All posts by Greta Wall
Coffee With Greta: PCE Inflation Cools
DJIA Futures: -24 (-0.1%) SPX Futures: -16 (-0.4%) NASDAQ Futures: -69 (-0.6%) Good morning friends! Futures are slipping despite new data showing inflation pressures continued to cool at the end of 2022 as disappointing earnings weigh on the market. Let’s get right to it! PCE Inflation Cools The Fed’s favorite inflation gauge continued to cool in December. The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.1% monthly and 5% year over year. That was down from the 5.5% annual gain in November. The core PCE price index, which excludes food, energy, and trade services, rose 0.3% monthly and 4.4% year over year. That was also down from the 4.7% annual gain in November and in line with economists’ expectations. Intel Tumbles After Earnings Miss, Weak Guidance Intel (INTC) shares are tumbling 9.8% ahead of the open after missing Q4 expectations and issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted EPS: $0.10 vs $0.21 expected Revenue: $14.04 billion vs $14.49 billion expected Intel missed its own prior forecast of EPS of $0.20 on $14 billion to $15 billion in revenue. The tech company forecast an adjusted loss of $0.15 per share on revenue of about $10.5 billion to $11.5 billion in Q1. Intel also expects gross margins of just 34.1% in the current quarter, far off from the 51% to 53% goal the company set last year and down from 55.1% in Q1 2022. The company blamed an inventory glut for the expected struggles this quarter as customers work through an oversupply of chips. The CEO told investors, “While we know this dynamic will reverse, predicting when is difficult.” Chevron Slips As Earnings Come Up Short Chevron (CVX) shares are down 1.4% in premarket trade after missing Q4 profit expectations. Here’s how the oil giant’s results compared to analysts’ expectations: Adjusted EPS: $4.09 vs $4.33 expected Revenue: $56.47 billion vs $52.68 billion expected For the full year, Chevron earned a record $36.5 billion in profit. That was about $10 billion higher than its previous record set in 2011. The CEO said, “We delivered record earnings and cash flow in 2022, while increasing investments and growing U.S. production to a company record.” Bed Bath & Beyond Defaults On Credit Line Bed Bath & Beyond (BBBY) shares are up 1.5% ahead of the open as potential bankruptcy hopes rise after the retailer defaulted on its credit line with JPMorgan. In an SEC filing, Bed Bath said it “does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.” The company’s debt load includes a $550 million asset-backed loan with JPMorgan, $375 million with lender Sixth Street, and nearly $1.2 billion in unsecured Treasury notes. In a separate filing today, Bed Bath said its Board has named restructuring expert Carol Flaton as an independent director. Key Earnings Next Week Earnings season continues to pick up steam next week. Here’s some of the major companies set to report: SoFi (SOFI) Exxon Mobil (XOM) Pfizer (PFE) McDonald’s (MCD) UPS (UPS) Caterpillar (CAT) Advanced Micro Devices (AMD) General Motors (GM) Spotify (SPOT) Snap (SNAP) Meta Platforms (META) Apple (AAPL) Alphabet (GOOGL) Amazon (AMZN) Ford (F)
Continue Reading -->Coffee With Greta: Stocks Rise As GDP Beats
DJIA Futures: +87 (+0.3%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +116 (+1.0%) Good morning friends! Futures are higher as traders digest strong Q4 GDP data and an earnings beat from Tesla. Let’s get right to it! U.S. Economy Expands More Than Expected The U.S. economy grew more than expected at the end of 2022. The Commerce Department’s first estimate shows GDP rose at a 2.9% annualized pace in Q4. That was better than economists’ expectations for 2.8% but still down from 3.2% growth in Q3. The data showed consumer spending remained strong at the end of the year, up 2.1% on a quarterly basis. Inflation pressures also cooled with the personal consumption expenditures price index increasing 3.2%, down from 4.8% in Q3. The slowdown in GDP growth from Q3 to Q4 was largely driven by lower residential fixed investment which plunged 26.7% as the housing market slowed. Exports also declined 1.3% in the quarter. Tesla Beats Q4 Expectations Tesla (TSLA) shares are rallying 8.8% ahead of the open after reporting record revenue in Q4 and beating earnings expectations. Here’s how the electric automaker’s results compared to analysts’ estimates: Adjusted EPS: $1.19 vs $1.13 expected Revenue: $24.32 billion vs $24.16 billion expected Automotive revenue jumped 33% year over year but gross margins came in at 25.9%, the lowest figure in five years. Tesla blamed those smaller margins on lower sales prices, saying average sales prices have “generally been on a downward trajectory for many years”. The company most recently cut prices on its cars in the U.S. and China in late 2022. IBM Sales Top Estimates IBM (IBM) shares are slipping 2.2% in premarket trade despite reporting better-than-expected sales in the fourth quarter. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $3.60 as expected Revenue: $16.69 billion vs $16.4 billion expected IBM’s total revenue was flat year over year, beating expectations for the first decline in two years. For the full year, the company’s revenue jumped 6% to $60.5 billion. IBM reiterated its previous forecast for 2023 revenue growth in the mid-single digits, suggesting a total of about $63.5 billion vs $60.8 billion expected. The company is projecting $10.5 billion in free cash flow this year vs $11.1 billion expected. American Airlines Beats Earnings Estimates American Airlines (AAL) shares are up 1.9% ahead of the open after beating Q4 earnings estimates. Here’s how the airline’s results compared to analysts’ expectations: Adjusted EPS: $1.17 vs $1.14 expected Revenue: $13.19 billion vs $13.20 billion expected Revenue jumped 16.6% compared to the same quarter in 2019 as travelers paid higher fare prices. That revenue total was a new record for the company despite operating 6.1% less capacity than Q4 2019. American brought in $127 million in net income for all of 2022, its first full-year profit since 2019. The carrier forecast Q1 capacity will be 8% to 10% higher year over year. Southwest Reports Worse-Than-Expected Q4 Loss Southwest Airlines (LUV) shares are dropping 2.6% in premarket trade after reporting a steeper Q4 loss than expected. Here’s how the carrier’s results compared to analysts’ estimates: Adjusted loss per share: $0.38 vs $0.12 expected Revenue: $6.17 billion vs $6.16 billion expected That loss was driven by the mass cancellation of about 16,700 Southwest flights between December 21 and December 31. The company said it expects that meltdown to continue weighing on its bottom line in Q1. Southwest said it expects to post another loss in Q1, sharply missing analysts’ expectations for a profit of $0.19 per share. The airline reported a $529 million profit for the full-year 2022, down 45% from a year earlier. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Intel (INTC) Visa (V)
Continue Reading -->Coffee With Greta: Microsoft’s Gloomy Outlook Weighs On Tech
DJIA Futures: -273 (-0.8%) SPX Futures: -42 (-1.0%) NASDAQ Futures: -194 (-1.6%) Good morning friends! Futures are falling as Microsoft’s gloomy forecast drags down the tech sector. Let’s get right to it! Microsoft Drops On Weak Forecast Microsoft (MSFT) shares are falling 3% ahead of the open after weak guidance overshadows a fiscal Q2 earnings beat. Here’s how the tech giant’s results compared to analysts’ estimates: Adjusted EPS: $2.32 vs $2.29 expected Revenue: $52.75 billion vs $52.94 billion expected Total revenue rose just 2% year over year which was the slowest rate since 2016. Microsoft’s Intelligent Cloud segment brought in $21.51 billion in revenue, up 18% from a year ago and better than analysts’ expectations of $21.44 billion. But executives told analysts on the conference call that they expect the weakening tech environment to continue. Microsoft said it expects $50.5 billion to $51.5 billion in fiscal Q3 revenue, falling short of estimates for $52.43 billion. Boeing Slips After Surprise Q4 Loss Boeing (BA) shares are down 2.6% in premarket trade after reporting an unexpected Q4 loss. Here’s how the plane maker’s results compared to analysts’ expectations: Adjusted loss per share: $1.26 vs $0.26 EPS expected Revenue: $19.98 billion vs $20.38 billion expected The profit loss was caused by supply chain issues which caused higher costs. Boeing’s commercial aircraft unit generated $9.2 billion in Q4 sales, up 94% year over year. The company generated $3.1 billion in free-cash flow last quarter, better than expected. It had $2.3 billion in cash flow for the full-year, the best since 2018. Boeing reiterated its forecast to generate between $3 billion and $5 billion in free-cash flow this year. Kimberly-Clark Falls After Q4 Sales Miss Kimberly-Clark (KMB) shares are down 4% ahead of the open after reporting mixed Q4 results. Here’s how the consumer goods giant’s results compared to analysts’ expectations: Adjusted EPS: $1.54 vs $1.51 expected Revenue: $4.96 billion vs $4.99 billion expected The drop in revenue came as sales volume declined 7% but pricing rose 10%. Kimberly-Clark forecast sales will be flat to up 2% in 2023 vs analysts’ expectations for 1% growth. AT&T Jumps On Earnings Beat AT&T (T) shares are up 2.4% in premarket trade after beating Q4 profit expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $0.61 vs $0.57 expected Revenue: $31.3 billion vs $31.4 billion expected AT&T added 656,000 monthly cell phone subscribers in the quarter vs 570,000 expected, bringing the 2022 total to nearly 2.9 million. The company forecast adjusted EPS of $2.35 to $2.45 for the full-year 2023 vs $2.53 expected. AT&T is targeting $16 billion or more in free-cash flow this year vs $16.2 billion estimates Mortgage Demand Rises As Rates Hit 4-Month Low Mortgage demand jumped last week as rates fell for the third week in a row. The Mortgage Bankers Association reported total application volume rose 7% last week. Purchase applications rose 3% weekly and were down 39% year over year. Refinance applications jumped 15% weekly and were down 77% annually. The jump came as the average 30-year contract rate fell to 6.2% from 6.23%, the lowest since September. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Tesla (TSLA) IBM (IBM) ServiceNow (NOW) Levi Strauss (LEVI)
Continue Reading -->Coffee With Greta: Traders Focus On Guidance In Earnings
DJIA Futures: -150 (-0.4%) SPX Futures: -20 (-0.5%) NASDAQ Futures: -86 (-0.7%) Good morning friends! Futures are falling as traders digest new Q4 earnings. Let’s get right to it! 3M Drops After Earnings Miss, Weak Outlook 3M (MMM) shares are down 4.5% ahead of the open after the company missed Q4 expectations and issued weak guidance. Here’s how the manufacturing giant’s results compared to analysts’ expectations: Adjusted EPS: $2.28 vs $2.36 expected Revenue: $8.1 billion as expected For the full year, 3M earned $10.10 per share in 2022. But the company expects profits to fall this year. 3M forecast 2023 earnings will be between $8.50 and $9 per share vs analysts’ expectations of $10.20. Sales are expected to fall between 2% and 6% compared to last year as consumer electronics demand is down “significantly”. The company also cited “near-term weakness in consumer discretionary spending.” 3M also announced plans to cut about 2,500 manufacturing jobs around the world as the company prepares for those challenges. Johnson & Johnson Slips Despite Earnings Beat Johnson & Johnson (JNJ) shares are falling 1.1% in premarket trade despite reporting better-than-expected Q4 results and issuing strong guidance. Here’s how the pharmaceutical giant’s results compared to analysts’ expectations: Adjusted EPS: $2.35 vs $2.23 expected Revenue: $23.71 billion vs $23.896 billion expected Revenue fell 4.4% year over year while unadjusted profits were down 25.7%. Johnson & Johnson forecast full-year 2023 EPS between $10.45 to $10.65 vs $10.33 expected. General Electric Earnings Beat, Outlook Falls Short General Electric (GE) shares are down 0.4% ahead of the open after beating Q4 earnings expectations but issuing weak guidance. Here’s how the company’s results compared to analysts’ expectations: Adjusted EPS: $1.24 vs $1.15 expected Revenue: $21.79 billion vs $21.25 billion expected Free cash flow: $4.3 billion vs $3.98 billion expected Total revenue jumped 7% year over year. That growth was largely driven by GE’s aerospace division which saw revenue rise 25.7%, power revenue rose 26.4%, renewable energy revenue increased 3.7%, and healthcare revenue slipped 0.4%. The company forecast 2023 adjusted EPS between $1.60 and $2.00 vs analysts’ expectations of $2.37. Verizon Falls On Disappointing Outlook Verizon (VZ) shares are falling 2.3% ahead of the open after its 2023 outlook disappointed. Here’s how the cell phone giant’s Q4 results compared to analysts’ expectations: EPS: $1.19 as expected Revenue: $35.3 billion vs $35.1 billion expected Verizon added 41,000 new monthly wireless subscribers last quarter after losing 189,000 in Q3 and 215,000 in Q2. The company also added 416,000 broadband users in Q4, up from 377,000 in Q3 and is best performance in more than a decade. Verizon forecast full-year 2023 adjusted EPS of $4.55 to $4.85 vs $4.96 expected. In Case You Missed It The Conference Board’s leading economic indicators index fell more than expected in December. The index slumped 1% vs economists’ expectations for a 0.7% decline. That drop was due to a softening labor market, a slowdown in manufacturing activity, and fewer homes being built. The continued decline in LEI signals a recession is likely in the near term.
Continue Reading -->Coffee With Greta: Traders Anticipate Fed Pivot
DJIA Futures: +70 (+0.2%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +13 (+0.1%) Good morning friends! Futures are rising as traders gear up for a busy earnings week and look ahead to a smaller rate hike next week. Let’s get right to it! Fed Pivot Expected Wall Street is feeling confident the Fed will continue to dial back the size of its rate hikes at the next meeting. CME Group’s FedWatch Tool shows 98.7% of traders expect the central bank to approve a 25 basis point move at the February 1st meeting. That would be the smallest rate hike since the current tightening cycle started in spring 2022. Spotify To Cut 6% Of Workforce Spotify (SPOT) shares are up 5.6% ahead of the open after announcing layoffs this morning. The streaming giant said it plans to cut 6% of its workforce or roughly 600 jobs. The chief content and advertising business officer will also depart the company as part of a broader reorganization. Spotify is the latest tech company to cut jobs in the face of lower ad spending amid the current demand downturn. Activist Investor Takes A Stake In Salesforce Salesforce (CRM) shares are rising 4.5% in premarket trade following reports that activist investor Elliott Management has bought a large stake in the company. Elliott’s managing partner told Reuters, “We look forward to working constructively with Salesforce to realize the value befitting a company of its stature.” He also called Salesforce “one of the preeminent software companies in the world.” It’s unclear what Elliott may push for at Salesforce but the investment comes after the company announced job cuts and office closures earlier this year. Big Banks Team Up On New Digital Wallet PayPal (PYPL) shares are falling 1.8% ahead of the open following reports that the nation’s largest banks are teaming up to create a new digital wallet. JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC) are all reportedly part of the project with four other banks. The Wall Street Journal reported the digital wallet would be managed by Early Warning Services LLC, which is the bank-owned company that operates Zelle. The digital wallet would be linked to shoppers’ debit and credit cards and the goal is to compete with PayPal and Apple’s (AAPL) Apple Pay. Busy Earnings Week Earnings season picks up steam this week with several key companies reporting. Here’s a look at the highlights: Tuesday AM: 3M (MMM), Johnson & Johnson (J&J), General Electric (GM) Tuesday PM: Microsoft (MSFT) Wednesday AM: Boeing (BA), Kimberly-Clark (KMB) Wednesday PM: Tesla (TSLA) Thursday AM: American Airlines (AAL) Thursday PM: Intel (INTC) Friday AM: Chevron (CVX)
Continue Reading -->Coffee With Greta: Netflix Subscribers Surge
DJIA Futures: -3 (-0.01%) SPX Futures: +9 (+0.2%) NASDAQ Futures: +72 (+0.6%) Good morning friends! Futures are mostly higher as Netflix shares boost the tech sector. Let’s get right to it! Netflix Rallies As Subscribers Surge Netflix (NFLX) shares are jumping 6.2% ahead of the open after sharply beating Q4 subscriber growth expectations. Here’s how the streaming giant’s results compared to analysts’ estimates: EPS: $0.12 vs $0.45 expected Revenue: $7.85 billion as expected New global paid net subscribers: 7.66 million vs 4.57 million expected The profit miss was largely due to a loss related to euro-denominated debt but the company’s 7% margins topped analysts’ expectations. Netflix also announced founder Reed Hastings will step down as CEO. Hastings will remain with the company as executive chairman and co-CEO Ted Sarandos will remain in his position. Current COO Greg Peters will take over Hastings’ spot as co-CEO with Saranados. Google Announces Layoffs, Delays Portion Of Bonuses Alphabet (GOOGL) shares are up 3.2% in premarket trade after announcing layoffs this morning. The tech giant’s CEO Sundar Pichai sent an email to employees saying they plan to layoff 12,000 workers. Pichai said layoffs in the U.S. will begin immediately but “will take longer due to local law and practices” in other countries. U.S.-based employees will receive 16 weeks of severance pay plus two weeks for each additional year they’ve worked for Google. The company is also delaying a portion of its annual employee bonus checks. Google employees usually receive their full bonus in January. But now, the tech giant is paying full-time employees 80% of their bonus this month and the remaining 20% in March or April. Moving forward, full bonuses will be paid in March. Nordstrom Sinks After Slashing Guidance After Weak Holiday Sales Nordstrom (JNW) shares are falling 6.9% ahead of the open after reporting weak holiday sales and slashing its guidance. The retailer said net sales dropped 3.5% year over year in the nine-week holiday shopping period that ended December 31. Nordstrom’s net sales fell 1.7% while Nordstrom Rack sales tumbled 7.6%. Those weak sales caused the company to cut its earnings and margin expectations for the full fiscal year. Nordstrom expects full-year revenue growth to be at the low end of its previously announced range of 5% to 7%. The retailer expected adjusted EPS to range between $1.50 and $1.70 vs $2.30 to $2.60 previously. CEO Erik Nordstrom said, “While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment.” The company was also forced to mark down merchandise more than expected during the holiday season in order to clear excess inventory. Nordstrom reports Q4 results on March 2. The disappointing holiday results from Nordstrom are dragging down other retail stocks in premarket trade. Macy’s (M) is down 2.6%, Kohl’s (KSS) is falling 3.5%, and Dillard’s (DDS) is down 1.3%. Existing Home Sales Expected To Fall The National Association of Realtors reports existing home sales for December at 10:00 a.m. ET. That report is expected to show sales fell to a seasonally adjusted annual rate of 3.95 million units last month from 4.09 million in November. That would be the 11th straight month of declining sales as the housing market has weakened due to higher mortgage rates. Key Earnings Next Week Earnings season picks up steam next week with several key companies reporting. Here’s a look at the highlights: Tuesday AM: 3M (MMM), Johnson & Johnson (J&J), General Electric (GM) Tuesday PM: Microsoft (MSFT) Wednesday AM: Boeing (BA), Kimberly-Clark (KMB) Wednesday PM: Tesla (TSLA) Thursday AM: American Airlines (AAL) Thursday PM: Intel (INTC) Friday AM: Chevron (CVX) In Case You Missed It Fed Vice Chair Lael Brainard reiterated the bank’s hawkish stance during a speech in Chicago on Thursday. Brainard said, “Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis.” Her comments echo other recent speeches from Fed officials insisting they will stick to plans to maintain high rates through early 2024. The comments have prompted fears on Wall Street that the bank will overtighten and send the U.S. economy into a deep recession. The Treasury Department began taking “extraordinary measures” as the U.S. hit its $31.4 trillion debt limit. Treasury Secretary Janet Yellen said the department should be able to pay the U.S. government’s bills through June. She is pushing Congress to raise the debt ceiling “without concession”. But many House Republicans have suggested they will push for spending cuts as part of the debt ceiling bill. Want to hear insight from pro traders about this market? Register for my upcoming virtual live event: Conversations With A Pro Trader!
Continue Reading -->Coffee With Greta: New Year Rally Fizzles
DJIA Futures: -268 (-0.8%) SPX Futures: -32 (-0.8%) NASDAQ Futures: -101 (-0.9%) Good morning friends! Futures are falling as the January rally fizzles out amid fears the Fed will over-tighten. Let’s get right to it! December Housing Starts & Building Permits New home construction fell less than expected at the end of 2022. The Census Bureau reported housing starts slumped 1.4% to a seasonally adjusted annual rate of 1.382 million units from a revised 1.401 million in November. That was better than expectations for a drop to 1.359 million units. But it was still the fourth straight month of declining building activity. Single-family starts surged 11.3% monthly but were still down 25% year over year while multi-family starts tumbled 18.9% monthly and were 16.3% lower compared to a year ago. The slowdown in building is expected to continue as permits fell in December. The number of new permits authorized dropped 1.6% last month to a seasonally adjusted annual rate of 1.33 million units from a revised 1.351 million in November. Permits were expected to rise to 1.37 million. Single-family permits fell 6.5% monthly and 34.7% year over year while multi-family permits rose 7.1% monthly but were down 21.8% from a year ago. Weekly Jobless Claims Fall Unexpectedly Weekly jobless claims fell unexpectedly last week to a four-month low. The Labor Department reported 190,000 Americans filed initial claims for unemployment benefits. That was down by 15,000 from the week before and lower than expectations for an increase to 215,000. It was the lowest total since September. Procter & Gamble Profits Fall Procter & Gamble (PG) shares are falling 3.0% ahead of the open despite reporting fiscal Q2 results that were in line with expectations. Here’s how the consumer goods giant’s results compared to analysts’ estimates: Adjusted EPS: $1.59, as expected Revenue: $20.77 billion vs $20.73 billion expected Profits fell by $320 million year over year while revenue was down 1%. All of Procter & Gamble’s divisions reported lower sales volumes in the quarter as consumer demand falls. The company is still planning to hike prices further in the months ahead to make up for that lower sales volume. The CFO said consumers have reacted to higher prices “generally better than expected” and “consumers don’t stop washing their hands or doing their laundry.” P&G expects 2023 sales growth between 4% and 5%, up from 3% to 5% previously. Bed Bath & Beyond Reportedly Looking For Buyer Bed Bath & Beyond (BBBY) shares are up 1.0% in premarket trade amid reports the retailer has been in discussions with potential buyers and lenders ahead of a likely bankruptcy filing. Sources say the company is hoping to find a buyer that would keep both its major chains, Bed Bath & Beyond and Buybuy Baby, open. Bed Bath has also reportedly been looking for a lender to provide capital to keep it afloat through a bankruptcy filing. A company spokeswoman said Wednesday, “Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner,” but declined to comment further. Key Earnings After The Close Here are the major companies set to report earnings after the close today: Netflix (NFLX) In Case You Missed It Homebuilder sentiment rose unexpectedly this month. The National Association of Homebuilders’ sentiment index improved to 35 from 31 in December. That broke a 12-month losing streak and was better than expectations for a decline to 30. The gain comes as mortgage rates have fallen at the start of the year and as the typically busy spring homebuying season approaches.
Continue Reading -->Coffee With Greta: Has Inflation Peaked?
DJIA Futures: +46 (+0.1%) SPX Futures: +13 (+0.3%) NASDAQ Futures: +57 (+0.5%) Good morning friends! Futures are higher following more better-than-expected inflation data. Let’s get right to it! Wholesale Inflation Tumbles Wholesale inflation pressures tumbled more than expected in December. The Bureau of Labor Statistics’ producer price index fell 0.5% monthly vs expectations for a 0.1% drop. The PPI rose 6.2% year over year, down from 7.3% in November. Excluding food, energy, and trade services, the core PPI rose 0.1% monthly and 4.6% annually. That was down from the 0.3% monthly and 4.9% annual gain in November. Retail Sales Drop Sharply U.S. retail sales fell more than expected in December as consumers spent less on cars, gas, and furniture. The Census Bureau reported retail sales dropped 1.1% last month to $677.1 billion. That was steeper than economists’ expectations for a 1% decline. High inflation and interest rates put pressure on shoppers during the key holiday shopping season. On an annual basis, retail sales rose 6% as shoppers continued to pay higher prices. Gas stations saw the largest decline in Decmeber as prices fell, down 4.6% from November. Furniture store sales fell 2.5%, car sales were down 1.2%, electronics and appliances fell 1.1%. The only retailers to see a slight gain were building material retailers which rose 0.3% and sporting goods stores which were up 0.1%. Core retail sales, which exclude vehicles and gas, fell 0.7% monthly and were up 7.2% year over year. United Airlines Jumps After Reporting Q4 Profit United Airlines (UAL) shares are up 4.0% ahead of the open after sharply beating Q4 expectations. Here’s how the carrier’s results compared to analysts’ estimates: Adjusted EPS: $2.46 vs $2.11 expected Revenue: $12.4 billion vs $12.23 billion expected The airline’s guidance also topped expectations. United expects Q1 EPS between $0.50 and $1, well above consensus estimates of $0.31. For the full year, the airline is anticipating adjusted EPS between $10 and $12 vs analysts’ estimates of $6.84. Party City Files For Bankruptcy Party City (PRTY) shares have been halted after rallying 10.6% in premarket trade following the company’s Chapter 11 bankruptcy filing. In a filing with the SEC on Tuesday, the retailer said it had struck an agreement to reduce its debt. Party City had received a $150 million debtor-in-possession loan to continue operations while it reorganizes. The company expects to complete its restructuring in Q2. Mortgage Demand Jumps Amid Lower Rates Mortgage application volume jumped at the start of the year as rates fell to the lowest level since September. The Mortgage Bankers Association reported total application volume rose nearly 28% last week from the week before. Refinance applications jumped 34% but were still 81% lower year over year. Purchase applications rose 25% weekly and were 35% lower than the same week a year ago. The jump came as the average 30-year fixed contract rate fell to 6.23% from 6.42% the week before. Market experts are anticipating an increase in mortgage activity over the next few months as we enter the traditionally busy spring buying season. Homebuilder Sentiment Expected To Fall Homebuilder sentiment is expected to have fallen further this month as the housing market continues to be squeezed by high mortgage rates. The National Association of Homebuilders releases its January sentiment index at 10:00 a.m. ET today. That survey is expected to fall to 30 from 31 in December. Sentiment fell for the 12th straight month in December, hitting the lowest level since June 2012. In Case You Missed It Peloton (PTON) shares rallied 2.7% on Tuesday after hiring a new chief marketing officer. The exercise bike maker hired former Twitter CMO Leslie Berland to fill that position. The former CMO left Peloton in September. Berland said she is “thrilled” to join Peloton at this “unique moment in its transformation journey.”
Continue Reading -->Coffee With Greta: More Big Bank Earnings
DJIA Futures: -114 (-0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -28 (-0.3%) Good morning friends! Futures are lower as Q4 earnings season continues. Let’s get right to it! Morgan Stanley Jumps After Earnings Beat Morgan Stanley (MS) shares are up 2.2% ahead of the open after beating Q4 expectations. Here’s how the bank’s results compared to analysts’ expectations: EPS: $1.26 vs $1.25 expected Revenue: $12.75 billion vs $12.64 billion expected Morgan Stanley’s wealth management division posted record net revenues of $6.63 billion, up 6% year over year. Chairman and CEO James Gorman said, “We reported solid fourth quarter results amidst a difficult market environment. Overall, 2022 was a strong year for the Firm as our clear strategy and balanced business model enabled us to deliver an ROTCE of 16% despite the complex macro backdrop.” But Morgan Stanley’s investment banking saw a big slowdown as IPOs collapsed. Investment banking revenue came in at $1.25 billion, down 49% compared to a year ago. Goldman Sachs Falls On Earnings Miss Goldman Sachs (GS) shares are falling 2.8% in premarket trade after missing Q4 expectations. Here’s how the investment bank’s results compared to analysts’ expectations: EPS: $3.32 vs $5.48 expected Revenue: $10.59 billion vs $10.83 billion expected It was the biggest profit miss since October 2011 as earnings plunged 66% year over year. Revenue was down 16% from a year ago. Operating expenses jumped 11% year over year to $8.09 billion, about $800 million higher than analysts were expecting. Activist Investor Takes Stake In Alibaba Alibaba (BABA) shares are up 0.2% ahead of the open following reports activist investor Ryan Cohen bought a large stake in the company. The Wall Street Journal reported Cohen has built a stake in the Chinese e-commerce giant worth hundreds of millions of dollars. He’s reportedly pushing the company to accelerate and expand its share-repurchase program. Alibaba had repurchased roughly $18 billion worth of its shares as of November 16. Cohen has reportedly told the board the current share buyback plan could be boosted by $20 billion, to roughly $60 billion. Housing Market In Focus This Week The majority of economic data set to come out this week will be focused on the housing market. The National Association of Homebuilders releases its January sentiment index Wednesday morning at 10:00 a.m. ET. Then the Commerce Department reports housing starts and building permits for December at 8:30 a.m. ET on Thursday. And on Friday, the National Association of Realtors reports existing home sales at 10:00 a.m. ET. This week also includes more inflation data with the December PPI and retail sales both set to be released at 8:30 a.m. ET on Wednesday. Key Earnings After The Close Here are the companies set to report earnings after the market close today: United Airlines (UAL)
Continue Reading -->Coffee With Greta: Big Banks Kick Start Earnings
DJIA Futures: -278 (-0.8%) SPX Futures: -38 (-0.9%) NASDAQ Futures: -126 (-1.1%) Good morning friends! Futures are lower after the biggest banks in the U.S. reported earnings and warned of an impending recession. Let’s get right to it! JPMorgan Chase Warns Of Recession Q4 earnings season kicked off this morning with some of the largest banks in the U.S. reporting. JPMorgan Chase (JPM) shares are falling 2.8% ahead of the open despite beating expectations. Here’s how the bank’s results compared to estimates: EPS: $3.57 vs $3.07 expected Revenue: $35.57 billion vs $34.3 billion expected Revenue surged 48% year over year as interest rates jumped. The biggest bank in the U.S. set aside $2.3 billion for credit losses in the quarter, up 49% from Q3 as the bank prepares for a recession. CEO Jamie Dimon said, “We still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening.” Bank of America Tops Expectations Bank of America (BAC) shares are falling 2.7% in premarket trade despite beating Q4 expectations on the top and bottom line. Here’s a look at the bank’s results vs analysts’ expectations: EPS: $0.85 vs $0.77 expected Revenue: $24.66 billion vs $24.33 billion expected Bank of America’s net interest income jumped 29% year over year to $14.7 billion as rates rose. That was shy of analysts’ expectations of $14.8 billion. The bank set aside $1.1 billion for loan loss reserves. CEO Brian Moynihan said the U.S. economic environment is “increasingly slowing.” Wells Fargo Profits Tumble Wells Fargo (WFC) shares are dropping 4% ahead of the open after reporting a sharp drop in Q4 profits. Here’s how the bank’s results compared to analysts’ estimates: EPS: $0.67 vs $0.60 expected Revenue: $19.7 billion vs $19.98 billion expected The bank’s profits tumbled 49% year over year compared to EPS of $1.38 in the same quarter a year ago. That was partly driven by a drop in mortgage banking due to fewer originations or new purchase loans. Home lending revenue was down 57% last quarter. Wells Fargo set aside $957 million for credit losses as the economic outlook deteriorates. CEO Charlie Scharf said, “As we look forward, we are carefully watching the impact of higher rates on our customers and expect to see deposit balances and credit quality continue to return toward pre-pandemic levels.” Citigroup Tops Q4 Expectations Citigroup (C) shares are up 0.7% in premarket trade after beating Q4 expectations on the top and bottom line. Here’s how the investment bank’s results compared to analysts’ expectations: EPS: $1.16 vs $1.14 expected Revenue: $18 billion vs $17.9 billion expected But profits tumbled 21% year over year to $2.5 billion vs $3.2 billion one year ago. As rates jumped, net interest income rose to $13.27 billion vs $12.7 billion expected. Fixed-income trading revenue topped expectations at $3.16 billion while the $789 million in equities trading revenue was below estimates. Citigroup set aside $1.85 billion in loan loss reserves, higher than expectations for $1.79 billion. Delta Drops On Weak Guidance Delta Airlines (DAL) shares are tumbling 5.3% ahead of the open after beating Q4 expectations but issuing weak guidance. Here’s how the airline’s results compared to analysts’ expectations: Adjusted EPS: $1.48 vs $1.33 expected Revenue: $12.29 billion vs $12.23 billion expected Sales were up 17% compared to Q4 2019. Operating costs jumped 19% from 2019 and included a $2.8 billion fuel bill, up 42% year over year. CEO Ed Bastian said Delta “rose to the challenges of 2022, delivering industry-leading operational reliability and financial performance.” But the airline expects profits to fall in the current quarter. Delta forecast Q1 adjusted EPS of just $0.15 to $0.40 and revenue growth of 14% to 17% over 2019 levels. The company also expects unit costs, excluding fuel, to increase by 3% to 4% from last year. Delta reiterated its full-year outlook for earnings of $5 to $6 per share. Tesla Falls After Cutting Prices Tesla (TSLA) shares are down 5.9% in premarket trade after cutting its prices in the U.S. and Europe. The electric automaker lowered the starting price of its Model 3 and Model Y. In the U.S., the Model 3 now starts at about $44,000. That’s down about 6% from the previous price. The performance version of the Model 3 was lowered to $54,000 from $63,000. The long-range version of the Model Y is now listed for about $53,000, down 20% from $66,000. The performance version of the Y was lowered to $57,000 from $70,000. Although Tesla did not comment on the changes many are speculating the move was aimed at qualifying for U.S. tax credits. Electric vehicles priced below $55,000 qualify for the $7,500 purchase tax credit passed in the Inflation Reduction Act. The lower prices are also expected to stimulate demand in the U.S. Tesla also cut its Model 3 and Y prices in Europe by as much as 17%. In Case You Missed It Lucid Group (LCID) shares jumped 4.8% Thursday after the electric automaker reported stronger 2022 production numbers than expected. Lucid said it produced 7,180 vehicles last year. That was higher than its previous outlook for production of between 6,000 and 7,000 vehicles for the full year. The company produced 3,943 vehicles in Q4, up 53% from Q3.
Continue Reading -->