All posts by Greta Wall
Coffee With Greta: Debt Ceiling Agreement Reached
Register now for my free Q&A with David Prince on Wednesday! DJIA Futures: -10 (-0.03%) SPX Futures: +22 (+0.5%) NASDAQ Futures: +187 (+1.3%) Good morning friends! Futures are mostly higher after the President and House Speaker reached a tentative debt ceiling agreement. Let’s get right to it! Debt Ceiling Deal President Biden and House Speaker Kevin McCarthy reached a deal on Sunday to raise the debt ceiling. Congress is expected to vote on the bill as early as tomorrow after the Treasury Department said they have until June 5 before a default. Biden said, “The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history. Takes the threat of a catastrophic default off the table.” The deal would suspend the debt ceiling until January 1, 2025 and spending caps for the next two years. In fiscal year 2024, military spending would be capped at $886 billion and nonmilitary discretionary spending at $704 billion. In fiscal year 2025, military spending would increase to $895 billion and nonmilitary discretionary spending to $711 billion. Nvidia Eyes $1 Trillion Nvidia (NVDA) shares are up 4.5% ahead of the open and on track to hit a $1 trillion market cap at the bell. To hit the $1 trillion mark NVDA shares must hold above $404.86. The stock has rocketed toward the trillion dollar club since last Wednesday when the company beat Q1 expectations and forecast huge Q2 revenue numbers. The other $1 trillion stocks include Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), and Microsoft (MSFT). Other semiconductor stocks are moving alongside NVDA this morning with the VanEck Semiconductor ETF (SMH) up 2.3%. Musk Meets China’s Foreign Minister Tesla (TSLA) shares are up 4.0% in premarket trade after CEO Elon Musk met with China’s Foreign Minister in Beijing. The meeting was reportedly meant to show China is open to foreign business while Tesla reportedly signaled plans to further expand in the country. The FM said China’s electric vehicle market “has broad prospects for development” and said the country will continue to create a better “market-oriented” and “law-based” business environment for foreign companies like Tesla. Jobs Week This will be an important week of data for the Fed as traders look ahead to the May jobs report. The Conference Board releases the May consumer confidence index at 10:00 a.m. ET today. Then the Labor Department releases its April job openings and labor turnover survey Wednesday at 10:00 a.m. while the Fed releases its Beige Book at 2:00 p.m. ADP’s private employment report for May will be out Thursday morning along with weekly jobless claims and the Q1 productivity revision. On Friday morning, the Labor Department releases the official May jobs report.
Continue Reading -->Coffee With Greta: Stubborn Inflation
Register now for my free Q&A with David Prince next week on LinkedIn! DJIA Futures: +9 (+0.03%) SPX Futures: +1 (+0.02%) NASDAQ Futures: +23 (+0.2%) Good morning friends! Futures are flat as traders digest the latest inflation data and monitor progress in debt ceiling talks. Let’s get right to it! PCE Inflation Hotter Than Expected The Fed’s preferred inflation gauge ran hotter than expected in April. The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.4% monthly and 4.4% year over year last month. That was up from the 4.2% gain in March. The core PCE price index, which excludes food and energy and is the Fed’s preferred inflation measure, rose 0.4% monthly and 4.7% year over year. That was hotter than expectations for 0.3% monthly and 4.6% annually. The data showed the U.S. economy tilting back toward a services focus as goods prices increased 2.1% year over year but services prices jumped 5.5%. The report also showed consumer spending held up strong during the month despite stubborn inflation pressures. Consumer spending jumped 0.8% in April vs 0.4% expected. Personal incomes rose 0.4%, in line with expectations. Debt Ceiling Talks Continue Debt ceiling talks are still ongoing after negotiators reportedly moved closer to a deal on Thursday. But the final phase of talks is expected to be the most difficult. Republican Representative Patrick McHenry told reporters, “We’re at a sensitive phase, with sensitive issues that remain. Those sensitive issues are the thorniest issues that we’ve been discussing. Everybody’s trying to do a fine job of figuring out the finer details of this, but nothing’s done.” President Biden said, “The only way to move forward is with a bipartisan agreement, and I believe we’ll come to an agreement that allows us to move forward and protects the hardworking Americans of this country.” No in-person meeting at the White House is scheduled for today but McHenry said, “there’s alignment on the set of things that we need to work on.” Costco Slips After Earnings Miss Costco (COST) shares are down 0.2% ahead of the open after missing fiscal Q3 expectations. Here’s how the warehouse retailer’s results compared to analysts’ estimates: EPS: $2.93 vs $3.29 expected Revenue: $52.6 billion vs $54.5 billion expected Same-store sales rose just 0.3% globally and dipped 0.1% in the U.S., missing expectations for 2.8% growth. Coming Up: Consumer Sentiment The University of Michigan releases its final consumer sentiment index for May at 10:00 a.m. ET. That survey is expected to be unchanged from the flash reading of 57.7 earlier this month. The index also includes consumers’ inflation expectations over the next one, three, and five years. In Case You Missed It Pending home sales stalled in April as buyers struggle with low inventory. The National Association of Realtors reported the number of contracts signed to purchase a home was unchanged last month. That missed expectations for a 0.8% increase. Pending sales tumbled 20.3% year over year.
Continue Reading -->Coffee With Greta: Nvidia Surprise
DJIA Futures: -25 (-0.1%) SPX Futures: +35 (+0.8%) NASDAQ Futures: +306 (+2.2%) Good morning friends! Futures are mixed as tech stocks rally after Nvidia’s blowout earnings report. Let’s get right to it! Nvidia Skyrockets Nvidia (NVDA) shares are surging 29.0% ahead of the open after crushing Q1 expectations and hiking its Q2 guidance. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $1.09 vs $0.92 expected Revenue: $7.19 billion vs $6.52 billion Nvidia’s CEO said the company is seeing “surging demand” for its data center products and is going to have a “giant record year”. That group’s sales jumped 14% last quarter to $4.28 billion vs $3.9 billion expected. Nvidia forecast $11 billion in Q2 sales, crushing analysts’ estimates for $7.15 billion. Dollar Tree Shrinks After Cutting Guidance Dollar Tree (DLTR) shares are falling 12.1% in premarket trade after missing Q1 earnings expectations and cutting its full-year profit outlook. Here’s how the discount retailer’s results compared to analysts’ estimates: Adjusted EPS: $1.47 vs $1.53 expected Revenue: $7.32 billion vs $7.28 billion expected Dollar Tree maintained its full-year revenue outlook but cut guidance for earnings. The company now expects EPS between $5.73 and $6.13 vs $6.30 to $6.80 previously. The CEO said, “We are adjusting our EPS outlook as we expect the elevated shrink and unfavorable sales mix to persist through the balance of the year. We still expect earnings to be more back-end loaded this year as the benefits of lower ocean freight rates flow through.” Q1 GDP Growth Revised Higher Economic growth in the first quarter was unexpectedly revised higher. The Commerce Department’s second estimate shows annual GDP growth of 1.3% vs 1.1% initially estimated. The increase was primarily driven by an upward revision to inventory investment. Weekly Jobless Claims Lower Than Expected Weekly jobless claims came in lower than expected last week. The Labor Department reported 229,000 Americans filed initial claims for unemployment benefits. That was an increase from the revised 225,000 in the previous week. The previous week was initially estimated at 242,000. But mass fraud has been discovered in unemployment numbers in Massachusetts in recent weeks, which contributed to the apparent increase in nationwide unemployment. The state says it is working to address the problem and will amend previous reports. That could reduce overall claims for the weeks of May 6 and May 13. Debt Ceiling Talks Make Progress House Speaker Kevin McCarthy says talks for a debt ceiling deal are making progress but the two sides still disagree on spending. After negotiators met at the White House on Wednesday, McCarthy said, “We will come to an agreement worthy of the American public and there should not be any fear. Money’s coming in [to the Treasury] every day.” But lawmakers are still leaving Washington for Memorial Day recess beginning today, indicating no deal is close to needing a vote. Rep. Steve Scalise said Wednesday, “If some new agreement is reached between President [Joe] Biden and Speaker McCarthy, members will receive 24 hours notice in the event we need to return to Washington for any additional votes, either over the weekend or next week.” In response to the turmoil over the debt limit, credit rating agency Fitch places the United States’ AAA status on “rating watch negative”. The agency said, “The brinkmanship over the debt ceiling, failure of the U.S. authorities to meaningfully tackle medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness.”
Continue Reading -->Coffee With Greta: Debt Ceiling Drag
DJIA Futures: -115 (-0.4%) SPX Futures: -18 (-0.4%) NASDAQ Futures: -76 (-0.6%) Good morning friends! Futures are falling as traders continue to monitor ongoing debt ceiling talks in Washington. Let’s get right to it! Debt Ceiling Drag Negotiators are expected to meet again today for talks on a debt ceiling deal. The meeting comes after little progress was made during talks on Tuesday after House Speaker Kevin McCarthy’s “productive” meeting with the President on Monday. Lawmakers are facing a June 1 deadline to raise the debt limit or risk a default. Intuit Drops As Tax Filings Slow Intuit (INTU) shares are falling 5.5% ahead of the open after missing fiscal Q3 revenue expectations as its tax filing business slowed. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $8.91 vs $8.48 expected Revenue: $6.02 billion vs $6.09 billion expected Intuit blamed the slowdown in its Turbo Tax business on people who chose not to file this year after filing in previous years to receive pandemic-era stimulus and credits. But the company hiked its full-year guidance. Intuit expects revenue growth of 12% to 13% in fiscal 2023 up from 10% to 12% previously. The company also expects full-year adjusted EPS between $14.20 and $14.25, which would represent growth of 20% vs 15% to 17% previously forecast. Abercrombie & Fitch Surges On Surprise Profit Abercrombie & Fitch (ANF) shares are surging 17.0% in premarket trade after reporting a surprise Q1 profit and hiking its outlook. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $0.39 vs $0.05 loss expected Revenue: $836 million vs $815 million expected Same-store sales rose 3% year over year vs the 1% decline analysts were anticipating. Abercrombie hiked its full-year guidance after the beat. The company now expects fiscal 2023 sales growth of 2% to 4% vs 1% to 3% previously. Abercrombie forecast net sales growth of 4% to 6% in Q2. Kohl’s Jumps On Surprise Profit Kohl’s (KSS) shares are rallying 13.1% ahead of the open after reporting a surprise Q1 profit and reiterating its full-year outlook. Here’s how the retailer’s results compared to analysts’ estimates: EPS: $0.13 vs $0.42 loss expected Revenue: $3.36 billion vs $3.34 billion expected Comparable sales fell 4.3% year over year, in line with expectations. Kohl’s expects full-year net sales to decline between 2% and 4% with EPS between $2.10 to $2.70. Meta Begins Latest Round of Layoffs Meta Platforms (META) shares are slipping 0.8% in premarket trade as the company reportedly begins its latest round of layoffs. About 10,000 total workers will lose their jobs between this month’s cuts and the ones enacted in April. Reuters first reported the latest round of cuts had started this morning. Meta employees in user experience, marketing, recruiting, and engineering later announced they had been let go on LinkedIn. The company has not confirmed the reports but the cuts were announced earlier this year as part of CEO Mark Zuckerberg’s “year of efficiency”. In Case You Missed It New home sales jumped unexpectedly in April as buyers struggle with low existing inventory. The Census Bureau reported new home sales rose 4.1% last month to a seasonally adjusted annual rate of 683,000 units vs 669,000 expected. March sales were revised lower to a rate of 656,000 units. But prices pulled back as rates remain high, the median price of a new home sold in April fell to $420,800.
Continue Reading -->Coffee With Greta: Waiting For A Deal
DJIA Futures: -51 (-0.2%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -46 (-0.3%) Good morning friends! Futures are slipping as traders remain on edge over debt ceiling negotiations. Let’s get right to it! Still No Debt Ceiling Deal There is still no deal to raise the debt ceiling after President Biden met with House Speaker Kevin McCarthy on Monday. McCarthy told reporters that Monday’s meeting was “productive” and “professional”. He said, “I think the tone tonight was better than any other night we’ve had discussions.” Both teams of negotiators reportedly reconvened overnight to come up with a compromise deal. McCarthy said, “The president and I know the deadline, so I think we’re going to talk every day … until we get this done.” The deadline to raise the debt limit is June 1. Lowe’s Drops After Cutting Outlook Lowe’s (LOW) shares are falling 1.6% ahead of the open after cutting its full-year outlook despite beating Q1 expectations on the top and bottom line. Here’s how the home improvement retailer’s results compared to analysts’ estimates: Adjusted EPS: $3.67 vs $3.44 expected Revenue: $22.35 billion vs $21.6 billion expected Comparable sales dropped 4.3% year over which was higher than the 3.4% decline analysts were expecting. Lowe’s now expects full-year sales to range between $87 billion and $89 billion vs the previous forecast for $88 billion to $90 billion. The company also expects adjusted EPS of $13.20 to $13.60 vs $13.60 to $14.00 previously. Dick’s Sporting Goods Beats Q1 Estimates Dick’s Sporting Goods (DKS) shares are up 2.6% in premarket trade after beating Q1 estimates on the top and bottom line. Here’s how the sporting goods retailer’s results compared to analysts’ expectations: Adjusted EPS: $3.40 vs $3.18 expected Revenue: $2.842 billion vs $2.799 billion expected Same-store sales jumped 3.4% year over year. Dick’s reaffirmed its full-year outlook for EPS between $12.90 and $13.80 vs $13.38 expected by analysts. Zoom Slips Despite Earnings Beat Zoom Video Communications (ZM) shares are falling 1.4% before the opening bell despite beating fiscal Q1 expectations on the top and bottom line. Here’s how the video calling platform’s results compared to analysts’ estimates: Adjusted EPS: $1.16 vs $0.99 expected Revenue: $1.11 billion vs $1.08 billion expected Zoom also hiked its Q2 and full-year outlooks after the beat. The company now expects Q2 adjusted EPS of $1.04 to $1.06 on $1.11 billion to $1.12 billion expected. That topped analysts’ estimates for adjusted EPS of $1.05 on $1.11 billion in revenue. Zoom forecast full-year adjusted EPS of $4.25 to $4.31 on $4.47 billion to $4.49 billion in revenue vs EPS of $4.21 on $4.45 billion in revenue expected. The CEO said, “The solid start to the year has enabled us to raise our outlook for fiscal-year 2024 while continuing to invest in innovations such as AI to help make interactions more meaningful and communications more effective.”
Continue Reading -->Coffee With Greta: Debt Ceiling Drama
DJIA Futures: +37 (+0.1%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +5 (+0.04%) Good morning friends! Futures are flat as traders remain on edge over debt ceiling negotiations. Let’s get right to it! Debt Ceiling Talks To Continue President Biden and House Speaker Kevin McCarthy are set to meet at the White House today to resume negotiations for a debt ceiling deal. The meeting comes after McCarthy said he had a “productive” phone call with Biden on Sunday. Staff reportedly restarted talks Sunday evening. Republicans are demanding spending cuts in exchange for a debt limit increase. But Biden said, “It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely, on their partisan terms.” Treasury Secretary Janet Yellen reaffirmed the June 1 deadline to come to an agreement. She said, “There can be no acceptable outcomes if the debt ceiling isn’t raised, regardless of what decisions we make. Fed’s Kashkari: June Pause Doesn’t Mean Rate Hikes Are Over Minneapolis Fed President Neel Kashkari is cautioning Americans against reading too much into a pause at the next Fed meeting. Kashkari told CNBC this morning that he’s open to a pause in June but that would not indicate the Fed is done hiking rates. He said, “If we did, if we were to skip in June, that does not mean we’re done with our tightening cycle. It means to me we’re getting more information.” CME Group’s FedWatch Tool shows 82.5% of traders expecting no rate hike on June 14. But Kashkari threw cold water on the market’s expectations of cuts later this year. He said, “Do we then start raising again in July? Potentially, and so that’s the most important thing to me is that we’re not taking it off the table.” The Fed has vowed to remain data-dependent for future rate decisions after the last 25bps hike in May. PacWest Sells Off Construction Loans PacWest Bancorp (PACW) shares are jumping 8.4% ahead of the open after the regional bank announced it has agreed to sell some real estate construction loans to Kennedy-Wilson Holdings (KW). KW shares are also up 2.9% in premarket trade. PacWest sold 74 loans with an outstanding balance of $2.6 billion to Kennedy-Wilson. The bank also plans to sell six more construction loans with a total balance of $363 million to the company. The transaction between PacWest and Kennedy-Wilson is expected to close in multiple deals during this current quarter and early Q3. JPMorgan Hikes Key Revenue Target JPMorgan Chase (JPM) shares are up 0.4% ahead of the opening bell after the bank hiked its full-year revenue target. Slides for an investor presentation today show the largest bank in the U.S. now expects to generate $84 billion in net interest income this year. That’s an increase of $3 billion from the guidance given in its Q1 earnings report, which was already an increase of $7 billion from the previous outlook. The higher forecast comes after JPMorgan’s takeover of First Republic Bank from regulators. But the bank did warn “sources of uncertainty” around deposits and the economy could impact its outlook. CEO Jamie Dimon is expected to speak in a Q&A session during today’s investor event.
Continue Reading -->Coffee With Greta: Awaiting Powell
DJIA Futures: +101 (+0.3%) SPX Futures: +13 (+0.3%) NASDAQ Futures: +10 (+0.1%) Good morning friends! Futures are rising as traders look ahead to a speech by the Fed Chair today. Let’s get right to it! Powell On Deck Traders are awaiting a speech by Fed Chair Jerome Powell at 11:00 a.m. ET today. Powell will participate in a panel discussion alongside former Fed Chair Ben Bernanke at the Thomas Laubach Research Conference. The market is focused on this speech after two Fed officials seemed to put their support behind a June rate hike on Thursday. Dallas Fed President Lorie Logan said in a speech, “We haven’t yet made the progress we need to make. And it’s a long way from here to 2 percent inflation.” St. Louis Fed President James Bullard later today the Financial Times, “I do expect disinflation, but it’s been slower than I would have liked, and it may warrant taking out some insurance by raising rates somewhat more to make sure that we really do get inflation under control.” Bullard added, “Our main risk is that inflation doesn’t go down or even turns around and goes higher, as it did in the 1970s.” CME Group’s FedWatch Tool still shows 64.4% of traders betting on no rate hike at the June 14 meeting. Foot Locker Tumbles After Earnings Miss Foot Locker (FL) shares are plunging 26.2% ahead of the open after missing Q1 expectations and cutting its full-year outlook. Here’s how the shoe retailer’s results compared to analysts’ estimates: EPS: $0.70 vs $0.76 expected Revenue: $1.93 billion vs $1.99 billion Same-store sales dropped 9.1% year over year vs the 7.7% decline expected. Foot Locker now expects full-year EPS of $2 to $2.25, down from $3.35 to $3.65 previously. The company also expects full-year sales to fall 6.5% to 8% vs 3.5% to 5.5% previously. The CEO said, “Our sales have since softened meaningfully given the tough macroeconomic backdrop, causing us to reduce our guidance for the year as we take more aggressive markdowns to both drive demand and manage inventory.” Deere Jumps On Earnings Beat Deere & Co (DE) shares are rising 3.4% in premarket trade after beating fiscal Q2 expectations on the top and bottom line. Here’s how the company’s results compared to analysts’ estimates: EPS: $9.56 vs $8.58 expected Revenue: $16 billion vs 14.9 billion expected Deere hiked its full-year guidance following the beat. The company now expects net income between $9.25 billion and $9.5 billion this year vs $8.75 billion and $9.25 billion previously. The CEO said, “As shown by the company’s outstanding second-quarter results, Deere continues to benefit from favorable market conditions and an improving operating environment. Though supply-chain constraints continue to present a challenge, we are seeing further improvement.” In Case You Missed It Existing home sales slowed less than expected in April. The National Association of Realtors reported existing sales fell 3.4% last month to a seasonally adjusted annual rate of 4.28 million units vs 4.26 million expected. Existing sales were down 23.2% year over year. There were 1.04 million homes for sale at the end of the month, up 1% from April 2022 but representing just a 2.9-month supply. The median price of an existing home sold in April fell 1.7% annually to $388,800. The Conference Board’s leading economic indicators index fell 0.6% as expected in April. That was the 13th straight monthly decline, signaling an impending recession. Eight of the 10 indicators included in the index declined. The measure of current economic conditions rose 0.3%.
Continue Reading -->Coffee With Greta: Fed Pause In Question
DJIA Futures: -57 (-0.2%) SPX Futures: -2 (-0.04%) NASDAQ Futures: +5 (+0.04% Good morning friends! Futures are mixed as traders digest hawkish comments from a key Fed official and Walmart’s strong earnings. Let’s get right to it! Dallas Fed President Does Not Support Pause Dallas Fed President Lorie Logan does not believe current data supports a pause in rate hikes at the bank’s next meeting. In a speech prepared for today in San Antonio, Logan said, “The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet.” She is a voting member of the Federal Open Market Committee this year. CME Group’s FedWatch Tool shows traders split about 50/50 on whether the Fed will hold rates steady or implement a 25bps hike at the June 14 meeting. Logan said, “We haven’t yet made the progress we need to make. And it’s a long way from here to 2% inflation.” The Fed’s preferred inflation gauge for April, the core PCE price index, will be released next week. Walmart Jumps After Earnings Beat Walmart (WMT) shares are up 1.4% ahead of the open after beating Q1 expectations on the top and bottom line and hiking its full-year outlook. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $1.47 vs $1.32 expected Revenue: $152.30 billion vs $148.76 billion expected Sales rose nearly 8% year over year as strong grocery sales helped offset weaker clothing and electronics sales. Walmart raised its full-year forecast after the beat, now expecting adjusted earnings between $6.10 and $6.20 per share. But its Q2 outlook was a bit weaker than expected. The retailer expects Q2 earnings to range between $1.63 and $1.68 per share vs $1.71 expected. The CFO said they have seen a shift in consumer spending but shoppers remain resilient. He said, “I think that’s in part probably because balance sheets are much stronger than they were pre-pandemic, even at this point.” Bath & Body Works Surges After Q1 Beat Bath & Body Works (BBWI) shares are rallying 12.3% in premarket trade after topping Q1 estimates and raising its full-year guidance. Here’s how the body care retailer’s results compared to analysts’ expectations: EPS: $0.33 vs $0.26 expected Revenue: $1.396 billion vs $1.393 billion expected The CEO said, “We delivered first quarter sales in line with our expectations while our EPS was better than anticipated as we saw benefits from our work to improve merchandise margin as well as early benefits from our cost optimization initiatives.” Bath & Body Works raised its full-year earnings guidance after the beat to between $2.70 and $3.10 vs $2.50 to $3.00 previously. Cisco Drops On Demand Concerns Cisco (CSCO) shares are down 4.5% ahead of the open despite beating fiscal Q3 expectations as concerns mount about demand. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $1.00 vs $0.97 expected Revenue: $14.57 billion vs $14.4 billion expected But orders declined 23% during the quarter, prompting fears about lower demand. For fiscal Q4, Cisco forecast adjusted EPS between $1.05 to $1.07 and revenue growth of 14% to 16%. That was better analysts’ estimates for EPS of $1.04 on $14.95 billion in revenue. The company also raised its full-year profit guidance, expecting adjusted EPS of $3.80 to $3.82. Weekly Jobless Claims Drop Weekly jobless claims fell more than expected last week as the labor market remains strong. The Labor Department reported 242,000 Americans filed initial unemployment claims. That was down by 22,000 from the previous week and lower than 255,000 expected. Continuing claims also fell by 8,000 to 1.799 million in the week ending May 6. Philly Fed Manufacturing Index Improves A key manufacturing gauge shows activity declined for the 9th straight month in May. The Philly Fed’s manufacturing index rose by nearly 21 points to negative 10.4 this month. That was better than expectations for negative 20 but marked the ninth straight negative reading. New orders increased 13.8 points to negative 8.9, the shipments index improved slightly to negative 4.7, and the six-month business outlook fell by 10.3 points to negative 1.5. Coming Up: Existing Home Sales, Leading Economic Indicators The National Association of Realtors reports existing home sales for April at 10:00 a.m. ET. That report is expected to show the pace of sales slowed last month to a seasonally adjusted annual rate of 4.26 million units. The existing home market has remained restricted by low inventory keeping prices high even amid high mortgage rates. The Conference Board also releases its leading economic indicators index for April at 10:00 a.m. That survey is expected to fall 0.6% from March. That would be the 13th straight monthly decline as the index continues to signal a recession is near.
Continue Reading -->Coffee With Greta: Stocks Jump On Debt Ceiling Optimism
Don’t miss my free Q&A event with pro trader Dan Darrow after the market close today. Register now! DJIA Futures: +139 (+0.4%) SPX Futures: +15 (+0.4%) NASDAQ Futures: +29 (+0.2%) Good morning friends! Futures are higher amid hopes for a debt ceiling deal. Let’s get right to it! Debt Ceiling Talks Make Progress House Speaker Kevin McCarthy says debt ceiling talks are making progress and he does not think there will be a default. McCarthy told CNBC today that he was encouraged by President Biden’s willingness to negotiate. He said, “Now [Biden has] finally admitted that we’re going to negotiate and we have a structure to negotiate. The problem is the timeline is very short.” This comes after Biden decided Tuesday to cut his trip to Asia short to return for debt ceiling talks. Talks have been ongoing between Congressional leaders and their staff. House Minority Leader Hakeem Jeffries also told CNBC “I’m optimistic common ground will be found in the next week or two.” Target Tops Q1 Expectations Target (TGT) shares are up 0.7% ahead of the open after topping Q1 expectations on the top and bottom line. Here’s how the retailer’s results compared to analysts’ estimates: EPS: $2.05 vs $1.76 expected Revenue: $25.32 billion vs $25.29 billion expected Revenue rose just 1% year over year while comparable sales were flat. The CEO said shoppers are spending less on discretionary items but Target is still drawing customers into stores with groceries, everyday essentials, and on-trend items. The company said it expects sales to remain sluggish in Q2 and maintained its full-year outlook. Target expects full-year earnings between $7.75 and $8.75 per share. Housing Starts, Building Permits Mixed U.S. new home construction picked up in April as builders continue to see strong buyer demand. The Commerce Department reported housing starts rose 2.2% last month to a seasonally adjusted annual pace of 1.4 million units. That was in line with economists’ expectations but starts were still down 22.3% year over year. Single-family starts rose 1.6% monthly and fell 28.1% annually. Multi-family starts jumped 5.2% monthly and fell 11.7% annually. But building permits fell more than expected in April, down 1.5% to a seasonally adjusted annual rate of 1.42 million units. Single-family permits rose 3.1% monthly and were down 21.2% annually. Multi-family permits dropped 9.7% monthly and 23% annually. Mortgage Demand Drops Mortgage demand dropped last week as rates hit a 2-month high. The Mortgage Bankers Association reported purchase applications dropped 4.8% weekly and 26% year over year. Refinance applications tumbled 8% weekly and 43% annually. The average 30-year fixed contract rate rose to 6.57% from 6.48%. The MBA’s chief economist said, “buyers remain wary of this rate volatility” and “for-sale inventory in many parts of the country remains scarce.” In Case You Missed It Homebuilder sentiment turned positive this month for the first time since July 2022. The National Association of Homebuilders sentiment index rose 5 points to 50 in May. That was better than expectations for the survey to be unchanged at 45. Current sales conditions rose 5 points to 56, the 6-month expectations index rose 7 points to 57, and buyer traffic improved by 2 points to 33. Builders say they are benefiting from low inventory of existing homes for sale with buyers turning to new builds instead.
Continue Reading -->Coffee With Greta: Home Depot’s Consumer Warning
DJIA Futures: -90 (-0.3%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -21 (-0.2%) Good morning friends! Futures are falling after disappointing results from Home Depot prompt worries about the consumer. Let’s get right to it! Home Depot Drops On Revenue Miss, Lower Outlook Home Depot (HD) shares are falling 2.5% ahead of the open after missing Q1 sales expectations and lowering its full-year outlook. Here’s how the home improvement retailer’s results compared to analysts’ estimates: EPS: $3.82 vs $3.80 expected Revenue: $37.26 billion vs $38.28 billion expected It was the company’s largest revenue miss in 20 years and the second quarter in a row it missed sales estimates. Comparable sales dropped 4.6% in the U.S. with the CFO saying lower lumber prices accounted for more than 2% of that drop. Home Depot now expects sales to decline between 2% and 5% in 2023 vs its previous outlook for sales to be flat. The retailer also expects full-year EPS to fall 7% to 13% vs the 5.7% estimate. Retail Sales Rise Less Than Expected U.S. retail sales rose less than expected in April. The Commerce Department reported retail sales rose 0.4% last month to $686.1 billion. That was a rebound from the 0.7% decrease in March but lower than expectations for a 0.8% increase. Total sales were 1.6% higher year over year. Retail sales excluding autos rose 0.4% in April, in-line with expectations. Coming Up: Homebuilder Sentiment The National Association of Homebuilders releases its May sentiment index at 10:00 a.m. ET. That survey is expected to be unchanged from April at 45. Confidence among builders remains in negative territory but has been improving in recent months as the 6-month expectations improve. Builders are looking ahead to lower mortgage rates in the future as the Fed appears to be done with the latest rate-hiking cycle. In Case You Missed It Consumer debt surpassed $17 trillion for the first time in Q1. New data from the New York Fed on Monday showed total borrowing totaled $17.05 trillion in the first three months of the year. New mortgage originations totaled $323.5 billion, the lowest level since Q2 2014 and down 62% year over year. Student loan debt rose to $1.6 trillion while auto loan debt rose to $1.56 trillion. Credit card delinquencies rose to 6.5% while auto loan delinquencies rose to 6.9%.
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