Coffee With Greta: U.S. Crude Supply Shrinks

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DJIA Futures: -141 (-0.4%)

SPX Futures: -23 (-0.5%)

NASDAQ Futures: -113 (-0.8%)

Good morning friends!

Futures are slipping as oil prices rise following an unexpected drop in U.S. crude supplies.

Let’s get right to it!

U.S. Crude Inventory Shrinks

Oil prices are up today after a new report showed crude inventories in the U.S. declined last week. 

West Texas Intermediate crude futures are up 3.1% to over $112 per barrel while Brent crude futures are up 3.2% to over $119 per barrel.

This comes after the American Petroleum Institute’s supply report showed crude stockpiles in the U.S. fell by 4.3 million barrels in the week ending March 18.

The Energy Information Administration is set to release its latest inventory data today. 

Consensus estimates are for that report to show U.S. crude supplies were unchanged last week.

Traders Hike Fed Expectations

Traders are expecting the Fed to get more aggressive on inflation this year than the latest dot plot shows. 

CME Group’s FedWatch Tool shows 66.1% of traders believe the bank will hike rates by 0.5% at the next meeting in May. 

More than 64% of traders also believe the bank will implement a 0.5% rate hike at the June meeting. 

That would put rates in a range of 1.25% to 1.5% after the June 15 meeting.

That’s higher than the Fed’s plans for 6 more 0.25% rate hikes this year, putting rates at 1.9% by year-end. 

More hawkish Fed officials, like St Louis President James Bullard, have said rates should be above 3% by the end of this year.

In a Bloomberg interview Tuesday, Bullard said, “faster is better” when it comes to rate hikes.

More Fed officials are set to speak today including Cleveland Fed President Loretta Mester at 10:00 a.m. ET and San Francisco Fed President Mary Daly at 11:45 a.m. ET.

GameStop Spikes as Chairman Buys More Stock

GameStop (GME) shares are rallying 7.5% in premarket trade after chairman Ryan Cohen upped his stake in the company.

Regulatory filings show Cohen bought another 100,000 GME shares on Tuesday.

He now owns 9,101,000 GameStop shares, bringing his stake to 11.9%.

The stock purchases were made through Cohen's investment company RC Ventures.

General Mills Rallies After Raising Guidance

General Mills (GIS) shares are up 3.2% ahead of the open after beating fiscal Q3 profit expectations and raising its guidance. 

The food company reported adjusted earnings of $0.84 per share on $4.538 billion in revenue. 

That topped analysts’ expectations for adjusted EPS of $0.78 on $4.545 billion in revenue. 

General Mills also hiked its full-year guidance, expecting sales growth of 5% vs the previous 4% to 5%. 

Wall Street was only expecting 3.7% growth this year.

Adobe Slips Despite Earnings Beat

Adobe (ADBE) shares are slipping 3.4% in premarket trade despite beating fiscal Q1 expectations.

The company reported adjusted earnings of $3.37 per share on $4.26 billion in revenue. 

That topped analysts’ expectations for adjusted EPS of $3.34 on $4.24 billion in revenue. 

That was a new record-high for quarterly revenue at Adobe and was up 9% year-over-year. 

Adobe’s executive vice president and CFO said the results “reflect the company’s strong execution and resilience through unprecedented circumstances”.

The company forecast fiscal Q2 revenue of $4.34 billion and earnings of $3.30 per share. 

The guidance was short of analysts’ expectations on the top and bottom line.

Adobe said it expects a $75 million revenue reduction this year after halting sales of its products in Russia and Belarus.

The company still maintained its full-year forecast.

Refinance Demand Plunges as Mortgage Rates Spike

Mortgage rates are continuing to surge as Treasury yields spike.

New data from the Mortgage Bankers Association shows the average 30-year contract rate jumped to 4.5% last week from 4.27% the previous week.

Mortgage applications to purchase a home fell 2% for the week and tumbled 12% compared to a year ago.

Refinance applications dropped 14% weekly and plunged 54% annually.

FHA and VA loans saw the largest drop in demand, signaling lower-income homebuyers are dropping out of the market.

Most economists previously forecast rates would be at just 4.5% by the end of this year. 

Mortgage rates closely track the movement of the 10-year Treasury yield, which spiked to the highest level since May of 2019 Tuesday. 

The yield is down slightly this morning to 2.37%.

February New Home Sales Preview

The Census Bureau releases its February new home sales report at 10:00 a.m. ET. 

That’s expected to show sales rose to a seasonally adjusted annual rate of 805,000 units last month from 801,000 in January.

But data from the Mortgage Bankers Association last week showed the number of new home purchase applications fell 1% from January to February. 

On an annual basis, those applications tumbled 3.9% compared to February 2021. 

In Case You Missed It

• Tesla (TSLA) shares rallied 7.9% Tuesday as the electric automaker opened its new gigafactory in Germany. CEO Elon Musk hosted a ribbon-cutting ceremony at Giga-Berlin. Tesla company delivered its first German-made vehicles to 30 customers at the event. The company expects to produce more than 500,000 vehicles at the factory every year.

• Nvidia (NVDA) shares slipped 0.8% Tuesday despite the chipmaker unveiling new products. The company said its new H100 graphics chip can significantly speed up the computing time for some AI training models. The new GPU will be available in Q3 and will also be used to build Nvidia’s new “Eos” supercomputer. The company also unveiled a new processor chip, called the Grace CPU Superchip, that will be available in the first half of 2023.