All posts by Greta Wall
Coffee With Greta: Key Manufacturing Index Rebounds
DJIA Futures: +25 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures: +20 (+0.1%) Good morning friends! Futures are up slightly as the market attempts to resume its recent rally. Let’s get right to it! Philly Fed Manufacturing Index Turns Positive The Philadelphia Fed’s Manufacturing Index unexpectedly turned positive this month. The general activity index rose 18.5 points to 6.2. That was better than economists’ expectations for -5.0. The new orders index jumped 20 points but remained in negative territory for the third month in a row at -5.1. The prices index declined for the 4th consecutive month. Prices paid dropped by 9 points to 43.6, the lowest since December 2020. 56% of firms reported increased input prices. This comes after the New York Fed’s Empire State Manufacturing Index plummeted 42 points to -31.3 earlier this week. That was the second largest decline on record. The two regional reports are seen as barometers for the broader U.S. manufacturing sector. Weekly Jobless Claims Stabilize Weekly jobless claims dipped in mid-August and appear to have stabilized. The Labor Department reported 250,000 Americans filed initial unemployment claims last week, down 2,000 from the revised 252,000 the prior week. The previous week was revised lower from 262,000. The latest increase was smaller than economists’ expectations for new claims to rise to 260,000. Continuing claims rose by 7,000 to 1.44 million in the week ending August 6. Kohl’s Tumbles After Cutting Outlook Kohl’s (KSS) shares are falling 7.4% ahead of the open after topping Q2 expectations but cutting its full-year outlook. The retailer reported adjusted earnings of $1.11 per share on $4.09 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.03 on $3.85 billion in revenue. Kohl’s now expects net sales in 2022 to fall 5% to 6% year over year vs its previous outlook for growth to be flat up to 1%. The company also forecast full-year adjusted EPS between $2.80 and $3.20, down sharply from earlier guidance of $6.45 to $6.85. Kohl’s said its middle-income customers have been squeezed by inflation, putting a damper on discretionary spending. The CEO said the company is adjusted its business plan and taking action to reduce inventory and expenses. Ryan Cohen Reveals Intent to Sell $BBBY Stake Bed Bath & Beyond (BBBY) shares are tumbling 14.5% in premarket trade after investor and GameStop (GME) Chairman Ryan Cohen revealed his intent to sell his stake in the company. A Form 144 filing with the SEC shows Cohen’s investment firm RC Ventures intends to sell 9.45 million BBBY shares. That represents the total amount of shares it holds. Cohen first revealed his more than 10% stake in the company in March and purchased January 2023 call options on more than 1.67 million shares earlier this week. BBBY shares surged 11.8% on Wednesday after those call options were revealed Tuesday. The stock has skyrocketed about 300% so far in August as part of the latest meme stock rally. Oil Prices Rise As U.S. Inventories Drop Oil prices are rising after new data showed much lower inventories than expected in the U.S. West Texas Intermediate crude futures are up 1.4% to over $89 bbl while Brent crude futures are up 1.7% to over $95 bbl. The Energy Information Administration reported a sharp drop in U.S. oil and gas inventories last week. Crude stockpiles fell by 7.1 million barrels vs the 1.7 million barrel decline analysts were expecting. That drop came as U.S. crude exports hit a record-high 5 million barrels per day. Gasoline inventories dropped by 4.6 million barrels as demand rose vs analysts’ expectations for a 1.7 million barrel decline. Existing Home Sales Expected to Fall The National Association of Realtors reports existing home sales for July at 10:00 a.m. ET. That report is expected to show sales dropped again last month to a seasonally adjusted annual rate of 4.81 million units. The housing market has seen a rapid slowdown as mortgage rates pile on top of record-high prices. In Case You Missed It The Fed’s July meeting minutes show the Central Bank is planning on an extended schedule of rate hikes. The report said “moving to a restrictive stance of policy” may be required to lower inflation. Fed officials indicated they would be willing to slow the pace of rate hikes when it becomes apparent inflation is slowing. The Fed continued to say all future decisions will be based on incoming data. Officials said there are few signs inflation is abating at this point and it would “take some time” before rate hikes have a meaningful impact.
Continue Reading -->Coffee With Greta: Retail Sales Fall Flat as Gas Prices Drop
DJIA Futures: -211 (-0.6%) SPX Futures: -34 (-0.8%) NASDAQ Futures: -115 (-0.8%) Good morning friends! Futures are falling after July retail sales missed expectations and Target reported a sharp drop in profits. Let’s get right to it! Retail Sales Fall Flat in July U.S. retail sales were flat in July as gas prices fell and auto sales dropped. The Commerce Department reported retail sales were unchanged last month at $682.8 billion. That missed economists’ expectations for sales to rise 0.1%. The flat sales came as gas station receipts tumbled 1.8% and car sales dropped 1.7%. Excluding autos, core retail sales rose 0.4% vs expectations for no change. That was driven by a strong 2.7% gain in online sales – boosted by Amazon Prime day – and a 1.5% gain at miscellaneous stores. Target Drops as Profits Plunge Target (TGT) shares are down 2.9% ahead of the open after missing profit expectations in the second quarter. The retailer reported earnings of $0.39 per share on $26.04 billion in revenue. That missed analysts’ expectations for EPS of $0.72 but was in line with sales estimates. Profit was down 90% year-over-year and the CFO blamed that plunge on Target’s aggressive efforts to reduce inventory. He said, “If we hadn’t dealt with our excess inventory head-on, we could have avoided some short-term pain on the profit line, but that would have hampered our longer-term potential. While our quarterly profit took a meaningful step down, our future path is brighter.” The company reiterated its full-year forecast, saying it’s now positioned for a rebound after reducing extra inventory. Lowe’s Reports Mixed Q2 Results Lowe’s (LOW) shares are up 1.1% in premarket trade after mixed Q2 earnings. The home improvement retailer reported adjusted earnings of $4.67 per share on $27.48 billion in revenue. That topped analysts’ expectations for EPS of $4.58 but fell short of revenue estimates for $28.12 billion. Comparable sales fell 0.3% year over year but home improvement sales rose 0.2%. The CEO said the home improvement consumer remained healthy in the quarter. “Rather than the DIY consumer trading down like you hear from some retailers, in many cases we were seeing the opposite,” he told CNBC. “The customer’s actually trading up to innovation and trading up for new.” Lowe’s also saw an increase in sales to professionals thanks to its new loyalty programs. The CEO said they saw double-digit growth in Pro sales for the ninth consecutive quarter. The company said it now expects full-year total and comparable sales toward the bottom of its previous outlook range while earnings are expected to be at the top end. Meme Stock Rally Continues Bed Bath & Beyond (BBBY) shares are surging 37.9% ahead of the open after surging 29.1% on Tuesday. The recent jump comes after a regulatory filing showed GameStop (GME) Ryan Cohen purchased call options on BBBY through his venture capital firm. Retail traders poured into the stock, with shares soaring as much as 70% on Tuesday. Cohen purchased call options on more than 1.6 million Bed Bath & Beyond shares with strike prices between $60 and $80. The options expire in January 2023. That means Cohen is betting the stock can rise as high as $80 by that time. BBBY closed at $20.65 per share on Tuesday. Oil Prices Fall to 6-Month Low Oil prices are hovering around 6-month lows today as recession fears weigh on the market. West Texas Intermediate crude futures are flat at $86.50 bbl while Brent crude futures are down 0.4% at $92 bbl. The fears of a global recession are outweighing new data that showed a drop in U.S. crude and gasoline stocks. The American Petroleum Institute reported Tuesday that U.S. crude inventories fell by 448,000 barrels last week vs expectations for a 117,000 barrel drop. Gasoline stockpiles fell by 4.48 million barrels. The Energy Information Administration reports official supply levels today. Analysts expect the EIA to show both crude and gasoline inventories fell by 1.7 million barrels last week. In Case You Missed It President Biden signed the $437 billion Inflation Reduction Act into law Tuesday afternoon. The tax, health, and climate legislation accomplishes several agenda items laid out in his Build Back Better plan. The bill imposes a 15% minimum corporate tax rate and includes $369 billion in funding for climate and energy policies. The legislation was approved along party lines in both chambers of Congress.
Continue Reading -->Coffee With Greta: Homebuilding Plunges in July
DJIA Futures: -45 (-0.1%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -30 (-0.2%) Good morning friends! Futures are slipping as new data shows the housing market slowing further and traders digest key retail earnings. Let’s get right to it! Housing Starts, Building Permits Drop in July New home construction fell more than expected in July as higher mortgage rates put pressure on builders already struggling with high material costs. The Census Bureau reported housing starts tumbled 9.6% last month to a seasonally adjusted annual rate of 1.45 million units. That’s the lowest rate of building since September 2020 and lower than expectations for an SAAR of 1.52 million units. Single-family starts plunged 10.1% while multi-family starts dropped 10% The slowdown will continue as building permits also fell in July. The number of new permits issued fell 1.3% to a seasonally adjusted annual rate of 1.67 million units. That was better than economists’ expectations for permits to fall to an SAAR of 1.63 million units. The drop in permits was focused in single-family homes. Single-family permits fell 4.3% monthly while multi-family permits rose 2.5%. Cancelled Home-Purchase Agreements Surge A record percentage of home-purchase agreements were cancelled in July as the housing market slows rapidly. Redfin reported 63,000 contracts were cancelled last month. That represented 16.1% of homes that went under contract during July, the highest percentage on record excluding March and April of 2020. Redfin said, “The housing market is slowing as higher mortgage rates sideline many prospective homebuyers. With competition declining, the house hunters who are still in the market are enjoying newfound bargaining power–a stark contrast from last year, when they often had to pull out every stop in order to win.” Walmart Tops Q2 Expectations Walmart (WMT) shares are up 4.2% ahead of the open after beating Q2 expectations on the top and bottom line. The retailer reported adjusted earnings of $1.77 per share on $152.86 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.62 on $150.81 billion in revenue. Same-store sales in the U.S. grew 6.5% year over year, better than estimates of 5.9% growth. Online sales rose 12% compared to a year ago and 18%. Walmart’s inventory levels in the U.S. surged 25.6% year over year as the cost of goods jumped. The company reiterated its profit warning from last month. Walmart maintained its forecast for 3% same-store sales growth in the U.S. for the rest of this year and anticipates adjusted EPS will decline between 9% and 11% for the full year. Home Depot Slips Despite Q2 Earnings Beat Home Depot (HD) shares are slipping 1% in premarket trade despite beating Q2 expectations on the top and bottom line. The home improvement retailer reported adjusted earnings of $5.05 per share on $43.79 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $4.94 on $43.36 billion in revenue. Same-store sales rose 5.8% year over year vs expectations for 4.9% growth. Home Depot reiterated its guidance for full-year sales to grow about 3% compared to a year ago. The CEO and President said, “Our team has done a fantastic job serving our customers, while continuing to navigate a challenging and dynamic environment.” Oil Prices Turn Higher Oil prices have reversed earlier losses and turned higher in morning trade. West Texas Intermediate crude futures are up 0.6% to $90 bbl while Brent crude futures are up 0.3% to over $95 bbl. The market is continuing to monitor talks to revive the Iran nuclear deal. If an agreement is reached, that deal is expected to allow Iran to boost its oil production. The American Petroleum Institute will report weekly crude and gasoline inventory levels later today. In Case You Missed It The NAHB’s sentiment index tumbled into negative territory on Monday. The survey dropped 6 points in August to 49, with any reading below 50 considered negative. That was the 8th straight monthly decline and lower than economists’ expectations for 54. NAHB’s Chief Economist said the U.S. has now fallen into a “housing recession” due to tighter monetary policy and persistently high construction costs. Walt Disney (DIS) shares rose 2.2% on Monday after activist investor Dan Loeb bought a new stake in the company. Loeb disclosed that “significant stake” in a letter to Disney’s CEO on Monday. In that letter, he asked the company to consider several initiatives including a spin-off of ESPN and fully acquiring Hulu to integrate it into the Disney+ platform.
Continue Reading -->Coffee With Greta: Chinese Economy Slows Unexpectedly
DJIA Futures: -186 (-0.6%) SPX Futures: -25 (-0.6%) NASDAQ Futures: -49 (-0.4%) Good morning friends! Futures are falling on concerns over slowing economic growth in China. Let’s get right to it! Chinese Economy Slows Unexpectedly The Chinese economy slowed unexpectedly in July. New data shows industrial production rose 3.8% year over year, down from 3.9% in June and lower than the 4.5% growth expected by economists. Retail sales rose just 2.7% annually vs 3.1% in June and lower than expectations for 5% growth. Fixed asset investment from January through July rose 5.7% year over year vs 6.2% expected. China’s statistics bureau warned of rising “stagflation risks” around the globe. Oil Prices Drop on Chinese Economy Concerns Oil prices are falling today on demand concerns from China after the country’s economy slowed in July. West Texas Intermediate crude futures are down over 5% to $87 bbl while Brent crude futures are down 5% to $93 bbl. Refinery output also slowed in China last month to 12.53 million barrels per day, the lowest since March 2020. Empire State Manufacturing Index Plunges The Empire State manufacturing index tumbled further into negative territory this month. The New York Fed survey plummeted 42.4 points to negative 31.3. That’s the second largest monthly decline on record and one of the lowest reading in survey history. That drop was far below economists’ expectations for a reading of 5 with any reading below 0 signaling deteriorating business conditions. The new orders index plunged 35.8 points to negative 29.6. The shipments index plummeted 49.4 points to negative 24.1 and unfilled orders fell for the third month in a row. This data and the Philadelphia Fed’s manufacturing survey are both seen as early indicators for the health of the entire U.S. manufacturing sector. Retail Sector In Focus Traders will have their focus on earnings from some big retailers this week. Walmart (WMT) and Home Depot (HD) are both scheduled to report Q2 results ahead of the open on Tuesday. Target (TGT) and Lowe’s (LOW) will report during premarket hours on Wednesday, followed by Kohl’s (KSS) Thursday morning. The market will be focused on how each company has been impacted by inflation so far and forward guidance for the business as consumer behavior has shifted. The Commerce Department also reports July retail sales Wednesday morning. Homebuilder Sentiment Expected to Slip The National Association of Homebuilders releases its August sentiment index at 10:00 a.m. ET. That survey is expected to have slipped further to 54 following the historic 12-point plunge to 55 in July. Builders have turned pessimistic about the rapidly slowing housing market as mortgage rates continue to rise. The housing market will be in focus throughout the week with July housing starts and building permits Tuesday morning and July existing home sales on Thursday. In Case You Missed It The House passed the Democrats’ Inflation Reduction Act on Friday. The $430 billion legislation was approved by a 220-207 vote along party lines. It includes funding for climate and energy policies, prescription drug pricing initiatives, boosting the IRS, and new corporate tax laws. President Biden is now set to sign the bill into law.
Continue Reading -->Coffee With Greta: Import Prices Fall as Fuel Prices Tumble
DJIA Futures: +136 (+0.4%) SPX Futures: +18 (+0.4%) NASDAQ Futures: +67 (+0.5%) Good morning friends! Futures are rising as the market is on track for its 4th straight winning week amid bets inflation has peaked. Let’s get right to it! U.S. Import Prices Drop for the First Time This Year U.S. import prices fell 1.4% in July, the first decline seen in 2022. That was steeper than expectations for a 1% drop and the largest since April 2020. The price of imported goods was still up 8.8% year over year, the smallest increase since March 2021. Import prices minus fuel fell 0.5%, the third straight monthly decline. The cost of imported fuel dropped 7.5% as gas prices tumbled from record-highs. But fuel import prices are still up 56.6% over the past year. Export prices fell 3.3% in July and were up 13.1% annually. Rivian Tops Q2 Expectations Rivian (RIVN) shares are up 1.4% ahead of the open after reporting a smaller Q2 profit loss than expected. The electric automaker reported an adjusted loss of $1.62 per share on $364 million in revenue. That was better than analysts’ expectations for a loss of $1.63 per share on $337.5 million in revenue. Rivian confirmed it still expects to produce about 25,000 vehicles this year. The company previously reported it delivered 4,467 vehicles in the second quarter. Rivian said it had 98,000 preorders for its R1-series truck and SUV at the end of Q2. The automaker lowered its full-year outlook, calling for a wider loss than previously forecast. Oil Prices Dip Oil prices are slipping today amid conflicting views for global oil demand. West Texas Intermediate crude futures are down 1.6% to under $93 bbl while Brent crude futures are down 1.3% to just over $98 bbl. OPEC cut its forecast for world oil demand in 2022 on Thursday while the International Energy Agency hiked its 2022 demand growth forecast. OPEC slashed its forecast by 260,000 barrels per day, expecting an increase of 3.1 million bpd. But the IEA raised its forecast to 2.1 million bpd. The group also raised its outlook for Russian oil supply by 500,000 bpd for the second half of this year and said OPEC would struggle to boost production. Gas Prices Slide Further U.S. gas prices slid further below $4 today. AAA shows the price dropped to $3.978/gal. That’s $1.04 lower than the record-high in June but $0.79 higher than the same time last year. The national average for diesel is down to $5.060/gal. That’s $0.76 lower than the record-high and $1.77 higher than a year ago. Consumer Sentiment Expected to Rise The University of Michigan’s preliminary consumer sentiment index for August will be released at 10:00 a.m. ET today. That survey is expected to have improved by 1 point to 52.5 this month. The index also includes consumers’ expectations for inflation over the next five years. Americans have been resilient in the face of surging inflation pressures this year.
Continue Reading -->Coffee With Greta: More Good Inflation Data Boosts Stocks
DJIA Futures: +245 (+0.7%) SPX Futures: +29 (+0.7%) NASDAQ Futures: +91 (+0.7%) Good morning friends! Futures are rallying after the release of more good inflation data. Let’s get right to it! Wholesale Inflation Drops in July Producer side inflation pressures fell unexpectedly in July. The Bureau of Labor Statistics producer price index dropped 0.5% on a monthly basis but was still up 9.8% year over year. That was better than expectations for a 0.2% monthly increase and the lowest annual rate since October 2021. The decline was driven by a 9% drop in energy prices while food prices rose 1%. Excluding food, energy, and trade services the core PPI rose 0.2% monthly and 5.8% annually. The PPI is a leading indicator for CPI, signaling consumer prices will continue to slow in the months ahead. Fed Officials Still Support Aggressive Tightening Two Fed officials spoke about the state of the U.S. economy after the July CPI showed inflation slowing on Wednesday. During an event at Drake University, Chicago Fed President Charles Evans said the data was “positive” but the annual pace of price increases is still “much too high.” The CPI rose 8.5% annually in July, which Evans said is “a big number, so nobody can be happy about that.” He said he expects the Fed to continue rate hikes through the end of this year and into 2023 to bring inflation back down to their 2% target. Evans forecast the Federal Funds Rate will be at 3.25%-3.5% by year-end. Minneapolis Fed President Neel Kashkari echoed that sentiment during a panel discussion at the Aspen Economic Strategy Group’s annual meeting. Kashkari said the July CPI was the “first hint” that inflation might be slowing. But he said the Central Bank is still “far, far away from declaring victory.” Kashkari also scoffed at market expectations the Fed might cut interest rates in early 2023, saying that’s “not realistic”. He said, “There’s a disconnect between me and the market.” CME Group’s FedWatch Tool shows 69.5% of traders expect a 0.5% rate hike in September while 30.5% expect a 0.75% hike. Weekly Jobless Claims Rise Less Than Expected Weekly jobless claims rose less than expected last week as the labor market remains extremely tight. The Labor Department reported 262,000 Americans filed initial unemployment claims, up 14,000 from the previous week. The previous week was also revised lower by 12,000 to 248,000. Continuing claims rose by 12,000 to 1.43 million in the week ending July 30. Disney Rallies On Earnings Beat, Strong Subscriber Growth Disney (DIS) shares are up 9.6% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. The company reported earnings of $1.09 per share on $21.5 billion in revenue. That was better than analysts’ expectations for EPS of $0.96 on $20.96 billion in revenue. The company’s streaming service, Disney+, had 152.1 million subscribers in the quarter, crushing estimates for 147.76 million. But revenue per Disney+ user fell 5% in the U.S. and Canada. Disney also announced price hikes for the streaming service. Starting December 8, Disney+ with commercials will cost $7.99 per month while the ad-free option will jump 38% to $10.99 per month. Revenue in Disney’s parks, experiences and products division surged 72% year over year to $7.4 billion. Oil Prices Turn Higher Oil prices have turned higher after falling earlier this morning. West Texas Intermediate crude futures are up 1% to just under $93 bbl while Brent crude futures are up 0.8% to over $98 bbl. The market has been in a back and forth over higher supply levels in the U.S. but lower demand. The Energy Information Administration reported U.S. crude inventories rose by 5.5 million barrels last week, beating expectations for a 73,000 barrel rise. Gasoline stockpiles tumbled by 5 million barrels vs expectations for a 1.2 million barrel drop. Refinery utilization surged to 94.3% as gasoline demand bounced back. Gas Falls Under $4 The national average for a gallon of gas dropped under $4 for the first time since March. AAA shows the price dropped to $3.99/gal today. That’s down more than $1 from the record-high and June but still $0.81 higher than a year ago. The national average for diesel is down to $5.077/gal. Gasoline demand rose to 9.1 million barrels per day last week, still 6% lower over the past 6 weeks compared to last year. Federal Budget Deficit Tumbles The U.S. federal budget deficit has narrowed by a record amount so far this fiscal year as government spending slowed sharply. The Treasury Department reported a $211 billion deficit in July, down from $302 billion in July 2021. The deficit was $726 billion, through the first 10 months of the fiscal year. That’s down $1.8 trillion from the same time a year ago, which is a record-high drop. So far this fiscal year, receipts are up by $787 billion while spending is down by $1 trillion. But economists say the sharp slowdown in government spending is causing a drag on economic growth. Economists at The Hutchins Center on Fiscal and Monetary Policy estimate it has reduced GDP by 3.8%. In Case You Missed It Boeing (BA) shares rose 2.5% on Wednesday as the planemaker restarted deliveries of its 787 Dreamliner. American Airlines (AAL) said it received a 787 from Boeing’s factory in South Carolina. Deliveries of the jumbo plane were halted in July 2021 to address manufacturing flaws in the fuselage. The FAA cleared Boeing to resume deliveries earlier this week.
Continue Reading -->Coffee With Greta: Stocks Rip Higher As Inflation Slows
DJIA Futures: +408 (+1.3%) SPX Futures: +70 (+1.7%) NASDAQ Futures: +313 (+2.4%) Good morning friends! Futures are rallying on better-than-expected inflation data. Let’s get right to it! Inflation Cools More Than Expected U.S. inflation pressures slowed more than expected in July as gas prices fell from record highs. The Bureau of Labor Statistics’ consumer price index was unchanged on a monthly basis and rose 8.5% year-over-year. That was better than economists’ expectations for a 0.2% increase monthly and 8.7% annually. The slowdown was driven by a steep drop in oil and gas prices. Fuel oil prices fell 11% monthly but were still up 75.6% year over year. Gas prices dropped 7.7% monthly and were still 44% higher annually. Those drops helped offset rising costs for food and housing. Grocery prices rose 1.3% monthly and jumped 13.1% year over year. Shelter prices rose 0.5% monthly and 5.7% annually. The core CPI, which excludes food and energy prices, rose 0.3% monthly and 5.9% annually, unchanged from June. Coinbase Loses Over $1 Billion In Q2 Coinbase (COIN) shares are up 2.9% ahead of the open despite reporting a $1.1 billion second-quarter loss. The crypto exchange reported a loss of $4.98 per share on $808.3 million in revenue. That was worse than analysts’ expectations for a loss of $2.65 per share on $832.2 million in revenue. Revenue tumbled nearly 64% year-over-year as the crypto market collapsed. The profit loss included a $377 million non-cash cryptocurrency-related impairment charge. Coinbase’s own crypto assets were worth just $428 million at the end of Q2 compared to about $1 billion at the end of Q1. In a letter to shareholders, the company said, “Q2 was a test of durability for crypto companies and a complex quarter overall. Dramatic market movements shifted user behavior and trading volume, which impacted transaction revenue, but also highlighted the strength of our risk management program.” The company had 9 million monthly transacting users in Q2, down from 9.2 million in Q1. Coinbase forecast it will have 7 million to 9 million monthly transacting users in 2022, down from its previous forecast for up to 15 million. Roblox Plunges On Q2 Miss Roblox (RBLX) shares are tumbling 10.6% in premarket trade after missing Q2 expectations on the top and bottom line. The video game platform reported a loss of $0.30 per share on $639.9 million in revenue. That was steeper than analysts’ estimates for a loss of $0.21 per share and missed revenue expectations of $644.4 million. Roblox had 52.2 million average daily active users last quarter, down from 54.1 million in Q1. Average bookings per daily active user tumbled 21% year over year to $12.25. The Chief Business Officer remained optimistic about the future in an interview with CNBC saying, “We’re very much in investment mode and that’s going to put a little bit of drag on earnings, but these are investments that are the right investments for us to make that will pay off in the three-to-five-year timeframe.” Unity Software Cuts Outlook Unity Software (U) shares are 3.6% ahead of the open after reporting mixed Q2 results. The videogame software company reported an adjusted loss of $0.18 per share on $297 million in revenue. That was better than analysts’ expectations for a $0.21 per share loss but revenue fell short of estimates for $299.7 million. The results came hours after Applovin (APP) offered to buy Unity in an all-stock transaction worth $20 billion. Unity forecast Q33 revenue between $315 million and $335 million with full-year sales ranging between $1.3 billion and $1.35 billion. That was down from its previous full-year forecast for revenue between $1.35 billion and $1.43 billion. Analysts were expecting Q3 revenue of $34.37 million and $1.36 billion for the full-year. Sweetgreen Plummets After Slashing Outlook, Announcing Layoffs Sweetgreen (SG) shares are plunging 20.8% in premarket trade after cutting its 2022 forecast and announcing layoffs. The salad chain reported a loss of $0.36 per share on $124.9 million in revenue. That was in line with analysts’ profit loss expectations but lower than estimates for $130.2 million in revenue. Sweetgreen said it laid off 5% of its support center workforce and is downsizing to a smaller office building to lower operating costs. The company forecast full-year revenue of $480 million to $500 million, down from its previous forecast of $515 million to $535 million. Same-store sales are now expected to grow 13% to 19% year over year vs the prior forecast for 20% to 25% growth. Oil Prices Flat As U.S. Inventory Jumps Unexpectedly Oil prices are flat after an unexpected increase in U.S. inventories last week. West Texas Intermediate crude futures are up 0.1% at $90 bbl while Brent crude futures are up 0.03% at $96 bbl. The American Petroleum Institute reported Tuesday that U.S. crude stockpiles rose by 2.2 million barrels last week. Analysts were expecting a 400,000 barrel decline in inventories. The unexpected jump signals a potential drop in demand. The Energy Information Administration reports official inventory levels today. In Case You Missed It Confidence among small business owners rose more than expected in July. The NFIB Small Business Optimism Index rose to 89.9 from 89.5 in June. Economists were expecting the index to be unchanged. 37% of owners said inflation is their single most important problem, up 3% from June and the highest level since Q4 1979. NFIB’s Chief Economist said, “The uncertainty in the small-business sector is climbing again as owners continue to manage historic inflation, labor shortages, and supply chain disruptions.”
Continue Reading -->Coffee With Greta: Worker Productivity Tumbles In Q2
DJIA Futures: +3 (+0.01%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -75 (-0.6%) Good morning friends! Futures are mostly lower as falling chip stocks weigh on the tech sector and new data shows worker productivity fell further in Q2. Let’s get right to it! Worker Productivity Drops, Labor Costs Soar U.S. productivity levels dropped again in the second quarter while labor costs continued to surge. The Labor Department reported worker productivity fell 4.6% annually in Q2 vs economists’ expectations for a 4.3% decline. This is the second straight quarterly decline in productivity. Hours worked rose 2.6% while output fell 2.1%. Unit labor costs jumped 10.6% quarterly and 9.5% year-over-year. That was steeper than the 8.2% annual gain in Q1. Micron Slips After Revenue Warning Micron Technology (MU) is falling 4.1% in premarket trade after issuing a revenue warning for the rest of the year. The chip maker said fiscal Q4 revenue “may come in at or below the low end of the revenue guidance range provided in our June 30 earnings call.” Executives said, “[W]e expect a challenging market environment in FQ4 22 and FQ1 23.” This comes a day after Nvidia (NVDA) warned its Q2 results will be weaker-than-expected on Monday. Spirit Tops Q2 Expectations Despite Surging Costs Spirit Airlines (SAVE) shares are up 0.7% ahead of the open after beating Q2 expectations. The discount airline reported an adjusted loss of $0.30 per share on $1.37 billion in revenue. That was better than analysts’ expectations for a loss of $0.46 per share on $1.35 billion in revenue. Revenue surged 59% year-over-year and was 34.9% higher than Q2 2019. Revenue per passenger, per flight jumped 24% from 2019 to $140.61. Spirit expects pre-tax margins in Q3 to range between negative 1% and positive 1%. The company plans to expand its schedule 14% from 2019 levels in Q3 and 25% in Q4. Novavax Craters on Unexpected Q2 Loss Novavax (NVAX) shares are plummeting 30.3% in premarket trade after reporting an unexpected profit loss in the second quarter and slashing its full-year guidance. The drugmaker reported a loss of $6.53 per share on $185.9 million in revenue. That sharply missed analysts’ expectations for earnings of $5.54 per share on $1.02 billion in revenue. Novavax now expects full-year revenue of $2 billion to $2.3 billion, a sharp downgrade from previous guidance for $4 billion to $5 billion. The company said it slashed guidance “account for several evolving market dynamics.” The CEO said the new forecast reflects an unexpected shortfall in demand for the company’s Covid vaccines. GoodRx Surges On Strong Q2 Results GoodRx (GDRX) shares are surging 29.4% ahead of the open after beating Q2 expectations on the top and bottom line. The company reported adjusted earnings of $0.06 per share on $191.8 million in revenue. That beat analysts’ expectations for adjusted EPS of $0.04 on $184.7 million in revenue. The company also announced it has addressed a previously disclosed issue with a major grocer. Tesla’s China Sales Slump Tesla (TSLA) shares are down 0.3% in premarket trade after reporting a sharp slowdown in China sales last month. The electric automaker delivered 28,217 vehicles from its factory in Shanghai in July. That was down sharply from a record 78,906 in June. 20,000 of those cars were exported and over 8,000 were delivered to Chinese customers. This drop was expected though as Tesla took some planned downtime last month to upgrade equipment at the assembly plant. But preliminary reports showed deliveries around 30,000. In Case You Missed It Consumer inflation expectations cooled in July. The New York Fed’s Survey of Consumer Expectations found Americans still expect inflation to be at a 6.2% annual pace a year from now. That’s down from the record-high 6.8% in June. In 3 years, consumers see inflation at 3.2% vs 3.6% in June. Americans expect home prices to rise just 3.5% over the next 12-months, the lowest reading since November 2020.
Continue Reading -->Coffee With Greta: Focus Turns To Inflation
DJIA Futures: +159 (+0.5%) SPX Futures: +25 (+0.6%) NASDAQ Futures: +99 (+0.7%) Good morning friends! Futures are rising as traders turn their focus to inflation and continue to digest earnings. Let’s get right to it! Focus Turns to Inflation The focus for traders this week is the July CPI report which will be released on Wednesday. That’s expected to show headline inflation slowed to 8.7% annually last month as gas prices cooled from the record-highs in June. But the core CPI is expected to increase to 6.1% from 5.9%. The data comes after the July jobs report crushed expectations last week. The inflation data this week will give the market more clarity on the Fed’s next rate hike. CME Group’s FedWatch Tool shows 68.5% of traders now expect another 0.75% rate hike at the September meeting. Tyson Reports Mixed Fiscal Q3 Results As Meat Prices Soar Tyson Foods (TSN) shares are falling 4.9% ahead of the open after reporting mixed fiscal Q3 results. The meat producer reported adjusted earnings of $1.94 per share on $13.5 billion in revenue. That missed analysts’ expectations for adjusted EPS of $1.97 but beat estimates for $13.31 billion in revenue. That profit miss came as demand fell for many of its products due to higher prices. Total sales volume fell 1.9% while prices rose 8.1% on average. Chicken volume fell 2.1% but sales increased 25.6% due to higher prices. Beef volume increased 1.3% and sales rose 1%. The company said the USDA has indicated domestic production of meat in fiscal 2022 should see flat annual growth compared to last year. Palantir Plunges On Surprise Q2 Loss Palantir (PLTR) shares are plunging 14.8% in premarket trade after reporting a surprise profit loss in the second quarter. The data analytics company reported a loss of $0.01 per share on $473 million in revenue. That missed analysts’ expectations for earnings of $0.03 per share but beat estimates for $471.3 million in revenue. Overall revenue rose 26% year-over-year with commercial revenue jumping 46%. Palantir said its commercial customer count increased 250% annually, growing from 34 customers to 119. The CFO blamed the profit miss on a decline in investments and marketable securities. But he said commercial growth is widespread. Palantir forecast Q3 revenue between $474 million and $475 million and full-year sales between $1.9 billion and $1.902 billion. Signify Health Surges On Possible CVS Takeover Signify Health (SGFY) shares are surging 17.2% ahead of the open amid reports CVS (CVS) is planning a takeover bid of the company. The Wall Street Journal first reported CVS is seeking to make a bid this week. The pharmacy chain said in its earnings last week it is looking to expand in home-health services. And Signify Health previously said it is exploring strategic alternatives, including a sale. Initial bids are due this week and CVS is expected to face competition. CVS shares are up 0.6% in premarket trade. Pfizer to Purchase Global Blood Therapeutics Global Blood Therapeutics (GBT) shares are up 4.7% ahead of the open after agreeing to be acquired by Pfizer (PFE). Pfizer will pay $68.50 per share for Global Blood. The deal is valued at about $5.4 billion, including assumed debt. GBT shares soared last week as original reports emerged the two companies were in talks for an acquisition. PFE shares are flat in premarket trade. Oil Prices Slide On Recession Fears Oil prices are sliding as demand concerns rise on fresh recession fears. West Texas Intermediate crude futures are down 1.1% at $88 bbl while Brent crude futures are down 1% at $94 bbl. New data also showed China imported just 8.79 million barrels of crude per day in July. That was up from the four-year low in June but still 9.5% lower than July 2021. In Case You Missed It Tesla (TSLA) shares are rising 2.2% after shareholders approved a 3-for-1 stock split last week. Each stockholder of record on August 17 will receive a dividend of 2 new shares for every one they own after the close on August 24. The stock will then begin trading on a split-adjusted basis on August 25. The Senate narrowly passed Democrats’ “Inflation Reduction Act” over the weekend. The legislation was approved in a 51-50 vote along party lines on Sunday, with the Vice President casting the tie-breaking vote. The bill is now headed to the House which plans to return from summer recess on Friday to approve it. The bulk of spending in the bill is focused on addressing climate change. It also addresses prescription drug pricing, puts a cap on insulin prices, includes a new 15% minimum tax on large corporations, and creates a new 1% excise tax on stock buybacks.
Continue Reading -->Coffee With Greta: Stocks Drop On HOT July Jobs Report
DJIA Futures: -189 (-0.6%) SPX Futures: -37 (-0.9%) NASDAQ Futures: -151 (-1.1%) Good morning friends! Futures are falling as a strong July jobs report gives the Fed more room to stay aggressive on inflation. Let’s get right to it! July Job Growth Crushes Expectations The Labor Department reported today that the U.S. economy added 528,000 jobs in July. That crushed economists’ expectations for a gain of 258,000. The unemployment rate slipped to 3.5% vs 3.6% expected. And wage gains also continued with average hourly earnings up 0.5% monthly and 5.2% year-over-year. The Fed has been focused on those wage gains as they add fuel to already red hot inflation. The data shows the labor market maintaining strength, giving the Fed more room to continue aggressive rate hikes to fight inflation. But there are still more jobs to be recovered from before the pandemic as the labor force participation rate slipped to 62.1% from 62.2%. That’s still down from 63.4% in February 2020. The report also included upward revisions for May and June. May’s job growth was revised higher by 2,000 to show 386,000 jobs added while June was revised higher by 26,000 to show 372,000 jobs added. DoorDash Reports Record Number of Orders DoorDash (DASH) shares are up 5.4% ahead of the open after mixed Q2 results. The food delivery service reported a loss of $0.72 per share on $1.61 billion in revenue. That was steeper than analysts’ expectations for a loss of $0.41 per share but beat revenue estimates for $1.52 billion. DoorDash said it delivered 426 million orders last quarter, up 23% year-over-year and a record-high. The company did warn it expects a “softer consumer spending environment” in the second half of the year. Because of uncertainty about how quickly consumer activity will shift, DoorDash forecast adjusted EBITDA to fall between $25 million and $75 million in Q3. Lyft Rallies on Earnings Beat Lyft (LYFT) shares are rising 5.8% in premarket trade after its strongest quarterly results since before the pandemic. The ride-hailing company reported adjusted earnings of $0.13 per share on $990.7 million in revenue. That topped analysts’ expectations for a loss of $0.04 per share on $989 million in revenue. Lyft said it had 19.86 million riders in Q2, up by more than 2 million year-over-year and in line with estimates. Revenue per ride came in at $49.89, above analysts’ estimates for $49.30. The co-founder and president said, “We feel great about what we did this quarter. We generated our highest adjusted Ebitda, added more than 2 million riders, and saw a recovery in the driver side.” Lyft forecast Q3 revenue between $1.04 billion and $1.06 billion, just shy of analysts’ expectations for $1.1 billion. The company expects adjusted EBITDA of $55 million to $65 million vs $61 million expected by analysts. AMC Revenue Surges, Company Announces New APE Shares AMC (AMC) shares are dropping 9.5% ahead of the open despite beating Q2 expectations. The theater chain reported an adjusted loss of $0.20 per share on $1.17 billion in revenue. That was better than analysts’ expectations for a loss of $0.23 per share and in line with revenue estimates. CEO Adam Aron said movies like “Top Gun: Maverick” and Jurassic World: Dominion” drove sales during the quarter. Global attendance surged 168%. AMC also announced it will issue a dividend to all shareholders in the form of preferred shares. The company applied to list those preferred shares under the ticker symbol APE. Aron said, “Today we are rewarding and recognizing our passionate and supportive shareholders, both to our shareholders in the U.S. and internationally. Shareholders will receive one AMC Preferred Equity unit for each company-issued share of AMC common stock that they own.” AMC expects to issue a dividend of about 517 million APE units later this month and the shares will start trading on August 22. The CEO said, “Given the flexibility that APEs will give us, we likely will be able to raise money if we need or so choose, which immensely lessens any survival risk as we continue to work our way through this pandemic to recovery and transformation.” Beyond Meat Cuts Outlook, Announces Job Cuts Beyond Meat (BYND) shares are falling 4.1% in premarket trade after missing Q2 expectations and lowering its full-year forecast. The alternative meat company reported a loss of $1.53 per share on $147 million in revenue. That was worse than analysts’ expectations for a loss of $1.18 per share on $149.2 million in revenue. Beyond forecast full-year revenue between $470 million and $520 million, down from its prior forecast of $560 million to $620 million. The company cited inflation, rising interest rates, and recession concerns for that downgrade. Beyond also announced it will lay off about 4% of its global workforce. Amazon to Acquire iRobot iRobot (IRBT) shares are surging 19.1% ahead of the open after Amazon (AMZN) announced plans to acquire the robot vacuum maker. Amazon will acquire iRobot for $61 per share. The all-cash deal values the company at $1.7 billion. The hardware devices chief at Amazon said, “Customers love iRobot products — and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.” The current iRobot CEO will continue to run the company after the deal closes. Oil Prices Flat Oil prices are flat but on track for weekly losses as demand concerns weigh on the market. West Texas Intermediate crude futures are up 0.1% to over $88 bbl while Brent crude futures are up 0.1% to over $94 bbl. The market has been in a volatile back and forth over supply worries and demand concerns. But the demand worries seemed to win this week after the EIA reported another drop in U.S. gasoline demand. In Case You Missed It Coinbase (COIN) shares rallied 10% on Thursday after the crypto exchange announced a partnership with BlackRock (BLK) that will allow its institutional clients to buy bitcoin. Coinbase will provide crypto trading, custody, prime brokerage, and
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