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Coffee With Greta: Inflation Is Still Poisoning the Market


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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 iPod touch, which is the last remaining model sold by Apple. 

Greg Joswiak, senior vice president of worldwide marketing at Apple, said “the spirit of iPod lives on” in its other products. 

The iPod has become basically obsolete as those features are available on iPhones.

Apple said the iPod touch will be available while supplies last but it will not make any more.

In Case You Missed It

  • Small business optimism remained at a record-low in April. The NFIB Optimism Index was unchanged at 93.2 last month. 32% of business owners cited inflation as their number one problem, the highest reading since 1980. 47% of owners said they have open jobs they are struggling to fill.
  • The New York Fed reported U.S. household debt rose 1.7% in Q1 to a record $15.84 trillion. Mortgage balances ballooned by $250 billion and were 10% higher compared to a year ago. Credit card balances fell by $15 billion in the quarter but were still up 9% year-over-year.

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