Coffee With Greta: Recession on the Brain


DJIA Futures: -183 (-0.6%)

SPX Futures: -12 (-0.3%)

NASDAQ Futures: +34 (+0.3%)

Good morning friends!

Futures are mostly lower as traders worry about a global recession.

Let’s get right to it!

Recession Fears Linger, Dollar Surges

Futures are mostly lower as worries over global economic growth take over. 

The drop in stocks come as Treasury yields are falling with investors fleeing to safety in bonds. 

The yield curve is still inverted with the 2-year yield down 6 basis points to 3.03% and the 10-year yield down 6 basis points to 2.93%.

The U.S. dollar index also popped 0.5% to 108.51 with the euro on the brink of parity with the dollar as recession fears grip Europe.

The dollar index is up 13% YTD.

Traders are also on edge for earnings season to begin with focus on future forecasts amid rising rates and recession worries.

Even High Earners Are Worried About Inflation

A new CNBC/Morning Consult survey shows even high-earning Americans are worried about inflation. 

96% of respondents who earn $100,000 or more said they were “concerned” about inflation while 65% said they are “very concerned”.

34% said they are worse off financially this year compared to a year ago and 46% have cut household spending due to higher prices. 

38% said they plan to make those cuts if inflation gets worse. 

The survey showed dining out is the first place where consumers cut their spending, followed by entertainment, and travel. 

The Bureau of Labor Statistics’ consumer price index on Wednesday is expected to show the pace of headline inflation picked up again in June.

EV Maker Canoo Skyrockets on Walmart Deal

Canoo (GOEV) shares are surging 76% in premarket trade after Walmart (WMT) agreed to buy its electric delivery vans. 

The two companies signed a definitive agreement for Walmart to purchase at least 4,500 and up to 10,000 of the vans.

The retailer will use the vans for local deliveries of online orders. 

Canoo will build the vehicles at its facility near Dallas and the vans are expected to go into service next year.

Lordstown Rises After Naming New CEO

Lordstown Motors (RIDE) shares are up 3.5% ahead of the open after naming a new CEO. 

The company’s president, Edward Hightower, was named CEO effective immediately. 

The former CEO, Daniel Ninivaggi, will become the company executive chairman.

Hightower will lead the new joint venture with Foxconn to design and develop electric vehicles that will be manufactured by Foxconn.

Ninivaggi said, “With over 30 years of automotive experience and having made significant contributions to the Endurance launch preparation and Foxconn transactions, Edward is the perfect person to lead the company and launch our product development efforts with Foxconn.”

Rivian Drops on Layoff Plans

Rivian (RIVN) shares are down 0.2% ahead of the open on news the company is planning layoffs. 

Bloomberg reported the electric automaker is planning to trim its workforce by about 5% because it grew too quickly in some departments.

Rivian has about 14,000 employees which means the cuts would impact around 700 workers.

Sources told Bloomberg those layoffs could be announced in the coming weeks.

Pepsi Rises on Earnings Beat

PepsiCo (PEP) shares are up 1.1% ahead of the open after beating Q2 earnings expectations. 

The company reported adjusted earnings $1.86 per share on $20.23 billion in revenue. 

That was better than analysts’ expectations for adjusted EPS of $1.74 on $19.51 billion in revenue. 

The CFO told CNBC, “We are facing inflation like everyone else, and we think that is going to persist for a while, but we are taking enough pricing to be able to manage the inflation, and our focus is really much more on how do we drive costs out of the business.”

Pepsi hiked its full-year revenue growth forecast to 10% from 8% previously and still expects earnings growth of 8%.

Gap Slides As CEO Steps Down

Gap (GPS) shares are down 7.3% in premarket trade after announcing its CEO and president is stepping down after-hours on Monday. 

Sonia Syngal is leaving her position effective immediately.

The current executive chairman of the board will serve as interim president and CEO.

Syngal said she is “thankful to have the board’s support in stepping down, ushering in a new opportunity for fresh perspective and rejuvenated leadership to carry Gap Inc. forward.”

The company also announced former Walmart Canada CEO and president Horacio Barbeito will take over as the Old Navy CEO on August 1.

Natural Gas Prices Jump as Russia Halts Flow to Europe

U.S. natural gas prices are up 3.9% as the largest pipeline between Russia and Germany is shutdown. 

The Nord Stream 1 pipeline was closed Monday for maintenance work that is set to run through July 21. 

That pipeline is the largest transporter of Russian natural gas into Europe, through Germany. 

It carries around 55 billion cubic meters of gas per year. 

Europeans are fearful the shutdown could last longer than the planned 10 days.

The EU currently receives 40% of its gas via Russian pipelines.

Oil Prices Slide on China Covid Surge

Oil prices are sliding as a Covid surge in China prompts concerns about demand. 

West Texas Intermediate crude futures are down 4.4% to $99 bbl while Brent crude futures are down 4% to just under $103 bbl.

The fresh Covid restrictions in China pile on top of rising recession fears for the oil market.

The American Petroleum Institute releases its report on oil and gas inventories today followed by the official Energy Information Administration report on Wednesday.

Gas Prices Extend Decline

U.S. gas prices fell for the 27th day in a row today. 

AAA shows the national average for regular gas fell more than 2 cents overnight to $4.655/gal today. 

Diesel also fell nearly 2 cents to $5.625/gal.

In Case You Missed It

  • Consumers’ short-term inflation expectations hit a record-high in June. The New York Fed’s Survey of Consumer Expectations shows Americans expect inflation to remain at 6.8% 1-year from now. Consumers’ 3-year expectations fell to 3.6% while 5-year expectations slipped to 2.8%.
  • U.S. homebuyers are canceling contracts to purchase existing homes at the fastest pace since the beginning of the pandemic. Redfin (RDFN) reported Monday nearly 15% of homes that went under contract in June had sales agreements later canceled.

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