All posts by Greta Wall
Coffee With Greta: Earnings Anticipation
Register now for today’s free pro trader Q&A on LinkedIn with options specialist Dan Darrow! DJIA Futures: +5 (+0.01%) SPX Futures: +2 (+0.1%) NASDAQ Futures: +33 (+0.2%) Good morning friends! Futures are slightly higher as traders await key earnings later today. Let’s get right to it! Goldman Sachs Misses Profit Estimates Goldman Sachs (GS) shares are down 1.4% ahead of the open after missing Q2 profit expectations. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $3.08 vs $3.18 expected Revenue: $10.9 billion vs $10.84 billion expected Profit dropped 58% year over year due to steep declines in trading and investment banking plus losses related to commercial real estate deals. The CEO said, “This quarter reflects continued strategic execution of our goals. I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders.” Fixed income trading revenue fell 26% to $2.71 billion vs $2.78 billion expected, equities trading revenue of $2.97 billion topped the $2.42 billion estimate, and investment banking fees fell 20% to $1.43 billion vs $1.49 billion expected. Carvana Reaches Debt Deal Carvana (CVNA) shares are surging 40.1% in premarket trade after announcing a debt restructuring deal. The used car retailer said the agreement will reduce its total debt outstanding by more than $1.2 billion. Carvana said the deal will eliminate over 83% of its 2025 and 2027 unsecured note maturities and lower its required cash interest expense by more than $430 million per year for the next two years. The CFO said, “This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth.” The company also announced plans to sell up to $1 billion in shares to raise capital. Carvana reported its second-quarter results alongside the debt announcement. Here’s a look at those numbers vs analysts’ expectations: Loss per share: $0.55 vs $1.15 expected Revenue $2.97 billion vs $2.59 billion expected Carvana’s gross profit per unit jumped 94% year over year to $6,520. The CEO said, “Our strong execution has made the business fundamentally better, and combined with today’s agreement with noteholders that reduces our cash interest expense and total debt outstanding, gives us great confidence that we are on the right path to complete our three-step plan and return to growth.” Housing Starts, Building Permits Drop New home construction slowed more than expected in June. The Census Bureau reported housing starts tumbled 8% last month to a seasonally adjusted annual rate of 1.43 million units vs 1.48 million expected. Single-family starts fell 7% while multi-family starts tumbled 11.6%. The number of new permits issued was also weaker than expected. Building permits fell 3.7% in June to a seasonally adjusted annual rate of 1.44 million units vs 1.48 million expected. Single-family permits rose 2.2% while multi-family permits dropped 13.5%. Mortgage Demand Jumps Mortgage demand rose last week as lower rates boosted refinance activity. The Mortgage Bankers Association reported total application volume rose 1.1% last week. That increase was driven by refinance applications which jumped 7% weekly and were down 32% year over year. Purchase applications fell 1% weekly and were down 21% annually. The refinance share of applications rose to 28.4% vs 26.8% the previous week. In Case You Missed It Microsoft (MSFT) shares hit an all-time high Tuesday after the company announced pricing for its new AI subscription service. The stock hit a high of $366.78 and settled at a new closing high of $359.49 at the end of the day. The new Copilot subscription service adds AI to Microsoft’s Office products like Word, Excel, and Teams. The subscription will cost an additional $30 per month for Office subscribers.
Continue Reading -->Coffee With Greta: Consumer Miss
Register now for tomorrow’s free pro trader Q&A on LinkedIn with options specialist Dan Darrow! DJIA Futures: -20 (-0.1%) SPX Futures: -5 (-0.1%) NASDAQ Futures: -32 (-0.2%) Good morning friends! Futures are flat but lower as traders digest the latest economic data and more big bank earnings. Let’s get right to it! Retail Sales Disappoint Retail sales rose less than expected in June. The Commerce Department reported retail sales rose 0.2% to $689.5 billion vs expectations for a 0.5% increase. Spending rose 2% at miscellaneous retailers, 1.9% online, 1.4% at furniture stores, and 1.1% at electronics stores. Department stores saw the largest drop with spending down 2.4%, receipts fell 1.4% at gas stations, and 1% at sporting goods stores. Excluding autos, retail sales rose 0.2% vs 0.3% expected. Morgan Stanley Slips Despite Earnings Beat Morgan Stanley (MS) shares are slipping 0.2% ahead of the open despite beating Q2 expectations. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $1.24 vs $1.15 expected Revenue: $13.46 billion vs $13.08 billion expected The bank’s profit dropped 13% year over year while revenue rose 2%. Morgan Stanley’s wealth management revenue jumped 15% from a year ago to a record $6.66 billion vs $6.5 billion expected. The CEO said, “The firm delivered solid results in a challenging market environment. The quarter started with macroeconomic uncertainties and subdued client activity, but ended with a more constructive tone.” But the bank’s Wall Street division saw weaker results. Institutional securities revenue fell 8 to $5.65 billion, Equities trading revenue came in at $2.55 billion in revenue vs $2.37 billion expected, and fixed income revenue of $1.72 billion missed the $1.99 billion estimate. Bank of America Tops Q2 Expectations Bank of America (BAC) shares are down 0.8% in premarket trade despite reporting better-than-expected Q2 earnings and revenue. Here’s how the consumer bank’s results compared to analysts’ estimates: EPS: $0.88 vs $0.84 expected Revenue: $25.33 billion vs $25.05 billion expected Earnings were up 19% from a year ago while revenue rose 11%. That revenue increase was fueled by a 14% jump in net interest income. The CEO said, “We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market. Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates.” Bank of America’s Wall Street division also helped boost revenue. Fixed income trading revenue jumped 18% to $2.8 billion vs $2.77 billion expected while equities trading slipped 2% to $1.6 billion vs $1.48 billion expected.
Continue Reading -->Coffee With Greta: Waiting For Earnings
Register now for Wednesday’s free pro trader Q&A on LinkedIn with options specialist Dan Darrow! DJIA Futures: -88 (-0.3%) SPX Futures: -6 (-0.1%) NASDAQ Futures: +1 (+0.01%) Good morning friends! Futures are mixed as a new week begins and traders look ahead to more key second-quarter earnings this week. Let’s get right to it! Ford Cuts F-150 Lightning Prices Ford (F) shares are down 0.7% ahead of the open after slashing prices on its electric F-150 Lightning pickup truck. The automaker said some of the least expensive versions of the truck would see prices fall by nearly $10,000 while the higher trim versions will fall by at least $6,000. The cuts reduce the entry-level price to about $50,000 and the extended-range Platinum trim starting price to about $92,000. Ford says the cuts come after its efforts to boost production and lower costs for battery minerals were successful. The company is also implementing factory upgrades that are expected to triple its output of the truck. Ford’s Dearborn factory where the Lightning is made will be closed for several weeks to make those upgrades. Tesla Builds First Cybertruck Tesla (TSLA) shares are rising 1.9% in premarket trade after the company successfully built its first Cybertruck. In a tweet over the weekend, the electric automaker said, “First Cybertruck built at Giga Texas!” The announcement came four years after CEO Elon Musk unveiled the prototype and two years behind schedule. Tesla was initially supposed to begin in late 2021. Musk has blamed supply chain issues for the delays. Microsoft, Sony Sign Call of Duty Deal Activision Blizzard (ATVI) shares are up 3.9% ahead of the open amid hopes Microsoft’s (MSFT) acquisition of the company will go through. This comes after Microsoft signed a binding, 10-year agreement with Sony (SONY) to keep Activision’s Call of Duty games on Playstation consoles after the acquisition. Microsoft’s Gaming CEO said, “We are pleased to announce that Microsoft and PlayStation have signed a binding agreement to keep Call of Duty on PlayStation following the acquisition of Activision Blizzard.” Regulators had previously expressed concern about Microsoft’s power over the gaming market if the acquisition was approved, with fears the company would make Activision’s games “exclusive” to its own consoles. Microsoft’s vice chair said even after the deal closes it “will remain focused on ensuring that Call of Duty remains available on more platforms and for more consumers than ever before.” Big Earnings This Week Second-quarter earnings season will pick up steam this week with some big reports set to be released. The main focus will be on Wednesday afternoon, here’s a look at what’s scheduled: Tuesday AM: Bank of America (BAC), Morgan Stanley (MS) Wednesday AM: Goldman Sachs (GS) Wednesday PM: Tesla (TSLA), Netflix (NFLX), United Airlines (UAL) Thursday AM: Johnson & Johnson (JNJ), American Airlines (AAL)
Continue Reading -->Coffee With Greta: Bank Earnings Beat
Register now for next week’s free pro trader Q&A on LinkedIn with options specialist Dan Darrow! DJIA Futures: +173 (+0.5%) SPX Futures: +7 (+0.2%) NASDAQ Futures: +4 (+0.03%) Good morning friends! Futures are higher as the second-quarter earnings season officially kicks off with big banks. Let’s get right to it! JPMorgan Tops Q2 Expectations JPMorgan Chase (JPM) shares are up 2.9% ahead of the open after beating Q2 expectations on the top and bottom line. Here’s how the largest bank in the U.S. did compared to analysts’ estimates: Adjusted EPS: $4.37 vs $4 expected Revenue: $42.4 billion vs $38.96 billion expected Net income surged 67% year over year while revenue jumped 34%. That growth was driven by higher rates with net interest income rising 44%. CEO Jamie Dimon said, “The U.S. economy continues to be resilient. Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong.” Chase also reported better-than-expected trading and investment banking results. Fixed income trading revenue dipped 3% to $4.6 billion vs $4.1 billion expected. Equity trading revenue came in at $2.5 billion vs $2.41 billion expected. And investment banking revenue of $1.5 billion topped the $1.42 billion estimate. Citigroup Rises On Earnings Beat Citigroup (C) shares are rising 1.5% in premarket trade after reporting better-than-expected second-quarter results. Here’s how the investment bank’s performance compared to analysts’ estimates: EPS: $1.33 vs $1.30 expected Revenue: $19.44 billion vs $19.29 billion expected The CEO said, “Amid a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model and strong balance sheet.” Total revenue dipped 1% year over year as the markets and investment banking business weighed on results. But personal banking and wealth management revenue rose 6% from a year ago. Wells Fargo Jumps After Earnings Wells Fargo (WFC) shares are up 3.0% ahead of the open after beating Q2 expectations on the top and bottom line. Here’s how the consumer bank’s results compared to analysts’ estimates: EPS: $1.25 vs $1.16 expected Revenue: $20.53 billion vs $20.12 billion expected Higher interest rates fueled that beat as net interest income jumped 29% from a year ago. Consumer and small business banking earnings rose 19% year over year. Wells Fargo’s CEO said, “Our company remains strong and we have significant opportunities to continue to improve how we serve our customers. The U.S. economy continues to perform better than many had expected, and although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters.” The bank set aside $1.7 billion in credit loss reserves, up from $1.2 billion in the first quarter. UnitedHealth Beats Earnings Estimates, Hikes Outlook UnitedHealth Group (UNH) shares are rising 2.9% in premarket trade after beating Q2 expectations and raising its outlook. Here’s how the health insurance giant’s results compared to analysts’ estimates: EPS: $6.14 vs $6.02 expected Revenue: $92.9 billion vs $90.6 billion expected UnitedHealth’s medical loss ratio rose to 83.2% from 81.5% a year ago, in-line with expectations. That number reflects the proportion of premiums paid out to cover medical expenses and a higher number means more spending on medical costs. The company now expects full-year EPS of $24.70 to $25.00 vs $24.50 to $25.00 previously. In Case You Missed It The federal budget deficit widened more than expected in June. That gap jumped to $227.76 billion last month compared to $88.8 billion in June 2022. Government receipts fell $42 billion to $418 billion while spending rose $96 billion to $646 billion. Through the first nine months of the fiscal year, the deficit was $1.39 trillion, up $515.1 billion compared to the same period last year.
Continue Reading -->Coffee With Greta: Disinflation Trend
Register now for next week’s free pro trader Q&A on LinkedIn with options specialist Dan Darrow! DJIA Futures: +70 (+0.2%) SPX Futures:+17 (+0.4%) NASDAQ Futures: +114 (+0.7%) Good morning friends! Futures are higher as more data shows the disinflationary trend continuing and Q2 earnings begin to trickle in. Let’s get right to it! Wholesale Inflation Cooler Than Expected Wholesale inflation pressures were cooler than expected in June. The Bureau of Labor Statistics’ producer price index rose 0.1% monthly and 0.1% year over year. That was better than expectations for 0.2% monthly and 0.4% annually. It was the lowest headline number since August 2020. The core PPI also cooled more than expected, rising 0.1% monthly and 2.4% annually. Economists were expecting core PPI to rise 0.2% monthly and 2.6% annually. This data is good news for consumer inflation as producer prices are a leading indicator for consumer price trends. Weekly Jobless Claims Slide Weekly jobless claims fell unexpectedly last week in another sign the labor market is maintaining strength. The Labor Department reported 237,000 Americans filed initial claims for unemployment benefits. That was down by 12,000 from the previous week and lower than expectations for claims to rise to 250,000. But continuing claims rose unexpectedly in the week ending July 1, up by 9,000 to 1.729 million vs expectations for that number to be unchanged. Delta Jumps On Record Earnings, Revenue Delta Airlines (DAL) shares are up 3.8% ahead of the open after reporting record second quarter earnings and revenue. Here’s how the airline’s results compared to analysts’ estimates: Adjusted EPS: $2.64 vs $2.40 expected Adjusted revenue: $14.61 billion vs $14.49 billion expected International travel surged during the quarter with revenue from trans-Atlantic trips up more than 60% year over year. Domestic revenue rose 8% while overall passenger revenue was up 21%. Fuel costs tumbled 22% during the quarter which boosted the company’s bottom line. Delta forecast Q3 earnings between $2.20 and $2.50 per share. The company expects capacity to increase 16% this quarter and revenue to jump as much as 14% from a year ago. Delta also hiked its full-year outlook, now expecting adjusted EPS of $6 to $7. PepsiCo Up After Earnings Beat, Higher Guidance PepsiCo (PEP) shares are rising 2.3% in premarket trade after beating Q2 expectations and hiking its full-year outlook. Here’s how the beverage maker’s results compared to analysts’ estimates: Adjusted EPS: $2.09 vs $1.96 expected Revenue: $22.32 billion vs $21.73 billion expected But sales volume dropped 3% in Pepsi’s food division and 1% in the beverage division as higher prices hurt demand. The company still raised its outlook for the second consecutive quarter. For 2023, Pepsi expects 10% organic revenue growth vs 8% previously. The company also forecast core constant currency earnings growth of 12% vs 9% previously. In Case You Missed It The Fed’s latest beige book shows economic growth continuing to slow across the country. The central bank released that report Wednesday afternoon. Five of the 12 Fed districts reported slight or modest growth, five reported flat growth, and two reported slight or modest declines. The report said labor markets are healthy with hiring more “targeting and selective”. Wage growth continued at a more moderate pace while price increases also slowed.
Continue Reading -->Coffee With Greta: Inflation Rally
Register now for today’s free pro trader Q&A on LinkedIn! DJIA Futures: +195 (+0.6%) SPX Futures: +32 (+0.7%) NASDAQ Futures: +141 (+0.9%) Good morning friends! Futures are popping higher after the release of positive new inflation data. Let’s get right to it! Inflation Cooler Than Expected U.S. inflation pressures were cooler than expected in June. The Bureau of Labor Statistics’ consumer price index rose 0.2% monthly and 3% year over year. That was better than expectations for +0.3% monthly and +3.1% annually. It was the lowest annual rate since March 2021. Grocery prices were up 4.7% from a year ago while gas prices were down 26.5%. The core CPI, which excludes food and energy prices, rose 0.2% monthly and 4.8% year over year. That was also better than +0.3% monthly and +5% annually expected. That core rate of inflation is the lowest level since August 2021. Treasury Yields Tumble On Cool CPI Treasury yields are dropping this morning after the release of that better-than-expected CPI data. The 2-year yield is down 10 basis points to 4.78% while the 10-year yield is down six basis points to 3.92%. The market is still pricing in a rate hike at the Fed’s meeting in 2 weeks. CME Group’s FedWatch Tool shows 89.9% of traders expecting a 25bps hike. But that is expected to be the bank’s final move with Fed futures predicting rates will remain in a range of 5.25%-5.5% until the end of the year. Domino’s Jumps On Uber Partnership Domino’s Pizza (DPZ) shares are rallying 12.5% ahead of the open after announcing a new delivery partnership with Uber (UBER). UBER shares are also up 1.7%. The agreement allows U.S. customers to orders Domino’s products through the Uber Eats and Postmates apps while Domino’s and its franchisees will then handle the delivery. In Case You Missed It Activision Blizzard (ATVI) shares jumped 10% on Tuesday after a federal judge denied the FTC’s motion for a preliminary injunction against Microsoft’s (MSFT) acquisition of the video game company. The ruling puts the deal one step closer to going through but the FTC can appeal. The companies also must resolve opposition from the Competition and Markets Authority in the U.K. Microsoft said it will work with U.K. regulators to modify the deal. MSFT shares rose 0.2% on Tuesday.
Continue Reading -->Coffee With Greta: Waiting Game
Register now for tomorrow’s free pro trader Q&A on LinkedIn with T3 Trading Group professional Josh Lefler! DJIA Futures: +117 (+0.3%) SPX Futures: +11 (+0.3%) NASDAQ Futures: +40 (+0.3%) Good morning friends! Futures are higher as traders wait for key inflation data Wednesday morning. Let’s get right to it! Microsoft Announces More Job Cuts Microsoft (MSFT) shares are up 0.2% ahead of the open after the company confirmed additional job cuts on Monday. The tech giant did not specify the number of additional layoffs but they are in addition to the 10,000 announced in January. A spokesperson told CNBC in an email, “Organizational and workforce adjustments are a necessary and regular part of managing our business. We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners.” Astra Plans Reverse Stock Split Astra Space Inc (ASTR) shares are falling 2.5% in premarket trade after the company revealed plans for a reverse stock split. In a securities filing Monday, the small rocket builder said it plans to conduct a 1 to 15 reverse stock split. Astra also hopes to raise up to $65 million through an “at the market” common stock offering. The reverse split plan was approved by the board on July 6 and is expected to take place on or before October 2. Small Business Optimism Rises Optimism among U.S. small business owners rose more than expected in June. The National Federation of Independent Business’ optimism index rose 1.6 points to 91 last month vs 89.9 expected. It was the highest reading in seven months as inflationary pressures continue to ease. The percentage of firms expecting the economy to improve rose 10 points to 40% while the percentage of firms expecting better sales rose 7 points to 14%. But the percentage of those planning to increase employment fell 4 points to 15% while just 6% said they feel it is a good time to expand. 24% of owners said inflation was the most important problem for their business while 24% cited labor quality as their top issue. Oil Prices Rise Ahead Of Supply Cuts Oil prices are higher this morning due to upcoming supply cuts by the world’s largest exporters and hopes for higher demand in the second half of this year. West Texas Intermediate crude futures are up 0.4% to over $73.30 bbl while Brent crude futures are up 0.4% to over $78 bbl. Saudi Arabia and Russia are set to implement supply cuts in August. The weaker dollar is also supporting prices as the dollar fell to a two-month low. A weaker dollar boosts oil demand as it makes crude cheaper for holders of other currencies. In Case You Missed It Carvana (CVNA) shares soared 16.4% on Monday after the company announced booming used electric vehicle sales. The used car retailer said in a statement that its used EV sales have increased 786% in the past five years. The company also named its top 10 best-selling electric vehicles for the first half of 2023 with the Tesla (TSLA) Model 3 topping that list.
Continue Reading -->Coffee With Greta: Key Week Begins
Register now for this week’s free pro trader Q&A on LinkedIn with T3 Trading Group professional Josh Lefler! DJIA Futures: +9 (+0.03%) SPX Futures: -3 (-0.1%) NASDAQ Futures: -22 (-0.1%) Good morning friends! Futures are flat as traders gear up for a big week with important inflation data and the start of Q2 earnings season. Let’s get right to it! Awaiting CPI Traders are looking ahead to key inflation data this week. The June consumer price index will be released by the Bureau of Economic Analysis on Wednesday morning. Expectations are for the annual headline CPI rate to fall to 3.1% from 4% in May and the annual core CPI rate to decrease to 5% from 5.3%. The June producer price index will then be released on Thursday morning. This data comes before the Fed’s next rate decision on July 26. CME Group’s FedWatch Tool currently shows 92.4% of traders expecting a 25 basis point rate hike at that meeting. Earnings Season Approaches Second quarter earnings season will officially kick off at the end of this week with the big U.S. banks. Things kick off with Delta Airlines (DAL) and Pepsico (PEP) Thursday morning ahead of the open. Then JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and UnitedHealth Group (UNH) all report Friday morning. There is a lot of focus on this earnings season as many analysts are expecting an “earnings recession”. Morgan Stanley (MS) analysts issued an earnings warning Sunday night. In a note, the group said corporate profits will be under pressure for the remainder of the year “as pricing power declines and costs remain sticky. Our US strategists remain of the view that 2H should see consensus downgrades.” The note said, “Inventory has grown sharply while demand, especially demand for goods, is falling. Companies will need to decide how they want to handle excess inventory and we believe many will turn to aggressive discounting; Autos is leading this debate.” Meta’s Threads Tops 100 Million Users Meta Platforms (META) shares are up 0.9% ahead of the open as its new social media platform Threads continues to grow rapidly. The tracking site Quiver Quantitative shows Threads has surpassed 100 million users since it launched last Wednesday. The growth has been rapid compared to other popular platforms. It took two months for ChatGPT to reach 100 million users and nine months for TikTok.
Continue Reading -->Coffee With Greta: Good Inflation News
Note: I will be out of office next week so there will be no Coffee With Greta. See you all Monday, July 10 and enjoy the holiday week! DJIA Futures: +151 (+0.4%) SPX Futures: +27 (+0.6%) NASDAQ Futures: +135 (+0.9%) Good morning friends! Futures are rising after the release of encouraging new inflation data. Let’s get right to it! PCE Inflation Continues To Cool The Fed’s preferred inflation gauge continued to cool in May. The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.1% monthly and 3.8% year over year. That was in line with expectations and down by 4.3% annually in April. It was the lowest headline reading since April 2021. The core PCE price index, which excludes food and energy prices, rose 0.3% monthly and 4.6% annually. That was slightly cooler than expectations for 4.6% annually. But the data also showed consumer spending slowed in May. Consumer spending rose just 0.1% last month vs 0.2% expected and down from 0.8% in April. Personal incomes rose 0.4%, better than 0.3% expected. Nike Drops On Earnings Miss Nike (NKE) shares are down 2.5% ahead of the open after missing fiscal Q4 profit expectations. Here’s how the sneaker giant’s results compared to analysts’ estimates: EPS: $0.66 vs $0.67 expected Revenue: $12.83 billion vs $12.59 billion expected It was Nike’s first earnings miss in three years as lower margins weighed on profits. Margins fell 1.4% to 43.6% which the company blamed on higher product input costs, elevated freight and logistics costs, more promotions, and unfavorable currency exchange rates. Apple Tops $3 Trillion Valuation Apple (AAPL) shares are rising 1.1% in premarket trade with the company’s market cap surpassing $3 trillion. The threshold for that milestone is just $190.73 per share and the stock is currently trading about $1 higher than that. Apple became the first company in history to hit the $3 trillion market cap during intraday trade in January 2022. But it failed to close above that milestone. AAPL shares are up about 46% so far this year. In Case You Missed It Pending home sales fell unexpectedly in May. The National Association of Realtors reported the number of contracts signed to purchase a home last month dropped 2.7% vs expectations for signings to be unchanged. These contract signings represent sales expected to close in 30 to 60 days, which is a bad sign for existing home sales in the months ahead. But the NAR Chief Economist still said, “The housing market is resilient with approximately three offers for each listing. “The lack of housing inventory continues to prevent housing demand from being fully realized.”
Continue Reading -->Coffee With Greta: Major Revision
DJIA Futures: +105 (+0.3%) SPX Futures: +10 (+0.2%) NASDAQ Futures: +29 (+0.2%) Good morning friends! Futures are higher as bank and tech stocks jump. Let’s get right to it! GDP Growth Revised Sharply Higher The U.S. economy grew much faster than previously estimated in the first quarter. The Commerce Department revised Q1 GDP growth sharply higher to 2% from 1.3% previously. That beat expectations for the final revision to come in at 1.4%. The revision was due to stronger consumer spending and exports than previously estimated. Treasury yields jumped following the release of that data as it signals the U.S. may be further from a recession than though. The 2-year yield is up 16 basis points to 4.88% while the 10-year yield is up 9 basis points to 3.80%. Banks Pass Stress Test Big bank stocks are up ahead of the open after passing the Fed’s annual stress test on Wednesday. JPMorgan Chase (JPM) shares are up 1.5%, Wells Fargo (WFC) shares are 1.7% higher, and Bank of America (BAC) is up 2%. Other bank stocks are also rising with the Financial Select Sector SPDR ETF (XLF) up 0.8% and the SPDR S&P Regional Banking ETF (KRE) up 1.9%. The Fed said all 23 banks included in the stress weathered a severe recession scenario while continuing to lend to consumers and corporations. In the hypothetical recession, all banks were able to maintain minimum capital levels. This year’s test included a “severe global recession” with 10% unemployment, a 40% decline in commercial real estate values, and 38% drop in housing prices. The Fed’s vice chair for supervision, Michael Barr, said, “Today’s results confirm that the banking system remains strong and resilient. At the same time, this stress test is only one way to measure that strength. We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses.” Weekly Jobless Claims Drop Weekly jobless claims dropped to the lowest level in a month last week. The Labor Department reported 239,000 Americans filed initial claims for unemployment benefits. That was down by 26,000 from the week before and well below expectations for 265,000. It was the largest drop since October 2021. Continuing claims decreased by 20,000 to 1.74 million in the week ending June 17 vs 1.77 million expected. Powell Remains Hawkish Fed Chair Jerome Powell reiterated the central bank’s plans for more rate hikes during a panel discussion in Portugal on Wednesday. Powell told the European Central Bank Forum “We believe there’s more restriction coming. What’s really driving it … is a very strong labor market.” The comments supported the Fed’s plan for two more 25bps rate hikes this year. CME Group’s FedWatch Tool currently shows 86.8% of traders betting on a rate hike at the July 26 meeting. Micron Rises After Earnings Beat Micron (MU) shares are rising 2.2% in premarket trade after beating fiscal Q3 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted loss per share: $1.43 vs $1.61 expected Revenue: $3.75 billion vs $3.65 billion expected Revenue was down 57% year over year. For fiscal Q4, Micron forecast $3.9 billion in revenue which was in line with estimates. Coming Up: Pending Home Sales The National Association of Realtors reports pending home sales for May at 10:00 a.m. ET. That data is expected to show pending sales were unchanged last month. Pending sales represent the number of contracts signed to purchase a home, with those sales expected to close in 30 to 60 days. This is a leading indicator for existing home sales.
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