Coffee With Greta: Higher Prices Boost Retail Sales

DJIA Futures: +188 (+0.6%)

SPX Futures: +17 (+0.4%)

NASDAQ Futures: +31 (+0.3%)

Good morning friends!

Futures are higher as traders digest the latest economic data and more big bank earnings.

Let’s get right to it!

Retail Sales Rise More Than Expected

U.S. retail sales rose more than expected in June, as prices for gas and food soared. 

The Commerce Department reported retail sales rose 1% last month to $680.6 billion. 

That beat expectations for a 0.9% gain and was 8.4% higher than June 2021. 

Retail sales excluding autos also rose 1% vs 0.7% expected. 

The jump does not necessarily reflect an increase in purchases but likely consumers paying higher prices for the same goods.

Gas station sales soared 49.1% year-over-year while sales at restaurants and bars jumped 13.4% annually.

Short-Term Treasury Yields Rise, Yield Curve Remains Inverted

The key 2-year and 10-year Treasury yield curve is still inverted as short-term yields pop higher this morning. 

The 2-year yield is up 2 basis points to 3.14% while the 10-year  yield is down 4 basis points to 2.93%.

Traders and investors have been monitoring the yield curve closely after it inverted earlier this month as that inversion is typically a sign of an impending recession. 

That inversion hit its deepest level since 2000 this week.

Traders Pullback Fed Expectations

The market is now split on its expectations for the Fed meeting later this month. 

CME Group’s FedWatch Tool shows 50.1% of traders expect a 0.75% rate hike while 49.9% are leaning toward a 1% hike. 

Fed Governor Christopher Waller calmed down fears of a larger move on Thursday, saying he’s still planning on a 75 basis point hike but is “open” to a larger move based on the data.

The CPI surged to a fresh 41-year high at 9.1% annually in June.

But no more inflation data will be released before the Fed meeting. 

The Central Bank meets July 26-27 and the June PCE Price Index will be released July 29.

Wells Fargo Slips On Revenue Miss

Wells Fargo (WFC) shares are down 0.7% ahead of the open after mixed Q2 results.

The consumer bank reported adjusted earnings of $0.82 per share, better than analysts’ expectations for $0.80. 

But the bank’s $17.03 billion in revenue fell short of estimates for $17.53 billion. 

Profits declined 48% year-over-year as Wells Fargo set aside more funds for bad loans.

The bank also said “market conditions” forced it to post a $576 million second-quarter impairment on equity securities tied to its venture capital business.

Citigroup Rises On Earnings Beat

Citigroup (C) shares are up 4.5% in premarket trade after beating Q2 expectations. 

The investment bank reported earnings of $2.19 on $19.64 billion in revenue.

That beat analysts’ expectations for EPS of $1.68 on $18.22 billion in revenue. 

Citi benefits from higher interest rates and strong trading results. 

The CEO said, “In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels.”

Pinterest Soars As Activist Investor Takes Stake

Pinterest (PINS) shares are surging 12.9% ahead of the open after the Wall Street Journal reported Elliott Management acquired a stake in the company.

The activist investment group is now the largest shareholder in Pinterest, with a more than 9% stake.

Sources say the two had been in discussions over the past several weeks. 

Elliott has a history of taking on struggling tech companies. 

Oil Prices Rise

Oil prices are higher today on optimism the Fed will stick with a 75 basis point hike later this month. 

West Texas Intermediate crude futures are up 1.4% to $97 bbl while Brent crude futures are up 1.6% to $100 bbl.

Uncertainty about the Fed pushed both contracts to the lowest close since February 23 on Thursday.

Demand concerns have also weighed on the market amid uncertainty about new Covid restrictions in China.

Gas Prices Fall Further

U.S. gas prices fell for the 30th day in a row today. 

AAA shows the national average for regular gas fell nearly 3 cents again overnight to $4.577/gal.

The national average for diesel also fell 2 cents to $5.572/gal.