Coffee With Greta: Another Profit Warning Drags Down Stocks

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DJIA Futures: -153 (-0.5%)

SPX Futures: -18 (-0.4%)

NASDAQ Futures: -52 (-0.4%)

Good morning friends!

Futures are slipping amid economic growth concerns after another big profit warning.

Let’s get right to it!

Credit Suisse Slips On Profit Warning

Credit Suisse (CS) shares are falling 7.1% in premarket trade after the company issued a Q2 profit warning.

In a new trading update, Credit Suisse said it will likely report a loss in the current quarter.

The Swiss lender cited the war in Ukraine, Central Bank tightening, and the end of Covid stimulus as reasons for that downgraded forecast. 

Credit Suisse said 2022 as a whole will remain a year of “transition” and it will accelerate cost-cutting measures “with the aim of maximizing savings from 2023 onwards”.

Fed GDP Tracker Shows Economy Inching Toward Recession

The Atlanta Fed’s GDPNow tracker now shows the U.S. economy expanding just 0.9% in Q2. 

That’s down from expectations for 1.3% growth a week ago. 

The revised outlook comes after the release of weak economic data in recent weeks. 

Consumer spending is now expected to rise 3.7% vs the previous 4.4% estimate.

And real gross private domestic investment (GPDI) is expected to shave 8.5% off overall GDP growth, higher than the previous estimate for an 8.3% hit.

GPDI is a measure of how much domestic businesses are investing in the economy.

The GDPNow tracker is updated in real-time based on the most recent data.

The U.S. economy contracted 1.5% in Q1 as the trade deficit soared to a record-high.

That gap declined by more than $20 billion in April. 

The trade deficit is now expected to shave off 0.13% in GDP growth this quarter down from the previous estimate of -0.25%.

The official definition of a recession is two straight quarters of negative economic growth.

Campbell Soup Rises On Earnings Beat

Campbell Soup (CPB) shares are up 2.8% ahead of the open after beating fiscal Q3 expectations.

The food company reported adjusted earnings of $0.70 per share on $2.13 billion in revenue. 

That was better than analysts’ expectations for adjusted EPS of $0.61 on $2.042 billion in revenue.

Campbell’s CEO said, “Our improved supply chain execution along with inflation-driven pricing began to mitigate the margin pressure we have experienced over the last 12 months.”

The company expects full-year sales growth up to 1% vs its previous forecast for sales to fall up to 2%.

That beat analysts’ estimates for full-year sales of $8.411 billion which would be a 0.8% decline.

Roku Rallies On Rumored Netflix Acquisition Discussions

Roku (ROKU) shares are rising 5.2% in premarket trade following a Business Insider report that the company’s employees are discussing the possibility of being acquired by Netflix (NFLX). 

Management is reportedly aware of those discussions and abruptly closed the trading window for all employees in response. 

That prevents employees from selling any of their vested ROKU stock.

ROKU shares are down more than 70% over the past year while NFLX shares have tumbled nearly 60%.

Spirit Extends Talks with Frontier, JetBlue

Spirit Airlines (SAVE) shares are slipping 0.7% ahead of the open after the company postponed its shareholder meeting to continue talks with Frontier Group (ULCC) and JetBlue (JBLU).

The company pushed that meeting from this Friday to June 30.

Shareholders were originally set to vote on the cash-and-stock Frontier merger this week.

But JetBlue sweetened its takeover offer earlier this week, offering $31.50 per share and a higher breakup fee if the deal is blocked by regulators. 

Mortgage Demand Tumbles To 22-Year Low

Mortgage demand has tumbled to the lowest level in 22 years as rates rise and supply remains low. 

The Mortgage Bankers Association reported total application volume fell 6.5% last week.

Purchase applications were down 7% weekly and 21% year-over-year. 

While refinance applications fell 6% weekly and tumbled 75% compared to a year ago. 

The average 30-year contract rate rose to 5.40% from 5.33%.

New data from Mortgage News Daily shows those rates have moved even higher this week.

Oil Prices Rise 

Oil prices are rising today as the market expects higher demand from China and as Norwegian oil workers prepare to strike. 

West Texas Intermediate crude futures are up 0.9% to over $120 bbl while Brent crude futures are rising 0.9% to over $121 bbl.

Some crude output is at risk of being shutdown as Norwegian oil workers plan to strike over pay starting on June 12.

The American Petroleum Institute reported Tuesday that U.S. crude inventories rose by 1.8 million barrels last week, while gas inventories also rose by 1.8 million barrels.

The Energy Information Administration releases official stock levels at 10:30 a.m. ET. 

Goldman Sachs raised its outlook for oil prices over the next 12 to 18 months.

The bank now expects Brent crude prices to rise to $140 a barrel as early as this summer. 

But the group says Americans will feel more pain as limited refinery capacity will push gas prices even higher than usual. 

U.S. Gas Prices Surge Again

The national average for a gallon of regular gas jumped sharply again overnight.

AAA shows that price rose to $4.955/gal today. 

That’s up nearly 4 cents from just yesterday and nearly 30 cents from a week ago.

At the current pace of gains, the national average is on track to top $5/gal this week.

Uranium Stocks Pop

Uranium stocks are rising ahead of the open after rallying on Tuesday. 

The Global X Uranium ETF (URA) is up 1.9% in premarket trade after closing 6% higher on Tuesday. 

The rally comes amid news the Biden Administration is looking to reduce U.S. reliance on foreign uranium, specifically from Russia. 

The White House has reportedly asked Congress to fund a $4.3 billion plan to buy enriched uranium from domestic suppliers.

Novavax Jumps on FDA Panel Vote For Covid Vaccine

Novavax (NVAX) shares are up 8.6% in premarket trade after an FDA panel voted to recommend the company’s Covid vaccine for adults. 

The FDA advisory committee voted unanimously on Tuesday in favor of the shot.

It still needs full FDA approval but the agency typically follows the committee’s recommendation.

Officials expect the vaccine to be cleared by the FDA for distribution in the U.S. as soon as this week. 

The CDC would then need to approve the shots before they can be administered to patients.

In Case You Missed It

• The World Bank slashed its global economic growth forecast on Tuesday and warned of 1970s-style stagflation on the horizon. The bank now expects the global economy to expand 2.9% in 2022, down from their January forecast for 4.1% growth. That would be a sharp slowdown from 5.7% global growth in 2021. The World Bank president said, “For many countries, recession will be hard to avoid.”