Coffee With Greta: Stocks Slip After Big Rally

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DJIA Futures: -123 (-0.4%)

SPX Futures: -18 (-0.4%)

NASDAQ Futures: -84 (-0.6%)

Good morning friends!

Futures are lower as the market gives up its two-day rally and focus turns back to the war in Ukraine.

Let’s get right to it!

Oil Prices Jump on Supply Warning

Oil prices are surging today after the International Energy Agency sent out a supply warning.

West Texas Intermediate crude futures are up about 6% and back above $100 per barrel.

Brent crude futures are also 6% higher, topping $104 per barrel.

The IEA is expecting a loss of three million barrels per day of Russian oil and products next month, which outweighs the expected demand drop of 600,000 barrels per day.

Russia denied a Financial Times report that there had been “substantial progress” in peace talks with Ukraine.

Kremlin spokesman Dmitry Peskov said, “On the whole, that’s wrong… When there’s progress, we’ll tell you.”

The two sides are expected to meet again today.

Weekly Jobless Claims Beat Expectations

Weekly jobless claims fell to the lowest level since the beginning of 2022. 

The Labor Department reported 214,000 Americans filed initial unemployment claims last week.

That’s down 15,000 from the previous week and better than expectations for 215,000.

It’s the lowest total since January 1 and shows the economy nearing full employment.

Continuing claims fell by seven million to 1.42 million vs 1.48 million expected.

Housing Starts, Building Permits

U.S. home construction rose more than expected last month. 

The Census Bureau reports housing starts rose 6.8% to a seasonally adjusted annual rate of 1.77 million units in February. 

That was better than economists’ expectations for a SAAR of 1.70 million units.

Building permits for future projects meantime fell 1.9% to a SAAR of 1.86 million units vs 1.85 million units expected.

This comes a day after the National Association of Homebuilders sentiment index fell to a 6-month low at 79. 

Confidence in current sales conditions fell 3 points to 86 while sentiment about sales conditions over the next 6 months plummeted 10 points to 70. 

Builders have struggled with high material costs, supply shortages, and labor shortages amid record-high buyer demand.

Nickel Trading Resumes

Nickel trading was once again resumed on the London Metal Exchange today after being halted Wednesday. 

The exchange placed an 8% up or down limit on the metal.

The three-month contract hit limit-down right at the open, falling to $41,945 per metric ton. 

Trading was halted last week as nickel prices more than doubled and topped $100,000 per metric ton.

Fed Turns Hawkish

The Federal Reserve raised the federal funds rate by 25 basis points to a range of 0.25% to 0.5% as expected on Wednesday. 

St Louis Fed President James Bullard was the only FOMC member to vote against the 0.25% rate hike and in favor of a 0.5% hike instead. 

The Central Bank also penciled in 6 more rate hikes this year, three in 2023, and zero in 2024.

Treasury yields popped on the news with the 10-year yield jumping 8 basis points to a high of 2.24%, the highest level since 2019.

Currently that rate is _______.

Fed Chair Jerome Powell told reporters they could begin their balance sheet reduction as early as May and that process will move faster this time than last. 

It took the Fed 2 years between 2017 and 2019 to reduce the size of its $4.5 trillion balance sheet following the 2008 recession.

The bank currently holds nearly $9 trillion of Treasury and mortgage-back securities on its balance sheet.

Berkshire Hathaway Soars to $500,000

Berkshire Hathaway Class A (BRK.A) shares topped $500,000 for the first time Wednesday. 

The stock closed 1.3% higher at $504,036 per share. 

The rally pushed Berkshire Hathaway’s market cap to $737 billion, making it the sixth most valuable company in the U.S.

BRK.A is up 11.8% YTD as it’s benefited from the market rotation back into value stocks.

The company also owns 90% of Berkshire Hathaway Energy which has a portfolio of 11 energy companies across the U.S. 

Those businesses have benefited from surging energy prices in recent months.

In Case You Missed It

• U.S. retail sales slowed more than expected in February as inflation squeezes consumers. The Census Bureau reported retail sales rose 0.3% last month to $658.1 billion vs 0.4% expected. Retail sales excluding autos rose 0.2% vs 0.8% expected. The data is not adjusted for inflation and the CPI rose 0.8% in February. January’s retail sales were revised higher to 4.9% from 3.8%. 
• Ukrainian President Volodymyr Zelenskyy addressed Congress virtually Wednesday morning. He called for the U.S. to implement a no-fly zone over Ukraine, asked for more weapons to be sent to Ukraine, and for more sanctions on Russia. Zelenskyy compared the Russian invasion to Pearl Harbor and 9/11 saying, “Just like nobody else expected it, you could not stop it. Our country experienced the same every day, right now at this moment, every night, for three weeks now.”