Coffee With Greta: Are We Buying More or Just Spending More?


DJIA Futures: +36 (+0.1%)

SPX Futures: -4 (-0.1%)

NASDAQ Futures: -36 (-0.3%)

Good morning friends!

Futures are flat following the release of strong consumer data.

Let’s get right to it!

Retail Sales Rise More Than Expected

U.S. retail sales rose more than expected in August as Americans spent more on new cars and ate out more. 

The Census Bureau reported retail sales rose 0.3% in August to $683.3 billion, up 9.1% year over year. 

That was better than economists’ expectations for sales to be unchanged. 

Sales rose 2.8% monthly and 6.7% annually at car dealers.

Restaurants and bars saw a 1.1% monthly and 10.9% annual increase in spending. 

Although lower gas prices caused a 4.2% monthly drop in spending at gasoline stations, those sales were still up 29.3% year over year.

Excluding autos and gasoline, core retail sales also rose 0.3% monthly and 7.6% annually. 

The jump largely reflects higher prices and not increased purchases. 

When adjusted for inflation, spending is basically flat over the past year. 

But it still shows consumers maintaining strength in the face of soaring inflation.

Weekly Jobless Claims Fall for Fifth Straight Week

Weekly jobless claims fell unexpectedly last week for the fifth week in a row.

The Labor Department reported 213,000 Americans filed initial unemployment claims.

That was down 5,000 from the previous week and better than expectations for an increase to 225,000.

The data shows no increase in layoffs as the Fed hikes rates. 

Continuing jobless claims were unchanged at 1.4 million in the week ending September 3.

Rail Stocks Rally on Labor Deal to Avoid Strike

Rail stocks are up ahead of the open after railroads and labor unions reached a tentative agreement overnight to avoid a massive rail strike.

The Association of American Railroads said in a press release that tentative agreements have been reached with the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters, the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division, and the Brotherhood of Railroad Signalmen.

Union Pacific (UNP) shares are up 3.1% ahead of the open, while CSX (CSX) shares are up 1.7%, and Norfolk Southern (NSC) shares are up 3.1%.

Under the new contracts, rail workers will receive a 24% wage increase by 2024, including $11,000 in immediate average payouts. 

The unions also negotiated an extra paid day off for workers.

The deal avoids a nationwide rail strike that threatened to worsen an already struggling supply chain across the U.S. 

The tentative agreement must now be ratified by union members, which could take at least a week.

Adobe Falls on Weak Outlook, New Acquisition Announcement

Adobe (ADBE) shares are down 9.8% in premarket trade after reporting mixed fiscal Q3 results and a weak outlook for Q4.

The software company reported adjusted earnings of $3.40 per share on $4.43 billion in revenue. 

That was better than analysts’ expectations for adjusted EPS of $3.35 but sales fell short of estimates for $4.44 billion.

For fiscal Q4, Adobe forecast revenue of $4.52 billion vs analysts’ expectations for $4.6 billio. 

The company said that outlook reflects macroeconomic conditions, foreign-exchange pressures, and the usual “year-end seasonal strength in demand for our offerings.”

Adobe sees adjusted earnings of $3.50 per share in fiscal Q4, better than analysts expectations for $3.47.

The company also announced it will acquire design software firm Figma in a cash and stock deal worth $20 billion.

Adobe’s chairman and CEO said, “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”

The company expects that deal to close in 2023.

Oil Prices Dip on Demand Fears

Oil prices are falling today as demand concerns take over. 

West Texas Intermediate crude futures are down 1.8% to just under $87 bbl while Brent crude futures are down 1.8% to $92 bbl.

The International Energy Agency forecast this week that oil demand growth would fall sharply in Q4. 

That outlook comes as analysts expect the Fed’s tightening policy to weaken the economy.

Meanwhile, the Energy Information Administration reported U.S. crude inventories rose by 2.4 million barrels last week vs expectations for a 1 million barrel increase. 

Gasoline stockpiles fell by 1.8 million barrels vs analysts’ expectations for a 600,000 barrel drop. 

In Case You Missed It

  • A Bloomberg report on Wednesday claimed the Biden Administration is looking at plans to start buying more oil soon in an effort to support prices. Sources say those purchases may begin if crude prices fall below $80 a barrel. The purchases would be used to refill the Strategic Petroleum Reserve after the President ordered a historic release from reserves this year.  Officials are reportedly looking to reassure oil producers the U.S. won’t let prices collapse as demand slows in the winter. 

Leave a Comment:

1 comment
Quinton B Brown says September 15, 2022

Thank you for this daily brief. I like it. Also, I saw on your Bio that you have education from Point Loma. I have “roots” in the Church of the Nazarene. Along with relatives who are Nazarene pastors. Have a great day!

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