with many bear flag continuation patterns. The recent low is $43.99. See if it stays below that or reclaims it for tactical action. The $35 area may be a good spot for long-term money.Positions Disclosure as of 5/9/2022 at 9:45 a.m. ET
Continue Reading -->Coffee With Greta: The Destruction Continues, Yields Spike
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: -364 (-1.1%) SPX Futures: -59 (-1.4%) NASDAQ Futures: -232 (-1.8%) Good morning friends! Futures are tumbling, extending last week’s rout as Treasury yields rise. Let’s get right to it! Yields Rally U.S. Treasury yields are on the rise amid new concerns about inflation and slowing economic growth. The 10-year Treasury yield hit the highest level since November 2018, jumping to 3.185% this morning. The yield on the 30-year bond jumped to 3.293%. Yields have spiked since the Fed decision last week as the market worries the bank’s actions against inflation will cause a recession. Bitcoin Is Still Tumbling Bitcoin prices kept sliding over the weekend after the crypto market fell alongside the stock market last week. Bitcoin is down 4.9% in the past 24 hours at $32,995. That’s the lowest level since July 2021 and down more than 50% from its peak at $68,990.90 in November. Ethereum is down 6.3% at $2,400. XRP is down 6.2% at $0.53 and Dogecoin has fallen 6.8% to $0.11. The global crypto market cap has lost 5.6% in the past 24 hours, falling to $1.59 trillion. Tyson’s Price Hikes Boost Earnings Tyson Foods (TSN) shares are up 2.7% ahead of the open after beating fiscal Q2 expectations. The meat company reported adjust earnings of $2.29 per share on $13.1 billion in revenue. That topped analysts’ expectations for adjusted EPS of $1.89 on $12.8 billion in revenue. Tyson said the average sales price of its products rose last quarter “due to the effects of pricing initiatives in an inflationary cost environment.” Beef revenue jumped 23.8% year-over-year, pork sales jumped 10.8%, chicken revenue was up 14.4%, and sales of prepared foods rose 15.9%. Tyson hiked its full-year revenue forecast to between $52 billion and $54 billion from $49 billion to $51 billion previously. Palantir Misses Q1 Expectations Palantir Technologies (PLTR) shares are tumbling 14.9% in premarket trade after missing Q1 expectations. The company reported adjusted earnings of $0.02 per share on $446.4 million in revenue. That was weaker than the company’s own forecast for revenue of $447 million and weaker than analysts’ expectations for adjusted EPS of $0.04. Commercial revenue rose 54% year-over-year to $205 million, topping analysts’ estimates for $193 million. Palantir expects Q2 revenue of at least $470 million vs consensus estimates for $484 million. The company reiterated its long-term forecast for annual revenue growth of 30% or better through 2025. BioNTech Earnings Boosted by Covid Vaccine Sales BioNTech (BNTX) shares are up 1.1% ahead of the open as strong Covid vaccine sales boosted its Q1 earnings. The German pharmaceutical company reported earnings of €14.24 per share on €6.37 billion in revenue. That topped analysts’ expectations for EPS of €9.16 on €4.34 billion in revenue. The company said the revenue jump “was mainly due to increased commercial revenues from the supply and sales of the company’s Covid-19 vaccine worldwide.” BioNTech reiterated its full-year outlook for Covid vaccine revenue between €13 billion to €17 billion. Oil Prices Tumble Oil prices are falling as a strong U.S. dollar weighs on the market and Covid lockdowns in China prompt demand worries. West Texas Intermediate crude futures are down 2.3% to $107 bbl while Brent crude futures are down 2.1% to $110 bbl. The dollar hit a 20-year high, making oil more expensive for foreign currency holders. The EU is still working to secure a unanimous vote on its proposed Russian oil ban. The G7 nations pledged to join the bloc in that action over the weekend and Japan’s prime minister said his country would ban Russian crude imports “in principle”. Inflation Week The market got rocked by a Fed rate hike and big economic data last week and more is on the way this week. The Bureau of Labor Statistics releases the April consumer price index Wednesday morning followed by the producer price index Thursday morning. Traders will be focused on that data to see if inflation has peaked. Although headline inflation pressures soared in March, the core CPI and PPI both came in weaker than expected. That prompted optimism that inflation may start trending downward soon. The Fed also believes inflation may have peaked and will start to cool in the months ahead. The New York Fed’s 1-year and 3-year consumer inflation expectations will be released today at 11:00 a.m. ET. In Case You Missed It Peloton (PTON) shares hit a record-low at $14.70 on Friday amid investor uncertainty about the company’s turnaround plans. The exercise bike maker is scheduled to report earnings ahead of the open Tuesday morning. PTON shares are down 2.4% in premarket trade.
Continue Reading -->Markets in Turmoil: Ugly Times for Traders
Volatility is the name of the game in 2022. And a Fed rate hike and big economic data created a perfect storm on Wall Street this week. Things were looking good on Wednesday. The Fed hiked rates 0.5% as expected, voted to start its balance sheet reduction on June 1, and Chairman Jerome Powell said a 0.75% hike is not on the table. That sparked a huge relief rally. Stocks skyrocketed into the close after Powell’s 2:30 p.m. ET presser. The Dow closed 2.8% higher, the S&P 500 gained 3%, and the Nasdaq settled up 3.2%. ETFs that track the major indexes also shot up sharply. The S&P and the Dow had their biggest gains since 2020. But then reality set in overnight; the Fed might not be able to avoid a recession, no matter what Powell says. And the panic selling peaked on Thursday. The Dow plunged more than 1,000 points, over 3.1%, while the Nasdaq dropped 5.0 % to its lowest closing level since November 2020. It was the largest daily drop for both indexes since 2020. And QQQ followed suit. While the broader market sold off, one specific sector got demolished. E-commerce stocks got rocked after a series of weak earnings reports thanks to consumers returning to physical stores. Wayfair (W) plummeted 26% and hit a fresh 52-week low. Shopify (SHOP) shed nearly 15%. Etsy (ETSY) plunged 17%. And eBay (EBAY) dropped 12%. Even Amazon (AMZN) wasn’t immune from the sell-off, falling about 8%. Many were hopeful a strong April jobs report on Friday could serve as a life raft. But even a big beat on job growth was unable to rescue stocks. The major indexes slid further Friday, with the Dow closing 0.3% lower, the S&P 500 falling 0.6%, and the Nasdaq down 1.4%. It was the 6th straight weekly decline for the Dow. SPY and QQQ both also extended their losses. The session saw some stocks hit fresh all-time lows. Peloton (PTON), a one-time pandemic star on Wall Street, bottomed out at $14.70 per share and ended down 7.7%. And that drop came ahead of earnings next week with expectations being low. Other pandemic-era favorites aren’t faring much better in 2022. Cathie Wood’s Ark Innovation ETF (ARKK) is down 65.6% from its 52-week high, ending Friday’s session 4.4% lower after tumbling 8.9% on Thursday. High-growth tech stocks aren’t the only ones suffering. FAANG is down 34.4% YTD. Netflix (NFLX) has been hit the hardest, plummeting 70% in 2022. Meta Platforms (FB) is down 39.4% YTD. Alphabet (GOOGL) is down 20.1% this year while Amazon (AMZN) dropped 31.2% despite impending 20-for-1 stock splits for both this summer. Apple (AAPL) is faring the best among big tech, falling “only” 11.4% YTD. So is anything up in 2022? Energy. The energy sector has been the bright spot this year thanks to Russia’s war in Ukraine pushing commodity prices to record highs. The VanEck Oil Services ETF (OIH) is up 49.8% in 2022. And the Energy Select Sector SPDR ETF (XLE) has risen 49.4% YTD But if you don’t own energy stocks, I’d be willing to bet your portfolio is hard to look at right now. The question now is whether the market has found its bottom. But looking ahead to next week, more turmoil may be on the way. It’s inflation week with the April Consumer Price Index and Producer Price Index both on the schedule. After the March CPI report, there was some talk that inflation had peaked. We’ll find out next week whether that was true. It’s been a hard and fast fall for stocks this year. After the original Covid crash in 2020, the market was easy to play. Buy a dip and watch it rise. The Fed was pumping tons of money into the market, Congress was handing out cash to Americans, and retail traders were killing the big hedge funds. Every trade felt like a winner back then. But everything is cyclical and experts say this market was well overdue for a correction. How long we’ll stay in a bear market remains to be seen.
Continue Reading -->Coffee With Greta: April Job Growth Comes In 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: -15 (-0.1%) SPX Futures: -3 (-0.1%) NASDAQ Futures: -13 (-0.1) Good morning friends! Futures are slightly lower after plunging on Thursday, with the Dow and the Nasdaq logging their worst days since 2020. Let’s get right to it! Mixed April Jobs Report April job growth came in hotter than expected but other metrics in the report were weak. The Labor Department reported the U.S. economy added 428,000 jobs last month, beating economists’ expectations for a gain of 400,000. The unemployment rate held steady at 3.6% vs expectations for that to fall to 3.5%. Average hourly earnings rose 0.3% monthly, below expectations for 0.4%. Wages rose 5.5% year over year, lagging far behind inflation. The labor force participation rate fell by 0.2% to 62.2%, tied for the lowest level of the year and still far below pre-pandemic levels. Supply Worries Boost Oil Prices Oil prices are still rising on fresh supply concerns. West Texas Intermediate crude futures are up 1.6% to $110 bbl while Brent crude futures are up 1.8% to $113 bbl. EU sources say the bloc is tweaking its sanctions plan against Russia to get three reluctant countries on board. The sanctions package would phase out all Russian oil imports by the end of this year. Crypto Tumbles The crypto market is extending Thursday’s losses this morning. Bitcoin dropped below $36,000 earlier in the day but is now down about 8% in the past 24 hours at $36,300. Ethereum is down 7.3% at $2,700, XRP is off 4.8% at $0.61, and Dogecoin is down 4.6% at $0.13. Some experts see Bitcoin moving lower in the days ahead, saying it lost a key level when it fell below $37,500. DraftKings Earnings DraftKings (DKNG) shares are up 5.6% ahead of the open after the company hiked its full-year guidance. The online sports betting company reported and adjusted Q1 loss of $0.74 per share on $417 million in revenue. That was better than analysts’ expectations for a loss of $1.09 per share on $412 million in revenue. DraftKings forecast full-year revenue between $1.93 billion and $2.03 billion, up from previous guidance for $1.85 billion to $2 billion. The CEO said, “DraftKings delivered significant growth across our key revenue and performance metrics. We are not seeing any impact from inflationary pressures on customer demand.” DoorDash Orders Hit Record High DoorDash (DASH) shares are up 3.6% in premarket trade after reporting record-high orders in the first quarter. The food delivery service reported a loss of $0.48 per share on revenue of $1.46 billion. That was steeper than analysts’ expectations for a $0.41 per share loss but better than estimates for $1.38 billion in revenue. Revenue rose 35% year-over-year as the total number of orders jumped 24% to 404 million. That’s the first time orders have topped 400 million. DoorDash forecast Q2 adjusted EBITDA of up to $100 million, up from $54 million in Q1. In a letter to investors, the company said it now holds 57% of the food delivery market in the U.S. DoorDash now plans to invest in other categories like grocery, alcohol, and retail deliveries. Sweetgreen Revenue Surges Sweetgreen (SG) shares are up 4.2% ahead of the open after reporting strong Q1 sales. The salad chain reported a loss of $0.45 per share on $102.6 million in revenue. That compared to analysts’ expectations for a $0.41 loss per share on $101.5 million in revenue. Sales jumped 67% year-over-year. Same-store sales rose 35% in Q1 as more customers visited the chain and Sweetgreen raised its prices. Prices were up 10% compared to Q1 2021. Sweetgreen reiterated its 2022 forecast for revenue between $515 million and $535 million and same-store sales growth between 20% to 26%. The company plans to open 35 new locations this year. Virgin Galactic Tumbles After Postponing Commercial Flight Virgin Galactic (SPCE) shares are falling 5.9% in premarket trade after postponing its first commercial space flight. The company reported a loss of $0.36 per share in Q1. Although that was down from the $0.55 per share loss a year ago, it was higher than analysts’ expectations for a $0.32 loss. But Virgin Galactic’s $319,000 in revenue topped estimates for $100,000. The company pushed its first commercial space flight to Q1 2023 citing “escalating supply chain and labor constraints”. Virgin Galactic previously announced plans to have its first 1,000 customers on board flights to space later this year. Block Shakes Off Q1 Earnings Miss Block (SQ) shares are up 5.3% ahead of the open despite missing Q1 expectations. The Square parent company reported adjusted earnings of $0.18 per share on $3.96 billion in revenue. That missed analysts’ expectations for adjusted EPS of $0.20 per share on $4.14 billion in revenue Block generated overall gross profit of $1.29 billion. That was up from $964 million a year ago but shy of analysts’ estimates for $1.3 billion. The market pays closer attention to that number than revenue as the revenue line is swayed by high-cost initiatives like Bitcoin trading. Block brought in $1.73 billion in Bitcoin revenue in Q1 but Bitcoin-related costs totaled $1.69 billion. Gross profit from its Cash App mobile wallet jumped 26% year over year while Square’s gross profit surged 41%. Block’s CFO said they have seen the “platform is resilient” through times of uncertainty like the pandemic and the current inflationary environment. Lucid Beats Q1 Expectations Lucid (LCID) shares are up 0.4% in premarket trade after reporting a narrow than expected Q1 loss. The electric automaker reported a loss of $0.05 per share on $58 million in revenue. That was better than analysts’ expectations for a loss of $0.31 per share on $56 million in revenue. Lucid delivered 360 vehicles in Q1 and said it has more than 30,000 reservations for its flagship Air sedan. The company announced it is raising prices as costs continue to soar. Lucid
Continue Reading -->Coffee With Greta: Fed Shrugs Off Recession Fears
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: -157 (-0.5%) SPX Futures: -25 (-0.6%) NASDAQ Futures: -97 (-0.7%) Good morning friends! Futures are lower, giving up Wednesday’s relief rally prompted by the Fed decision. Let’s get right to it! Largest Rate Hike in 22 Years The Federal Reserve approved its largest rate hike in more than two decades Wednesday. The Federal Open Market Committee voted, as expected, to raise the federal funds rate by 0.5% to a range of 0.75% to 1.00%. That’s the largest increase since 2000. The FOMC also voted to begin the balance sheet reduction in June. Starting June 1, $30 billion in Treasury securities and $17.5 billion in mortgage-backed securities will be rolled off per month. That pace will increase to $60 billion in Treasury securities and $35 billion in mortgage-back securities after three months. In his news conference after the meeting concluded, Fed Chair Jerome Powell said “Inflation is much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down”. Powell said more 0.5% rate hikes are on the table for the future but shut down the market’s expectation for larger hikes. He said “75-basis points is not something the committee is actively considering”. Powell said the Fed believes “the American economy is very strong and well-positioned to handle tighter monetary policy” and they will be able to achieve a “soft or softish” landing. Weekly Jobless Claims Rise More Than Expected Weekly jobless claims rose more than expected as the labor market remains tight. The Labor Department reported 200,000 Americans filed initial claims for unemployment benefits last week. That was an increase of 19,000 from the previous week and higher than economists’ expectations for 182,000. Continuing jobless claims fell by 24,000 to 1.384 million in the week ending April 23. Labor Productivity Plunges, Costs Surge U.S. worker productivity tumbled 7.5% in the first quarter, marking the fastest decline since 1947. Productivity is a measure of worker output against number of hours worked. While productivity dropped sharply, labor costs soared 11.6% last quarter. That brings the increase over the past 4 quarters to 7.2%, the largest gain since Q3 1982. Economists were expecting productivity to fall 5.2% and unit labor costs to rise 10.5% Oil Prices Climb on Supply Worries Oil prices are rising on new supply concerns after the EU laid out its plan to phase-out Russian imports. West Texas Intermediate crude futures are up 1.2% to over $109 bbl while Brent crude futures are up 1.4% to nearly $112 bbl. OPEC+ also met today, sticking to its planned modest increase in production even amid uncertainty over supply in the market. The group will increase production by just 432,000 barrels per day in June. Meantime, the U.S. Energy Information Administration reported fuel inventories rose by 1.2 million barrels last week. That increase came as the U.S. released more from its strategic reserve. Shell Reports Highest Quarterly Profit Since 2008 Shell (SHEL) shares are up 0.9% ahead of the open after reporting its highest quarterly profit since 2008 in Q1. The oil giant reported an adjusted profit of $9.1 billion or $1.20 per share. That beat analysts’ expectations for $1.11 per share. The surging profits came as commodity prices soared in the quarter. Shell said it took $3.9 billion in post-tax charges related to pulling its business out of Russia. The company increased its dividend by about 4% to $0.25 per share and said $4 billion of its $8.5 billion share buyback program is complete. The remaining $4.5 billion in buybacks are scheduled to be complete before Shell announces Q2 earnings. Anheuser-Busch Inbev Slips Despite Q1 Earnings Beat Anheuser-Busch InBev (BUD) shares are down 0.6% in premarket trade despite beating Q1 expectations. The world’s largest brewer said EBITDA rose 7.4% year-over-year to $4.49 billion or $0.67 per share. Revenue was up 11.1% to $13.2 billion. That topped analysts’ expectations for EBITDA to rise just 4.6% and revenue to increase by 7.6%. AB InBev forecast 2022 EBITDA growth between 4% and 8% Shopify Tumbles on Earnings Miss Shopify (SHOP) shares are plunging 13.2% ahead of the open after missing Q1 expectations. The e-commerce company reported adjusted earnings of $0.20 per share on $1.2 billion in revenue. That missed analysts’ expectations for adjusted EPS of $0.64 on $1.24 billion in revenue. Shopify also announced plans to spend $2.1 billion to acquire fulfillment technology provider Deliverr. That deal will be 80% cash 20% Class A subordinate voting shares of Shopify. Shopify’s CEO said, “Our goal is to not only level the playing field for independent businesses, but tilt it in their favor – turning their size and agility into a superpower”. Sunrun Rallies on Strong Solar Demand Sunrun (RUN) shares are rallying 9.4% in premarket trade after reporting stronger than expected Q1 sales. The solar company reported a loss of $0.42 per share on $495.8 million in revenue. That was steeper than analysts’ expectations for a $0.17 per share loss but better than estimates for $401.3 million in revenue. Sunrun’s customer orders jumped 39% year-over-year as demand rose due to surging utility costs across the U.S. The company added 29,463 new customers in Q1, up 20% compared to a year ago and bringing the total to roughly 690,000. Sunrun also said it implemented “meaningful” price increases during the quarter to offset higher costs. The company hiked its guidance, expecting installed solar capacity growth of 25% or more in 2022. That’s up from previous guidance for 20% growth this year. eBay Tumbles on Lower Guidance eBay (EBAY) shares are dropping 7.4% ahead of the open after beating Q1 expectations but cutting its full-year outlook. The online retail company reported adjusted earnings of $1.05 per share on $2.48 billion in revenue. That was in-line with eBay’s previous guidance and beat analysts’ expectations for adjusted EPS of $1.03 on $2.46 billion in
Continue Reading -->Coffee With Greta: Private Job Growth Tumbles
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: +86 (+0.3%) SPX Futures: +12 (+0.3%) NASDAQ Futures: +27 (+0.2%) Good morning friends! Futures are higher as traders are laser-focused on the Fed meeting following the release of fresh jobs data this morning. Let’s get right to it! Private Job Growth Slows Sharply Job growth in the U.S. private sector slowed in April as the labor market remains historically tight. Payroll firm ADP reported private employers added 247,000 workers last month. That missed economists’ expectations for 390,000 and was a sharp decline from 479,000 in March. The slowdown was mostly due to a drop off in hiring at small businesses. Companies with less than 50 employees lost 120,000 workers in April while those with 500 or more employees added 321,000. The leisure and hospitality sector continued to lead the gains, adding 77,000 jobs last month. This comes ahead of the official April jobs report from the Labor Department on Friday. That report is expected to show the U.S. economy added 400,000 workers last month with the unemployment rate slipping to 3.5%. ADP’s chief economist said, “In April, the labor market recovery showed signs of slowing as the economy approaches full employment. While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers.” Fed Decision Day The Federal Open Market Committee releases its rate hike decision at 2:00 p.m. ET. The Fed is expected to vote in favor of a 0.5% rate hike today and begin the process of drawing down its balance sheet. The March minutes showed most officials support that runoff happening at a pace of $95 billion per month. But several Fed officials have since expressed support to be more aggressive and start selling off assets on the balance sheet. 57% of respondents to CNBC’s May Fed Survey said they believe the bank’s aggressive tightening action will lead to a recession. Moderna Reports Blowout Q1 Moderna (MRNA) shares are rallying 6.4% ahead of the open after crushing Q1 expectations. The pharmaceutical giant reported adjusted earnings of $8.58 per share on $6.07 billion in revenue. That smashes analysts’ expectations for adjusted EPS of $5.21 on $4.62 billion in revenue. Moderna sold $5.9 billion worth of its Covid vaccine in Q1, more than triple from $1.7 billion a year ago. The company maintained its full-year guidance for $21 billion in Covid vaccine sales. CVS Rises on Q1 Earnings Beat CVS (CVS) shares are up 1.6% in premarket trade after beating Q1 expectations. The pharmacy chain reported adjusted earnings of $2.22 per share on $76.83 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $2.15 on $75.39 billion in revenue. CVS saw declining demand for Covid related products during the quarter. The company administered more than 6 million Covid tests and 8 million vaccines in Q1. That’s down from 8 million tests and more than 20 million vaccines in Q4. Same-store sales rose 10.7% year-over-year, pharmacy same-store sales were up 10.1% and front store same-store sales rose 13.2%. CVS hiked its full-year guidance, forecasting earnings will range between $8.20 and $8.40 per share. Advanced Micro Devices Earnings Advanced Micro Devices (AMD) shares are jumping 6.7% ahead of the open after a Q1 earnings beat and strong outlook. The chipmaker reported adjusted earnings of $1.13 per share on $5.89 billion in revenue. That beat analysts’ expectations for adjusted EPS of $0.91 on revenue of $5.01 billion. It was the first time revenue has topped $5 billion as sales surged 71% compared to a year ago. Sales from the company’s computing and graphics segment jumped 33% year-over-year to $2.8 billion while data-center sales skyrocketed 88% to $2.5 billion. AMD forecast Q2 revenue between $6.3 billion and $6.7 billion and hiked its full-year forecast to $26.3 billion. That’s higher than analysts’ estimates for Q2 revenue of $5.14 billion and full-year revenue of $21.48 billion. Starbucks Reports Strong U.S. Sales Starbucks (SBUX) shares are 6.8% higher in premarket trade after reporting fiscal Q2 results after-hours on Tuesday. The coffee chain reported adjusted earnings of $0.59 per share on $7.64 billion. That was in line with analysts’ EPS expectations but beat estimates for $7.6 billion in revenue. The company suspended its full-year outlook as Covid lockdowns in China dent international sales. Starbucks’ same-store sales in the U.S. jumped 12% year-over-year, which helped offset a 23% drop in China. The company is making big investments in its workers to fend off a union push. Starbucks plans to spend $1 billion on higher wages, improved training, and store innovation in fiscal 2022. Employees who have been with the company between 2 to 5 years will get a 5% raise or be paid 5% above the market’s start rate, whichever is higher. Those with more than 5 years of tenure will get a 7% raise or be paid 10% above the market’s start rate. Those enhanced benefits will not be offered to workers at the stores that have voted to unionize. Starbucks is also adding more drive-through locations to boost its sales. Airbnb Revenue Surges as Travel Rebounds Airbnb (ABNB) shares are up 5.1% ahead of the open after reporting strong Q1 sales. The short-term rental company reported a loss of $0.03 per share on $1.51 billion in revenue. That was better than analysts’ expectations for a loss of $0.29 on $1.45 billion in revenue. Airbnb reported 102.1 million nights and experiences booked in the first quarter, topping pre-pandemic levels and crossing the 100 million mark for the first time ever. Revenue was up 70% compared to Q1 2021. Airbnb expects that strong growth to continue, forecasting Q2 revenue between $2.03 billion and $2.13 billion. That beat analysts’ estimates for $1.96 billion. Uber Drops on Q1 Loss Uber (UBER) shares are falling 3.4% in premarket trade after reporting an unexpected Q1 loss. The ride-share company reported
Continue Reading -->Coffee With Greta: Will the Fed Cause a Recession?
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: +28 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures: +30 (+0.2%) Good morning friends! Futures are flat after markets rebounded on the first trading day of May. Let’s get right to it! Recession Fears Loom as Fed Meeting Begins The Federal Reserve kicks off its two-day policy meeting today with the bank expected to enact a 0.5% rate hike on Wednesday. The bank now has to act aggressively to get inflation under control, after getting behind the curve on prices. One former Fed official thinks a recession is “almost inevitable”. Former Fed vice chair Roger Ferguson told CNBC Monday, “It’s a witch’s brew, and the probability of a recession I think is unfortunately very, very high because their tool is crude and all they can control is aggregate demand.” Treasury yields are rising ahead of the meeting. The 10-year Treasury yield is up 8 basis points to 2.97%, that yield briefly hit 3% for the first time since late 2018 on Monday. Pfizer Slashes Outlook Pfizer (PFE) shares are down 1.1% ahead of the open after cutting its full-year outlook. The pharmaceutical giant reported adjusted earnings of $1.62 per share on $25.66 billion in revenue. That topped analysts’ expectations for adjusted EPS of $1.47 on $23.86 billion in revenue. $13.2 billion of that revenue came from Covid vaccine sales. Pfizer sold $1.5 billion worth of its oral Covid treatment Paxlovid after it was authorized in December. The company reaffirmed its guidance for $32 billion in Covid vaccine sales and $22 billion in Paxlovid sales this year. But Pfizer cut its full-year earnings guidance to between $6.25 and $6.45 per share, down from the previous $6.35 to $6.55 per share. Overall, the company is expecting $98 billion to $102 billion in sales this year. BP Crushes Q1 Expectations BP (BP) shares are 5.1% higher in premarket trade after crushing Q1 expectations. The oil giant’s Q1 underlying replacement cost profit came in at $6.2 billion. That was the highest level in more than a decade and sharply beat expectations for $4.5 billion. But BP had a headline loss of $20.4 billion last quarter caused by pre-tax charges of $24 billion and $1.5 billion related to ditching its stake in Russian oil company Rosneft. BP announced $2.5 billion more in share buybacks for the year. Oil Continues to Slip Oil prices are falling further this morning after tumbling Monday on Chinese demand concerns. West Texas Intermediate crude futures are down 0.6% to under $105 bbl while Brent crude futures are down 0.6% to under $107 bbl. Beijing is reporting dozens of new Covid cases per day but has so far avoided a lockdown by mass-testing residents. But restaurants in the city have been closed for dining in and some apartment blocks have been sealed shut. The possible EU ban of Russian oil is preventing prices from falling further. The European Commission is expected to finalize work on its next sanctions package against Russia today. The American Petroleum Institute issues its inventory report today followed by the Energy Information Administration Wednesday. JOLTS Preview The Labor Department releases its Job Openings and Labor Turnover Survey (JOLTS) for March at 10:00 a.m. ET. That report is expected to show the number of job openings in the U.S. dipped to 11.2 million in March from 11.3 million in February. There has been a major shortage of available workers in the U.S. labor market in recent months. There were just 6 million unemployed workers in March. March Factory Orders The Census Bureau reports factory orders for March at 10:00 a.m. ET. Economists expect that report to show orders rose 1.0% compared to February. Orders declined unexpectedly in February following nine straight months of increases. In Case You Missed It The U.S. manufacturing sector expanded at the slowest pace in 18 months in April. The Institute for Supply Management’s Manufacturing PMI fell 1.7% to 55.4% last month. That sharply missed expectations for the index to rise to 57.8%. Respondents to the survey highlighted rising costs, labor shortages, and supply chain disruptions as their biggest struggles in April. U.S. construction spending rose less than expected in March. The Commerce Department reported construction spending rose 0.1% vs 0.5% in February. That missed economists’ expectations for a 0.8% increase. Spending on residential construction projects rose 1% while nonresidential construction spending fell 0.8%.
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