All posts by Greta Wall
Coffee With Greta: Rate Worries Continue
DJIA Futures: -92 (-0.3%) SPX Futures: -13 (-0.3%) NASDAQ Futures: -59 (-0.4%) Good morning friends! Futures are slipping after the 10-year Treasury yield crossed a key threshold for the first time in 16 years. Let’s get right to it! 10-Year Yields Tops 5% Treasury yields are down this morning after the 10-year crossed a key threshold late on Thursday. The 2-year yield is down 3 basis points at 5.14% while the 10-year yield is down 5 basis points at 4.94%. The 10-year hit 5.001% around 5:00 p.m. ET on Thursday, the first time it’s crossed 5% since July 20, 2007. The late jump in yields on Thursday came after a speech by Fed Chair Jerome Powell. Yields initially pulled back after the speech before turning higher later in the afternoon. Powell Recap Fed Chair Jerome Powell spoke at the Economic Club of New York on Thursday. Powell said, “Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.” He added, “my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent.” Powell did not commit to any future policy path for the bank but other Fed officials have said in recent days that they can be patient amid the rise in Treasury yields. CME Group’s FedWatch Tool shows no expectations for another rate hike in November or December. Oil Extends Gains Oil prices are up this morning and on track for the second straight week of gains amid the war between Israel and Hamas. West Texas Intermediate crude futures are up 1.4% at $90.60 bbl while Brent crude futures are up 1.2% at $93.50 bbl. The U.S. Department of Energy said Thursday it is seeking to buy 6 million barrels of crude for delivery to the Strategic Petroleum Reserve in December and January. The SPR was drained in response to high oil prices last year. But high prices are expected to persist through the fourth quarter after Saudi Arabia and Russia extended their supply cuts to the end of the year. Solar Stocks Plunge Solar stocks are dropping this morning after SolarEdge Technologies (SEDG) cut its quarterly outlook. SEDG shares are plunging 28.1% ahead of the open. After the close on Thursday, the company cut its Q3 outlook and said it expects “significantly lower” Q4 revenue due to a slowdown in solar-power installations in Europe. SolarEdge expects Q3 revenue to range between $720 million and $730 million vs $880 million to $920 million previously. Q3 adjusted gross margins are expected to be between 20.1% and 21.1% vs 28% to 31% previously. And adjusted operating income is now expected to be in a range of $12 million to $31 million vs $115 million to $135 million. SolarEdge reports earnings after the close on November 1. The guidance cut is dragging down other solar stocks as well, with Enphase Energy (ENPH) dropping 15.1% and SunPower (SPWR) down 9.7%. In Case You Missed It Existing home sales fell less than expected in September. The National Association of Realtors reported existing sales dropped 2% last month to a seasonally adjusted annual rate of 3.96 million units vs 3.9 million expected. Sales were down 15.4% year over year, the slowest pace since October 2010. Supply continued to be an issue with 1.13 million homes for sale at the end of September, representing a 3.4-month supply at the current sales pace. The median price of a home sold last month rose 2.8% year over year to $394,300. But high rates are squeezing buyers with the average 30-year rate currently hovering near 8%.
Continue Reading -->Coffee With Greta: Ahead of Powell
DJIA Futures: +9 (+0.03%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +40 (+0.3%) Good morning friends! Futures are rising as traders look ahead to a speech by the Fed Chair later today. Let’s get right to it! Yields Surge Ahead of Powell Treasury yields are surging as the market awaits comments from Fed Chair Jerome Powell. The 10-year yield is up 5 basis points at 4.95% after pushing closer to 5% earlier this morning. That yield crossed the 4.9% mark for the first time since 2007 on Wednesday. Many analysts believe the recent surge in Treasury yields has done some of the Fed’s job for them, removing the need for another rate hike this year. All ears will be on Powell at 12:00 p.m. ET to see if he strikes a more dovish tone than he did in the press conference after the last meeting. The Fed’s next rate decision is on November 1. Netflix Surges On Subscriber Beat Netflix (NFLX) shares are surging 13.9% ahead of the open after beating Q3 expectations and reporting a strong jump in subscribers. Here’s how the streaming giant’s results compared to analysts’ estimates: EPS: $3.73 vs $3.49 expected Revenue: $8.54 billion, as expected Subscribers: 247.15 million vs 243.88 million expected The company added 8.76 million global subscribers during the quarter vs estimates for 5.49 million. Netflix said its ad-tier memberships grew nearly 70% from the previous quarter. The company also announced price increases. The ad-tier plan will remain $6.99 per month, basic will increase to $11.99 from $9.99, premium will increase to $22.99 from $19.99, and the standard plan will remain at $15.49. Tesla Slumps After Earnings Tesla (TSLA) shares are dropping 6.9% in premarket trade after missing Q3 expectations across the board. Here’s how the electric automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.66 vs $0.73 expected Revenue: $23.35 billion vs $24.1 billion expected It was the first quarter Tesla has missed on both the top and bottom line since Q2 2019. Gross profit declined 22% year over year while the company’s total operating margin came in at 7.6% vs 17.2% a year ago. On X (Twitter), the company said, “Cybertruck production remains on track for later this year, with first deliveries scheduled for November 30th at Giga Texas.” But CEO Elon Musk warned during the conference call, “It is going to require immense work to reach volume production and be cashflow positive at a price that people can afford. I just want to temper expectations for Cybertruck. It’s a great product, but financially, it will take a year to 18 months before it is a significant positive cash flow contributor.” American Airlines Earnings American Airlines (AAL) shares are up 1.3% ahead of the open after beating Q3 earnings expectations. Here’s how the airline’s results compared to analysts’ estimates: Adjusted EPS: $0.38 vs $0.25 expected Revenue: $13.48 billion vs $13.52 billion expected On a non adjusted basis, American lost $545 million during the quarter, its first loss since Q1 2022. Capacity rose 7% year over year but higher costs squeezed profit. American cut its full-year forecast, partly due to higher fuel prices. The airline now expects full-year adjusted EPS between $2.25 and $2.50 vs $4 to $3.75 previously. American expects a full-year adjusted operating margin of 7% vs 10% previously. Weekly Jobless Claims Beat Weekly jobless claims fell unexpectedly last week. The Labor Department reported 198,000 Americans filed initial claims for unemployment benefits. That was down by 13,000 from the previous week’s revised level and lower than 210,000 expected. Continuing claims rose by 32,000 to 1.734 million vs 1.710 million expected in the week ending October 7.
Continue Reading -->Coffee With Greta: Waiting For TSLA, NFLX
Register now for today’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: -92 (-0.3%) SPX Futures: -21 (-0.5%) NASDAQ Futures: -104 (-0.7%) Good morning friends! Futures are lower as earnings season picks up steam and traders look ahead to Tesla (TSLA) and Netflix (NFLX) after the close. Let’s get right to it! Morgan Stanley Profits Drop Morgan Stanley (MS) shares are dropping 3.4% ahead of the open after topping Q3 expectations but profits were down year over year. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $1.38 vs $1.28 expected Revenue: $13.27 billion vs $13.23 billion expected Profit fell 9% from a year ago while revenue rose 2%. Stronger than expected trading revenue helped offset misses in other divisions. Morgan Stanley’s bond trading revenue came in at $1.95 billion, about $200 million more than analysts were expecting. Equity trading revenue of $2.51 billion beat expectations by about $100 million. But the wealth management division’s revenue of $6.4 billion missed estimates by more than $200 million. Investment banking produced $938 million in revenue vs $1.11 billion expected. United Airlines Falls On Weak Guidance United Airlines (UAL) shares are down 4.8% in premarket trade after beating Q3 expectations but issuing weak guidance. Here’s how the airline’s results compared to analysts’ estimates: Adjusted EPS: $3.65 vs $3.35 expected Revenue: $14.48 billion vs $14.44 billion expected United said higher fuel costs and a halt to its Tel Aviv flights will eat into profits in the current quarter. The company forecast Q4 adjusted EPS of $1.50 to $1.80 vs analysts’ estimates of $2.06. For the full-year that would put adjusted earnings between $9.55 and $9.85 per share, down from its previous forecast of $11 to $12 per share. Jet fuel prices have surged nearly 25% since the start of the summer. United said Q4 revenue will rise 9% year over year if its Israel flights remain suspended through the end of the year and 10.5% if the suspension lasts only through October. Costs, excluding fuel, are expected to rise between 3.5% and 5%. Procter & Gamble Beats Q3 Estimates Procter & Gamble (PG) shares are up 2.2% ahead of the open after beating fiscal Q1 expectations on the top and bottom line. Here’s how the consumer goods maker’s results compared to analysts’ estimates: EPS: $1.83 vs $1.72 expected Revenue: $21.87 billion vs $21.58 billion expected Net sales rose 6% year over year with organic revenue up 7%. P&G widened its fiscal 2024 revenue outlook, anticipating foreign exchange rates to be a larger drag than previously expected. The company forecast revenue growth of 2% to 4% vs its previous forecast of 3% to 4%. P&G reiterated its full-year forecast for organic revenue growth. Home Construction Rebounds New home construction rebounded in September following a sharp drop the previous month. The Commerce Department reported housing starts rose 7% last month to a seasonally adjusted annual rate of 1.36 million units. That was in line with expectations for an SAAR of 1.36 million units. Single-family starts rose 3.2% while multi-family starts jumped 17.1%. Building permits fell less than expected, down 4.4% to a rate of 1.47 million units. Economists were anticipating a 6% decline to 1.45 million units. Single-family permits rose 1.8% while multi-family permits dropped 14%. Permits are a forward looking indicator for housing starts. Mortgage Demand Drops Mortgage demand dropped to a 28-year low last week as rates neared 8%. The Mortgage Bankers Association reported total application volume fell 6.9% from the previous week, the lowest total since 1995. Purchase applications dropped 6% weekly and 21% annually. Refinance applications tumbled 10% weekly and 12% annually. The average 30-year contract fixed rate increased to 7.70% from 7.67%, the highest rate since November 2000. The adjustable-rate mortgage share was 9.3%, the highest in 11 months as more borrowers turn to these loans which offer lower upfront rates. In Case You Missed It Homebuilder sentiment dropped to a 10-month low in October as mortgage rates continue to soar. The National Association of Homebuilders Housing Market Index dropped 4 points to 40 vs 44 expected. September’s index was also revised lower from 44 to 43. Any reading below 50 is considered negative. Sentiment about current sales conditions fell 4 points to 46, 6-month sales expectations dropped 5 points to 44, and buyer traffic fell 4 points to 26.
Continue Reading -->Coffee With Greta: Interest Rate Woes
Register now for tomorrow’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: -84 (-0.3%) SPX Futures: -17 (-0.4%) NASDAQ Futures: -88 (-0.6%) Good morning friends! Futures are slipping as traders grow concerned over higher rates. Let’s get right to it! Retail Sales Beat U.S. retail sales were much stronger than expected in September. The Commerce Department reported retail sales rose 0.7% last month to $704.9 billion. That was more than double expectations for a 0.3% gain. Core retail sales also jumped 0.6%, triple expectations for a 0.2% increase. August retail sales were also revised higher to show a 0.8% gain from 0.6% initially. Miscellaneous retailers saw the largest increase in spending last month, up 3% from August. Online spending jumped 1.1% while car dealers saw a 1.1% increase in sales. There were only categories that logged a decline in sales last month. Electronics and appliance stores sales fell 0.8%, sales at clothing stores fell 0.8%, and sales at building material stores fell 0.2%. Bank of America Tops Q3 Expectations Bank of America (BAC) shares are up 1% ahead of the open after beating Q3 expectations on the top and bottom line. Here’s how the bank’s results compared to analysts’ estimates: EPS: $0.90 vs $0.82 expected Revenue: $25.32 billion vs $25.14 billion expected Profit jumped 10% year over year while revenue climbed 2.9%> Bank of America’s interest income rose 4% from a year ago, topping estimates by roughly $300 million. Consumer banking deposits fell 8% during the quarter but the segment posted a 6% increase in revenue. CEO Brian Moynihan said, “We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last year but continuing to slow.” Goldman Sachs Beats Q3 Estimates Goldman Sachs (GS) shares are up 0.5% in premarket trade after beating Q3 expectations on the top and bottom line. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $5.47 vs $5.31 expected Revenue: $11.82 billion vs $11.19 billion expected Profit tumbled 33% from a year ago while revenue was down 1%. Bond trading revenue slipped 6% to $3.38 billion, topping analysts’ estimates by $600 million. Goldman Sachs said strength in interest rate products and mortgages helped to offset declines in trading revenue. Johnson & Johnson Earnings Beat Johnson & Johnson (JNJ) shares are up 1.2% ahead of the open after topping expectations in the third quarter. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: Adjusted EPS: $2.66 vs $2.52 expected Revenue: $21.35 billion vs $21.04 billion expected This marks Johnson & Johnson’s first quarterly report since it complete the separation from its consumer health spinoff Kenvue (KVUE). J&J’s pharmaceutical sales totaled $13.89 billion in the quarter, up 5% year over year. The medical devices business brought in $7.46 billion in sales, up 10% from a year ago. The company hiked its full-year outlook after the Q3 beat. J&J now expects 2023 sales between $83.6 billion and $84 billion vs $83.2 billion to $84 billion previously. The company forecast full-year adjusted EPS of $10.07 to $10.13 vs $10.00 to $10.10 previously. Tupperware Replaces CEO Tupperware (TUP) shares are rallying 8.9% in premarket trade after replacing its CEO. The company announced it was replacing CEO Miguel Fernandez effective immediately this morning. Laurie Ann Goldman, previous CEO of Avon North America and Spanx, was named CEO, president and a board member. Tupperware said Goldman would “support the company’s continued turnaround strategy and execution.” The company also announced a “board refreshment” as four directors stepped down and three were added. The chair of the board said, “Now is the right time to bring in new leadership, and Laurie Ann is exceptionally well-suited to advance our long-term strategy and accelerate growth.” Wyndham Pops On Takeover Offer Wyndham Hotels & Resorts (WH) shares are surging 13.2% ahead of the open after a proposed takeover from Choice Hotels (CHH). Choice proposed to acquire Wyndham for about $7.8 billion today. The takeover would be a cash and stock deal and would create a new U.S. budget hotel giant. Wyndham shareholders would receive $90.00 per share, including $49.50 in cash and 0.324 shares of CHH common stock, for every WH share they own.
Continue Reading -->Coffee With Greta: Busy Earnings Week
Register now for this week’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: +208 (+0.6%) SPX Futures: +25 (+0.6%) NASDAQ Futures: +55 (+0.4%) Good morning friends! Futures are higher as traders gear up for a busy week of earnings. Let’s get right to it! Busy Earnings Week This will be an important week of earnings for traders with several key names scheduled to report. Here are the highlights: Tuesday AM: Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ) Tuesday PM: United Airlines (UAL) Wednesday AM: Morgan Stanley (MS), Procter & Gamble (PG) Wednesday PM: Tesla (TSLA), Netflix (NFLX) Thursday AM: AT&T (T), American Airlines (AAL) Thursday PM: Taiwan Semiconductor (TSM) Pfizer Slashes Guidance Pfizer (PFE) shares are slipping 0.2% ahead of the open after slashing its full-year guidance. The pharmaceutical giant cut its outlook for both earnings and revenue this year on Friday. Pfizer now expects 2023 sales between $58 billion and $61 billion vs $67 billion to $70 billion previously. The company said that lower revenue outlook was “solely due to its Covid products”. Pfizer expects revenue from its Covid treatment, Paxlovid, to come in $7 billion lower than previously estimated and vaccine sales to be $2 billion lower than previously expected. The company forecast full-year adjusted EPS of $1.45 to $1.65 vs $3.25 to $3.45 previously. Rite Aid Files For Bankruptcy Rite Aid (RAD) shares are dropping 5.6% in premarket trade after filing for Chapter 11 bankruptcy protection. The drugstore chain submitted that filing in New Jersey on Sunday and said it would begin restructuring to significantly reduce its debt. Rite Aid said it reached a restructuring deal with its creditors which includes closing underperforming stores. Lenders also agreed to extend $3.45 billion in new funding to “provide sufficient liquidity” through the restructuring. Rite Aid also appointed Jeffrey Stein as its new CEO, Chief Restructuring Officer, and a member of the Board on Sunday. Charles Schwab Earnings Beat Charles Schwab (SCHW) shares are up 0.3% ahead of the open after beating Q3 profit expectations. Here’s how the financial services company’s results compared to analysts’ estimates: Adjusted EPS: $0.77 vs $0.74 expected Revenue: $4.606 billion vs $4.615 billion expected Revenue dropped 16% year over year while net income tumbled 31%. Net interest revenue was down 23.5%, asset management and administration fee revenue rose 16.9%, and trading revenue dropped 17.4%. Schwab’s bank deposits fell to $284.4 billion from $304.4 billion in Q2.
Continue Reading -->Coffee With Greta: Big Bank Earnings
Register now for next week’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: +86 (+0.3%) SPX Futures: +8 (+0.2%) NASDAQ Futures: -10 (-0.1%) Good morning friends! Futures are mixed as Q3 earnings season kicks off with the big banks. Let’s get right to it! Chase Rises After Q3 Results JPMorgan Chase (JPM) shares are up 0.8% ahead of the open after reporting higher profits in the third quarter. Here’s how the largest U.S. bank’s results compared to analysts’ estimates: EPS: $4.33 vs $3.92 expected Revenue: $40.69 billion vs $39.63 billion expected Profits surged 35% year over year while revenue climbed 21%. Net interest income jumped 30%, topping expectations by about $600 million. Chase CEO Jamie Dimon said U.S. consumers and businesses “generally remain healthy, although consumers are spending down their excess cash buffers.” Dimon warned that plus tight labor markets and “extremely high government debt levels” may push interest rates even higher. Citigroup Tops Q3 Estimates Citigroup (C) shares are rising 2.6% in premarket trade after beating Q3 expectations on the top and bottom line. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $1.63 vs $1.23 expected Revenue: $20.1 billion vs $19.3 billion expected Revenue was up 9% year over year and profits rose 2%. Citigroup’s institutional clients reported $10.6 billion in revenue, up 12% from a year ago and 2% from Q2. Personal banking and wealth management revenue jumped 10% year over year and 6% from Q2 to $6.8 billion. Wells Fargo Rises On Earnings Beat Wells Fargo (WFC) shares are up 2.9% ahead of the open after beating Q3 expectations on the top and bottom line. Here’s how the consumer bank’s results compared to analysts’ estimates: EPS: $1.48 vs $1.24 expected Revenue: $20.9 billion vs $20.1 billion expected Higher interest rates boosted net interest income, which jumped 8% year over year during the quarter. That helped offset slower lending activity at the bank. Wells Fargo’s CEO said, “Our revenue growth from a year ago included both higher net interest income and noninterest income as we benefited from higher rates and the investments we are making in our businesses.” He added, “While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly.” UnitedHealth Jumps After Earnings Beat UnitedHealth Group (UNH) shares are rising 1.5% in premarket trade after topping Q3 expectations. Here’s how the health insurer’s results compared to analysts’ estimates: Adjusted EPS: $6.56 vs $6.32 expected Revenue: $92.4 billion vs $91.4 billion expected Revenue jumped 14% year over year. UnitedHealth’s medical loss ratio was also better than expected at 82.3% vs the 82.8% consensus estimate. The company raised its full-year outlook, now expecting EPS between $24.85 and $25. Microsoft Closes Activision Blizzard Acquisition Microsoft (MSFT) shares are slipping 0.1% ahead of the open after closing its acquisition of Activision Blizzard. Activision Blizzard announced the deal had closed in a regulatory filing this morning. The deal expands Microsoft’s portfolio of video game franchises. Microsoft faced intense regulatory pushback on the acquisition after announcing it in January 2022. It was originally expected to close in June 2023 before the companies pushed the deadline to October 18.
Continue Reading -->Coffee With Greta: Market Shakes Off Hot CPI
Register now for next week’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: +100 (+0.3%) SPX Futures: +10 (+0.2%) NASDAQ Futures: +21 (+0.1%) Good morning friends! Futures are higher after the release of the September CPI. Let’s get right to it! Rising Shelter Costs Drive Hot CPI Headline inflation pressures rose slightly more than expected in September. The Bureau of Labor Statistics’ consumer price index rose 0.4% monthly and 3.7% year over year vs 0.3% monthly and 3.6% annually expected. That was driven mostly by higher shelter costs which jumped 0.6% monthly and 7.2% annually. Gas prices continued to rise as well, up 2.1% monthly and 3% from a year ago. The core CPI, which excludes food and energy prices, rose 0.3% monthly and 4.1% annually, in line with expectations. That was the lowest core reading since September 2021. Jobless Claims Flat Weekly jobless claims were unchanged last week. The Labor Department reported 209,000 Americans filed initial claims for unemployment benefits, lower than expectations for claims to rise by 3,000 to 210,000. The previous week was revised higher by 2,000 to 209,000. This is the fourth straight week claims have been under 210,000. Continuing claims rose by 30,000 to 1.702 million vs 1.676 million expected in the week ending September 30. Delta Jumps On Strong Summer Quarter Delta Airlines (DAL) shares are up 2.7% ahead of the open after beating Q3 profit expectations. Here’s how the airline’s results compared to analysts’ estimates: Adjusted EPS: $2.03 vs $1.95 expected Revenue: $14.55 billion vs $14.56 billion expected Revenue was up 13% year over year while profit surged 59%. Delta’s flights were 88% full during the quarter, up 1% from a year ago. But unit revenue fell 1.5% due to lower airfares. Delta saw a surge in international travel demand during the quarter, with trans-Atlantic trip revenue up 34% year over year. For the fourth quarter, the airline estimated revenue will rise 9% to 12% with EPS between $1.05 and $1.30. Delta trimmed its full-year forecast, now expecting adjusted EPS of $6 to $6.25 vs $6 to $7 previously and free cash flow of $2 billion vs the prior $3 billion forecast. Walgreens Rises Despite Earnings Miss Walgreens Boots Alliance (WBA) shares are rising 1.7% in premarket trade despite missing fiscal Q4 profit expectations and issuing soft guidance. Here’s how the retail pharmacy giant’s results compared to analysts’ estimates: Adjusted EPS: $0.67 vs $0.69 expected Revenue: $35.42 billion vs $34.78 billion expected Revenue rose roughly 9% year over year. Sales in the U.S. retail pharmacy segment rose 3.7%, pharmacy sales rose 6.4%, and international sales jumped 12%. But total prescriptions filled fell by 0.5% and retail sales declined 4.3%. Walgreens forecast adjusted EPS of $3.20 to $3.50 in the next fiscal year, below analysts’ estimates of $3.72. The company expects $141 billion to $145 billion in revenue vs $144 billion expected. Ford Slips As UAW Expands Strike Ford (F) shares are down 2.2% ahead of the open after the United Auto Workers Union expanded its strike against the automaker. UAW began its strike at the Kentucky Truck Plant at 6:30 p.m. ET on Wednesday. That plant is where Ford produces its Super Duty pickup trucks as well as Ford Expedition and Lincoln Navigator SUVs. The plant employs 8,700 UAW members and is Ford’s largest in terms of employment and revenue. In a press release, the union said, “The strike was called after Ford refused to make further movement in bargaining. The surprise move marks a new phase in the UAW’s Stand Up Strike.” Ford said the “decision by the UAW to call a strike at Ford’s Kentucky Truck Plant is grossly irresponsible but unsurprising given the union leadership’s stated strategy of keeping the Detroit 3 wounded for months through ‘reputational damage’ and ‘industrial chaos.’”
Continue Reading -->Coffee With Greta: PPI Comes In Hot
Register now for today’s free trading Q&A on LinkedIn with James Young from the Strategic Day Trader VTF®! DJIA Futures: +54 (+0.2%) SPX Futures: +7 (+0.2%) NASDAQ Futures: +38 (+0.3%) Good morning friends! Futures are higher but have trimmed some earlier gains after the release of hotter-than-expected inflation data. Let’s get right to it! Wholesale Inflation Runs Hot Wholesale inflation pressures were hotter than expected in September. The Bureau of Labor Statistics’ producer price index rose 0.5% monthly and 2.2% year over year vs 0.3% monthly and 1.6% annually expected. The core PPI jumped 0.3% monthly and 2.7% annually vs 0.2% monthly and 2.2% annually expected. This data is a leading indicator for the CPI as producers pass down higher prices to consumers. The September CPI will be released Thursday morning. Adjustable-Rate Mortgage Demand Jumps Overall mortgage demand rose slightly last week, driven by a jump in adjustable-rate applications. The Mortgage Bankers Association reported total application volume rose 0.6% from the previous week. Purchase applications rose 1% weekly while refinance applications increased 0.3%. MBA’s vice president said, “The level of ARM applications increased by 15% over the week, bringing the ARM share up to 9.2% of all applications, the highest share since November 2022.” The average 30-year fixed contract rate rose to 7.67% from 7.53%, the highest level since 2000. But the average rate on 5/1 ARMs decreased to 6.33% from 6.49%. Exxon To Buy Pioneer Natural Resources Pioneer Natural Resources (PXD) shares are up 1.8% ahead of the open after Exxon Mobil (XOM) announced it has agreed to buy the company. Under the agreement, Exxon will buy Pioneer for $59.5 billion in an all-stock deal. That values the stock at $253 per share. Pioneer stockholders will receive 2.3234 XOM shares for every PXD share they own. The deal is expected to close in the first half of 2024. Exxon said this acquisition will more than double its production volume in the Permian Basin. The oil giant’s CEO said, “The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis.” Plug Power Rallies On Rosy Forecast Plug Power (PLUG) shares are jumping 8.9% in premarket trade after the company released strong guidance for the next few years. In a regulatory filing, the company said it expects to generate $6 billion in revenue by 2027 and $20 billion in revenue by 2030. Plug Power expects to generate about $1.2 billion in 2023, slightly below analysts’ estimates of $1.28 billion. The company projected a compound annual growth rate in revenue of about 50% and a 5% gross margin over the next seven years.
Continue Reading -->Coffee With Greta: Rush To Safety
Register now for this tomorrow’s free trading Q&A on LinkedIn with James Young from the Strategic Day Trader VTF®! DJIA Futures: +62 (+0.2%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +5 (+0.03%) Good morning friends! Futures are rising as Treasury yields drop. Let’s get right to it! Yields Drop Treasury yields are dropping this morning as investors flood the bond market amid uncertainty about the impact of the Israel-Hamas war. The 2-year yield is down 9 basis points at 4.99% while the 10-year yield is down 12 basis points at 4.69%. This is the first day the bond market is open since the war began after being closed for Columbus Day on Monday. Investors have concerns about how the war may affect the global economy and markets. IMF Hikes U.S. Growth Outlook The International Monetary Fund raised its projection for U.S. economic growth this year. The group released an updated World Economic Outlook this morning, forecasting 2.1% growth in the U.S. That was up 0.3% from its July forecast. The IMF also raised its outlook for U.S. growth in 2024 by 0.5% to 1.5%. But the group expects slower growth for the euro zone. The euro zone’s 2023 forecast was revised down by 0.2% to 0.7% and the 2024 forecast was lowered by 0.3% to 1.2%. The IMF reiterated its global growth forecast of 3% this year and lowered its 2024 global forecast by 0.1% to 2.9%. Pepsi Jumps After Earnings Beat PepsiCo (PEP) shares are up 1.0% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. Here’s how the beverage giant’s results compared to analysts’ estimates: Adjusted EPS: $2.25 vs $2.15 expected Revenue: $23.45 billion vs $23.39 billion expected Net sales rose 6.7% year over year with organic revenue up 8.8%. Pepsi hiked its full-year forecast for the third consecutive quarter following the beat. The company now expects EPS growth of 13% this year vs 12% previously. Palantir Wins Army Contract Palantir (PLTR) shares are rising 2.5% in premarket trade after the data analytics company was awarded a $250 million Army contract. The company said it was “awarded a new contract for up to three years to provide additional capabilities in support of the Combatant Commands (COCOMs), Armed Services, Intelligence Community, and Special Forces as they continue to test, utilize, and scale artificial intelligence (AI) and machine learning (ML) capabilities.” Since 2018, Palantir has provided the Army leading data integration, management, and AI model training. The company’s president said, “We’re honored to expand our partnership with the Army to continue delivering the most innovative technologies and advanced data applications across the Armed Services.” Unity CEO Retires Unity Software (U) shares are up 3.9% ahead of the open after announcing its CEO’s retirement. In a post on its website today, the company said CEO John Riccitiello will retire as President, CEO, Chairman, and a member of the Board effective immediately. Riccitiello said, “It’s been a privilege to lead Unity for nearly a decade and serve our employees, customers, developers and partners, all of whom have been instrumental to the Company’s growth. I look forward to supporting Unity through this transition and following the Company’s future success.” Unity appointed James M. Whitehurst as interim CEO, President, and member of the Board. The current Lead Independent Director of the Board will take over as Chairman. The company said it “will initiate a comprehensive search process, with the assistance of a leading executive search firm, to identify a permanent CEO.” Unity reaffirmed its Q3 guidance with results set to be released after the market close on November 9.
Continue Reading -->Coffee With Greta: Oil Prices Surge, Stocks Drop
Register now for this week’s free trading Q&A with James Young from the Strategic Day Trader VTF! DJIA Futures: -199 (-0.6%) SPX Futures: -29 (-0.7%) NASDAQ Futures: -119 (-0.8%) Good morning friends! Futures are falling as a war breaks out in the Middle East following Hamas’ brutal attacks against Israel over the weekend. Let’s get right to it! Oil Prices Jump Oil prices are surging this morning in response to the war between Israel and Hamas. West Texas Intermediate crude futures are up 4.1% at over $86 bbl while Brent crude futures are up 3.9% at just under $88 bbl. But analysts believe this surge in prices will be a temporary reaction unless there is a sustained reduction in oil supply or transport. Neither country is a major oil producer but the conflict is taking place near a key oil producing and export region. Energy stocks are popping alongside oil prices. The Energy Select Sector SPDR ETF (XLE) is up 2.7% ahead of the open, with Exxon Mobil (XOM) shares rising 2.6%, Chevron (CVX) shares up 2.9%, and Occidental Petroleum (OXY) shares up 3.2%. Activist Investor Hikes Disney Stake Walt Disney (DIS) shares are up 1.4% in premarket trade following a report over the weekend that activist investor Nelson Peltz’s Trian Fund Management increased its stake in the company. The Wall Street Journal reported Trian’s Disney stake is now worth over $2.5 billion. The fund now holds more than 30 million shares vs 6.4 million at the end of June. The report said Trian is planning to request multiple seats on the Disney board, including one for Peltz. Disney previously denied a request from Peltz to join the board, arguing he didn’t understand the media industry. If Disney were to deny any upcoming requests, Trian could nominate directors that would be voted on at the annual meeting next spring. Tesla Slips On Declining China Sales Tesla (TSLA) shares are slipping 1.8% ahead of the open following a report that its China-made EV sales dropped in September. The China Passenger Car Association reported Sunday that Tesla sold 74,073 China-made EVs last month. That was a 10.9% decrease year over year. Sales of Model 3 and Model Y cars made in China dropped 12% from August. Meanwhile, Tesla’s Chinese rival BYD saw its sales jumped 42.8% year over year last month. Inflation Week This will be an important and busy week of economic data for traders. Things start off slow with a couple of Fed speeches today, then the NFIB small business optimism index and wholesale inventories Tuesday morning. Wednesday morning the Bureau of Labor Statistics releases the September producer price index, followed by the Fed’s September meeting minutes in the afternoon. On Thursday, traders will get weekly jobless claims and the September CPI in the morning. And on Friday, September import prices will be reported in the morning followed by the University of Michigan’s preliminary consumer sentiment index. Earnings season also kicks off with the big banks on Friday. Bond Market Closed A reminder that the bond market is closed today in observance of Columbus Day.
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