Coffee With Greta: Third Week Of Gains


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DJIA Futures: +125 (+0.4%)

SPX Futures: +11 (+0.2%)

NASDAQ Futures: -8 (-0.1%)

Good morning friends!

Futures are mixed with the market on track for its third straight weekly gain.

Let’s get right to it!

Yields Flat Ahead Of Fed Speakers

Treasury yields have turned flat this morning as investors bet the Federal Reserve is done with its rate-hike cycle.

The 10-year yield is flat at 4.45%. 

This week’s cooler-than-expected CPI and PPI data gave more credence to the market’s expectations that the Fed is done hiking. 

CME Group’s FedWatch Tool shows 99.7% of traders anticipating no rate hike at the December 13 meeting. 

But central bank officials are remaining cautious on the victory lap. 

Cleveland Fed President Loretta Mester told CNBC on Thursday, “We’re going to have to see much more evidence that inflation is on that timely path back to 2%. But we do have really good evidence that it has made progress and now it’s just, is it continuing?”

She would not commit to the Fed being done with hikes, saying, “I haven’t assessed that yet. Where I think we are right now is we’re basically in a very good spot for policy.”

Several more Fed officials are scheduled to speak today including the Boston Fed President, Fed Vice Chair for Supervision, Chicago Fed President, and San Francisco Fed President.

Housing Starts Rise More Than Expected

New home construction increased more than expected in October. 

The Census Bureau reported housing starts rose 1.9% to a seasonally adjusted annual rate of 1.37 million units vs 1.35 million expected. 

It was the second straight monthly increase but starts were still down 4.2% from October 2022. 

Single-family starts rose 0.2% monthly and 13.1% year over year while multi-family starts rose 4.9% monthly and dropped 31.8% annually. 

The increased building activity is expected to continue as new permits issued also topped estimates.

Building permits rose 1.1% to a seasonally adjusted annual rate of 1.49 million vs 1.45 million expected. 

Single-family permits were up 0.5% while multi-family permits jumped 2%.

Gap Shares Soar On Q3 Beat

Gap (GPS) shares are surging 18.3% ahead of the open after beating Q3 expectations on the top and bottom line. 

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

  • Adjusted EPS: $0.59 vs $0.19 expected
  • Revenue: $3.77 billion vs $3.60 billion expected

Revenue fell 7% year over year but same-store sales declined just 2% vs the 8.7% drop analysts were anticipating. 

Gap’s gross margin also improved to 41.3% vs 38.9% expected as the retailer had lower commodity costs, fewer promotions, and continued several cost-cutting efforts.

The company reaffirmed its full-year guidance and said it expects Q4 sales to be flat to slightly negative year over year.

In Case You Missed It

  • Homebuilder sentiment dropped unexpectedly this month. The National Association of Homebuilders sentiment index fell 6 points to 34 vs 40 expected. It was the lowest reading in a year with anything below 50 considered negative. Sentiment about current sales conditions fell six points to 40, 6-month sales expectations dropped five points to 39, and buyer traffic fell five points to 21.

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