Coffee With Greta: Fed Hawks Are Still Circling

DJIA Futures: -370 (-1.1%)

SPX Futures: -50 (-1.3%)

NASDAQ Futures: -172 (-1.5%)

Good morning friends!

Futures are falling after hawkish comments from a key Fed official. 

Let’s get right to it!

Hawkish Fed Comments Spook Traders

St Louis Fed President James Bullard is not backing a pivot on rate hikes yet. 

In a speech this morning, Bullard said rate hikes so far “have had only limited effects” on inflation. 

He said “the policy rate is not yet in a zone that may be considered sufficiently restrictive” and to do so “the policy rate will need to be increased further”.

Bullard is a voting member of the Federal Open Market Committee this year. 

A chart he used in the presentation reportedly suggested that “sufficiently restrictive” rate could be around a 5% to 7% range. 

The federal funds rate is currently in a range of 3.75% to 4%. 

Treasury yields popped following the comments with the 2-year yield up 6 basis points to 4.45% and the 10-year yield rising 9 basis points to 3.79%.

Home Construction Falls Less Than Expected

U.S. home construction slowed less than expected in October.

The Census Bureau reported housing starts dropped 4.2% to a seasonally adjusted annual rate of 1.43 million units. 

That was down 8.8% year over year but better than economists’ expectations for an SAAR of 1.41 million units. 

Single-family starts dropped 6.1% to an SAAR of 855,000 units while multi-family starts slipped 0.5% to an SAAR of 556,000 units.

Permits issued for future home builds also declined less than expected. 

The report shows permits were issued at a seasonally adjusted annual rate of 1.53 million units, down 2.4% from September. 

Single-family permits fell 3.6% to an SAAR of 839,000 units while multi-family starts dropped 1.9% to an SAAR of 633,000 units.

This comes a day after the National Association of Homebuilders sentiment index fell more than expected this month to 33, the lowest reading since June 2012. 

That was down 5 points from October and marked 11 straight months of falling sentiment. 

Builder sentiment about current sales conditions dropped 6 points to 39, buyer traffic fell 5 points to 20, and six-month sales expectations fell 4 points to 31. 

Weekly Jobless Claims Fall

Weekly jobless claims fell more than expected last week.

The Labor Department reported 220,000 Americans filed initial claims for unemployment benefits. 

That was down 6,000 from the previous week and lower than 225,000 expected. 

Continuing claims rose by 13,000 to 1.51 million in the week ending November 5.

That’s the first time continuing claims have topped 1.5 million since March 2021. 

Nvidia Slips On Mixed Results

Nvidia (NVDA) shares are falling 1.3% ahead of the open after reporting mixed Q3 results.

Here’s how the chipmaker’s results compared to analysts’ expectations:

• Adjusted EPS: $0.59 vs $0.69 expected
• Revenue: $5.93 billion vs $5.77 billion expected

Revenue was down 17% year over year while gross margins fell 11.6% to 53.6%. 

The company attributed those lower margins to an inventory charge caused by low data center chip demand in China.

Nvidia forecast $6 billion in Q4 sales, below analysts’ estimates of $6.09 billion. 

Macy’s Hikes Forecast After Earnings Beat

Macy’s (M) shares are up 7.1% in premarket trade after beating Q3 expectations and hiking its guidance. 

Here’s how the department store chain’s results compared to analysts’ expectations:

• Adjusted EPS: $0.52 vs $0.19 expected
• Revenue: $5.23 billion vs $5.2 billion expected

Macy’s is not dealing with the same inventory glut as other retailers, with inventory levels up just 4% year over year in Q3. 

The company forecast annual adjusted EPS of $4.07 to $4.27 vs $4 to $4.20 previously. 

Macy’s maintained its full-year revenue guidance of $24.34 billion to $24.58 billion.

Kohl’s Yanks Outlook

Kohl’s (KSS) shares are falling 3% ahead of the open after beating Q3 expectations but pulling its Q4 guidance. 

Here’s how the retailer’s results compared to analysts’ expectations:

• Adjusted EPS: $0.82 vs $0.77 expected
• Revenue: $4.28 billion vs $4.07 billion expected

Revenue was down 7% year over year while same-store sales dropped 6.9%.

Kohl’s withdrew its full-year guidance, citing volatility in retail and “significant” macroeconomic headwinds. 

The company also said board member Tom Kingsbury will serve as interim CEO when Michelle Gass leaves in December. 

Kohl’s has formed a committee to search for a new CEO.