Coffee With Greta: The People vs. Inflation

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DJIA Futures: +371 (+1.1%)

SPX Futures: +56 (+1.4%)

NASDAQ Futures:+213 (+1.7%)

Good morning friends!

Futures are rallying after some strong economic data.

Let’s get right to it!

April Retail Sales Jump

The Commerce Department reported U.S. retail sales rose 0.9% in April to $677.7 billion as consumers remain resilient in the face of soaring prices. 

Although that was slightly lower than economists’ expectations for a 1% gain, March was revised higher to a 1.4% increase from the original 0.7%.

Retail sales were up 8.2% compared to April 2021.

Gasoline sales surged 36.9% year-over-year while restaurant sales jumped 19.8% annually.

Core retail sales, which excludes gas stations and auto dealers, rose 1% last month. 

Adjusted for inflation on a monthly basis, retail sales were still up 0.6%. 

Walmart Tumbles On Earnings Miss

Walmart (WMT) shares are falling 5.6% ahead of the open after missing Q1 earnings expectations. 

The retailer reported adjusted earnings of $1.30 per share on $141.57 billion in revenue. 

That was weaker than analysts’ expectations for adjusted EPS of $1.48 but beat estimates for $138.94 billion in revenue. 

Walmart’s CFO blamed the miss on high fuel costs, labor costs, and high inventory levels. 

The CEO said, “We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future”.

The company raised its sales outlook, forecasting net revenue growth of about 4% this year vs the prior 3% outlook. 

But Walmart lowered profit expectations, now expecting full-year EPS to decline about 1% year-over-year.

Home Depot Rallies On Earnings Beat

Home Depot (HD) shares are up 3.6% in premarket trade after reporting a record first quarter. 

The home improvement retailer reported earnings of $4.09 per share on $38.91 billion in revenue. 

That crushed analysts’ expectations for EPS of $3.68 on $36.72 billion in revenue. 

Revenue jumped 3.8% and set a new record for Q1. 

Same-store sales increased 2.2%. 

Home Depot hiked its full-year outlook, now expecting revenue growth of about 3% and EPS growth in the mid-single digits. 

Berkshire Invests in Citigroup, Paramount

Citigroup (C) shares are 5% higher ahead of the open while Paramount (PARA) is jumping 10% after Berkshire Hathaway (BRK.A) unveiled new investments in both companies. 

In an SEC filing Monday evening, Berkshire said it purchased more than 55 million Citigroup shares and had a $2.95 billion stake in the bank as of the end of March.

Warren Buffett’s company also bought 68.9 million shares of Paramount, bringing that stake to $2.6 billion at the end of March.

Oil Prices Rise, U.S. Gas Prices At Fresh Record

Oil prices jumped to a 7-week high today as the EU continues efforts to ban Russian oil imports.

West Texas Intermediate crude futures are up 0.3% to $114.50 bbl while Brent crude futures are 0.4% higher at $114.75 bbl.

Brent rose to a high of $115.69 earlier today, the highest since March 28.

The market is also expecting higher demand as China lifts Covid restrictions. 

U.S. gas prices hit a fresh record-high today as well. 

AAA shows the national average for a gallon of regular jumped 4 cents overnight to $4.523.

Diesel also rose to a new record $5.573/gal.

Musk Still Focused On Fake Twitter Accounts

Twitter (TWTR) shares are falling 2% ahead of the open after Elon Musk said he will not move ahead on his take over deal without more clarity on fake users. 

In a tweet this morning, Musk said “My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”

Twitter then filed a proxy statement with the SEC, saying it is committed to the deal at the pre-agreed price.

Musk hinted Monday he could seek to renegotiate that $44 billion price.

Bloomberg reported that Musk said a deal at a lower price wasn’t “out of the question” during an event in Miami Monday. 

Twitter shares tumbled 8.2% in Monday’s session and have erased all gains made since Musk disclosed his investment in the company in early April.

The Tesla CEO estimates fake users make up at least 20% of all Twitter users while the company says it is less than 5%. 

United Airlines Rallies On Updated Outlook

United Airlines (UAL) shares are up 4.2% in premarket trade after the company issued an updated Q2 outlook after-hours on Monday. 

In an SEC filing, the airline said, “the demand environment has continued to improve, resulting in a higher unit revenue outlook for the second quarter 2022.”

United now expects total revenue per available seat mile (TRASM) to be 23% to 25% higher compared to Q2 2019, up from previous guidance of 17%.

The company also expects capacity to be 14% higher versus previous guidance of 13%.

Homebuilder Sentiment Expected to Fall

The National Association of Homebuilders releases its April sentiment index at 10:00 a.m. ET.

Economists expect the index to fall 2 points to 75. 

Homebuilders have enjoyed strong demand for new homes amid a severe shortage of existing homes in the market. 

But they have also struggled with high costs, supply chain shortages, and an ongoing labor shortage.

In Case You Missed It

• The White House is in a spat with Jeff Bezos over inflation. In a statement Monday, the Biden Administration said “it doesn’t require a huge leap to figure out why” Bezos is opposed to their plans to raise taxes on the wealthy and corporations. Bezos responded in a tweet accusing the White House of trying to “muddy the topic”. The Amazon (AMZN) founder accused the administration late last week of “misdirection” for trying to link inflation to corporate taxes.