All posts by Greta Wall
Coffee With Greta: GameStop Splits!
DJIA Futures: +170 (+0.6%) SPX Futures: +16 (+0.4%) NASDAQ Futures: +49 (+0.4%) Good morning friends! Futures are up as the S&P 500 looks to extend its gains for the third straight day. Let’s get right to it! GameStop Rallies After Announcing Stock Split GameStop (GME) shares are up 5.9% ahead of the open after the company announced a 4-for-1 stock split after hours on Wednesday. The video game retailer said its board of directors approved the split. Shareholders who own the stock before the close on July 18 will get three additional shares for each one they own. The dividend will be distributed after trading closes on July 21 and GME will start trading at the split-adjusted price on July 22. Samsung Earnings Guidance Boosts Chip Stocks Chip stocks are rising in premarket trade after Samsung released better than expected Q2 earnings guidance. The VanEck Semiconductor ETF (SMH) is up 1.8% ahead of the open. Samsung said today it expects Q2 revenue to rise 22% year-over-year with operating profit expected to grow 12%. The South Korean chipmaker will release detailed second-quarter results later this month. Weekly Jobless Claims Hit 6-Month High Weekly jobless claims rose unexpectedly last week in a sign layoffs are increasing. The Labor Department reported 235,000 Americans filed initial claims for unemployment benefits. That was an increase of 4,000 from the previous week and the highest level since January. The 4-week moving average of new claims also rose to 232,500, a 6-month high as well. Continuing claims also rose by 51,000 to 1.38 million in the week ending June 25. U.S. Trade Deficit Shrinks in May The U.S. trade deficit decreased in May to $85.5 billion. That was down 1.3% from April but higher than expectations for $84.9 billion. It’s still the lowest trade gap so far this year after the deficit hit a record-high two months ago. Exports rose 1.2% to a record $255.9 billion while imports rose 0.6% to $341.4 billion. Adjusted for inflation, the real goods deficit rose to $116.6 billion in May. The lower trade deficit will be positive for GDP growth as the record-high gap in March was blamed for the contraction in Q1. Treasury Yields Rise, Curve Remains Inverted The curve between the 2-year and 10-year Treasury yields is still inverted, signaling a recession is on the horizon. The 2-year Treasury yield is up about 3 basis points to over 3% while the 10-year yield is up just over 1 basis point to 2.95%. This part of the yield curve first inverted on March 31 and then again briefly in June. Yields are rising today after the Fed minutes on Wednesday showed the bank is leaning toward another 75 basis point hike this month. Oil Prices Rise Oil prices are rebounding today after plunging on global recession fears Wednesday. West Texas Intermediate crude futures are up 1.1% at just under $100 bbl while Brent crude futures are up 0.7% at over $101 bbl. Both closed at their lowest price since April 11 on Wednesday as recession fears overtook supply concerns. The Energy Information Administration reports U.S. crude and gas inventories at 11:00 a.m. ET today. Analysts expect that report to show oil stockpiles fell by 1.2 million barrels in the week ending July 1 while gas inventories are expected to have dropped by 500,000 barrels. The American Petroleum Institute reported a 3.8 million barrel increase in crude inventories and 1.8 million decrease in gasoline stockpiles on Wednesday. Gas Prices Still Dropping U.S. gas prices fell for the 22nd day in a row. AAA shows the national average for regular gas fell to $4.752/gal today. Diesel also fell by more than a cent overnight to $5.698/gal. The sharp decline in oil prices is expected to continue pushing U.S. gas prices down. In Case You Missed It The number of available jobs is still outpacing workers by about 2 to 1. The Labor Department’s JOLTS shows there were 11.25 million job openings in May. That was down from 11.67 million in April but just 5.95 million unemployed workers were counted in May. The Great Resignation continued to slow with 4.27 million workers quitting their jobs in May. The Fed’s June meeting minutes show the bank is committed to lowering inflation even if it causes a recession. The Fed released those minutes on Wednesday afternoon, showing another 0.75% rate hike is on the table for the July meeting. FOMC members acknowledged that tighter policy will likely slow the pace of economic growth but they see inflation returning to 2% as “critical to achieving maximum employment on a sustained basis”.
Continue Reading -->Coffee With Greta: The Fed Is Dead Ahead
DJIA Futures: +13 (+0.04%) SPX Futures: +2 (+0.1%) NASDAQ Futures: +10 (+0.1%) Good morning friends! Futures are flat as traders gear up for new economic data. Let’s get right to it! Futures Flat with JOLTS, Fed Minutes Ahead Futures are flat with the focus on new jobs data and the Fed. The Labor Department releases the May Job Openings and Labor Turnover Survey (JOLTS) at 10:00 a.m. ET. That is expected to show the number of available jobs fell to 11.1 million from 11.4 million in April. The Fed then releases the minutes of its June meeting at 2:00 p.m. ET. Traders are eyeing that readout for more clarity on the bank’s plans for larger rate hikes moving forward. The Fed raised rates by 0.75% in June and the Fed Chair signaled they will consider more hikes of that size to combat inflation. Treasury Yields Fall, Curve Remains Inverted Recession alarms are sounding as a key part of the Treasury yield curve is still inverted. The 2-year Treasury yield is down about 5 basis points at 2.77% while the 10-year yield is down 5 basis points at 2.75%. An inversion between the 2-year and 10-year yields is typically seen as a sign the economy is weakening and a recession is on the horizon. Mortgage Demand Falls Despite Lower Rates Mortgage demand slipped last week even as rates dropped for the second week in a row. The Mortgage Bankers Association shows purchase applications fell 4% weekly and 17% year-over-year. Refinance applications dropped 8% weekly and tumbled 78% compared to a year ago. The average 30-year contract rate pulled back to 5.74% from 5.84% the prior week. The drop in rates followed the decrease in Treasury yields as mortgage rates typically track with the 10-year yield. Oil Prices Rebound on Supply Concerns Oil prices are bouncing back after Tuesday’s drop as supply worries take over. West Texas Intermediate crude futures are up 1% at over $100 bbl while Brent crude futures are rising 1.8% to over $104 bbl. The rebound comes after WTI crude closed below $100 bbl for the first time since late April on Tuesday. Analysts expect volatility to continue as the market grapples with supply worries against economic growth concerns. Gas Prices Continue Pullback U.S. gas prices are still falling as demand drops. AAA shows the national average for regular gas fell to $4.779/gal today. That’s down nearly 10 cents from a week ago and nearly 24 cents from the record-high. Diesel also fell to $5.716/gal, down a full cent from yesterday. The Energy Information Administration shows U.S. gasoline demand at 8.93 million barrels per day, down from 9.11 million bpd at the same time last year. Amazon Partners with Grubhub Amazon (AMZN) Prime members will now get a free year of Grubhub deliveries. The online retail giant announced that deal with the food delivery service today. It also includes an option for Amazon to acquire an up to 15% stake in the company. The news is dragging down competitors like Uber (UBER) and DoorDash (DASH). UBER shares are down 3.3% ahead of the open while DASH is tumbling 6.9%. Spirit Wins Newark Peak-Hour Flights Spirit Airlines (SAVE) shares are flat ahead of the open after the government shifted peak-hour runway timings at Newark Airport to the company. The U.S. Transportation Department said this “secures low-cost service options for Newark customers and improves competition in the Newark market.” Southwest Airlines (LUV) previously operated those timings but pulled out of Newark in favor of LaGuardia in 2019. Spirit beat out JetBlue (JBLU) and Alaska Air Group (ALK) for the approvals. Spirit said it will “continue to promote competition and offer affordable, high-value travel options for guests traveling in and out of the New York Metropolitan area.”
Continue Reading -->Coffee With Greta: Stocks Are Free… Free Fallin’
DJIA Futures: -98 (-0.3%) SPX Futures: -11 (-0.3%) NASDAQ Futures: -46 (-0.4) Good morning friends! Futures are falling as traders gear up for the first day of Q3 after the worst first half in decades. Let’s get right to it! Worst First Half in 50+ Years The S&P 500 logged its worst first half of a year since 1970. And things are even worse for the Dow, which booked its worst first half since 1962. Stocks are deep in a bear market as traders are focused on inflation and the possibility of a recession. Even though the Core PCE Price Index fell in May, it was still one of the hottest readings since the 1970s. Analysts say the dramatic drop in stocks was all due to the Fed getting behind on inflation. Now the Fed is playing catch up, with a recession looming overhead. If data later this month shows another GDP contraction in Q2, that will officially meet the criteria for a recession. Bitcoin Logs Worst Month Ever Crypto currencies are rising this morning after another tough session on Thursday. Bitcoin is up about 1.7% in the past 24 hours at over $19,200 while Ethereum is up over 3% at about $1,050. Bitcoin suffered its worst month on record in June, losing more than 38% of its value last month. Ethereum also plunged 47% in June. More than $2 trillion has been wiped off the global crypto market cap in recent months. Micron Slides on Weak Forecast Micron (MU) shares are down 4.7% ahead of the open despite beating fiscal Q3 expectations as traders focus on weak guidance. The chipmaker beat reported adjusted fiscal Q3 earnings of $2.59 per share on $8.64 billion in revenue. That topped analysts’ expectations for adjusted EPS of $2.43 on $8.64 billion in revenue. But Micron released a grim forecast for fiscal Q4. The company expects $7.2 billion in revenue this quarter, sharply missing Wall Street’s estimate for $9.1 billion. Micron also announced it is slowing its expansion plans. The CEO said, “Recently, the industry demand environment has weakened, and we are taking action to moderate our supply growth in fiscal 2023. We are confident about the long-term secular demand for memory and storage and are well-positioned to deliver strong cross-cycle financial performance.” Kohl’s Tumbles After Ending Takeover Talks Kohl’s (KSS) shares are plunging 18.6% in premarket trade after terminating sales talks with Franchise Group (FRG). The retailer announced today is was ending those talks and said the retail environment has significantly deteriorated since the beginning of the process. Kohl’s also slashed its fiscal Q2 outlook due to slowing consumer spending amid high inflation. The company now expects its annual sales decline to be in the high-single digits vs its previous forecast for low-single digits. The Chair of the board said, “Despite a concerted effort on both sides, the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable agreement.” Meta Slashes Hiring Plans, Warns About Economy Meta Platforms (META) shares are down just 0.6% ahead of the open despite slashing its hiring plans for engineers. During a weekly employee Q&A on Thursday, CEO Mark Zuckerberg said the company has cut plans to hire engineers by at least 30% this year. Zuckerberg also warned them to brace for a severe economic downturn saying, “If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history.” Meta originally planned to hire about 10,000 new engineers this year but has now lowered that target to around 6,000-7,000. Gas Prices Still Dropping U.S. gas prices are still falling ahead of the 4th of July holiday weekend. AAA shows the national average for regular gas fell to $4.842/gal today. That’s down more than a cent overnight and more than 17 cents from the record high. Diesel also fell by more than a cent over night, down to $5.76/gal. Oil Prices Rebound Oil prices are rebounding today after falling on Thursday. West Texas Intermediate crude futures are up 2.8% to just under $109 bbl while Brent crude futures are up 2.9% to over $112 bbl. Prices have been volatile as the market grapples with supply concerns against the possibility of a recession. Libya’s oil production has fallen sharply as more ports and oilfields have been shutdown due to protests. Norway is expected to see shutdowns early next week with offshore workers planning to strike.In Case You Missed It A new CNBC survey shows investors expect stocks to keep falling. 42% of respondents said they’re most likely to buy high-dividend stocks right now while just 18% said they would buy mega-cap tech stocks. 50% also said cash is their safest play right now, signaling more investors may be pulling out of the market during this time.
Continue Reading -->Coffee With Greta: Is Inflation Actually Cooling?
DJIA Futures: -299 (-1%) SPX Futures: -40 (-1%) NASDAQ Futures: -125 (-1.1%) Good morning friends! Futures are slipping after the release of the Fed’s favorite inflation gauge. Let’s get right to it! Core PCE Inflation Cools The Fed’s favorite inflation measure cooled slightly in May. The Bureau of Labor Statistics Core Personal Consumption Expenditures (PCE) Price Index rose 0.3% monthly and 4.7% year-over-year. That index excludes food and energy prices. The gain was lower than expectations for a 0.4% monthly increase and 4.8% annual jump in prices. It was a slowdown from 4.9% in April but is still the highest reading since the 1980s. The headline PCE Price Index rose 0.6% monthly and 6.3% annually. That was sharply higher than the 0.2% monthly increase in April and unchanged on an annual basis. Personal incomes rose 0.5% but disposable incomes fell 0.1%. Headline personal spending rose 0.2% monthly but when adjusted for inflation that spending dropped 0.4%. Weekly Jobless Claims Fall Less Than Expected Weekly jobless claims fell slightly last week as the labor market remains tight. The Labor Department reported 231,000 Americans filed initial claims for unemployment benefits last week. That was down 2,000 from the previous week but higher than expectations for 228,000. It was the second weekly drop in a row but claims are still hovering near a five-month high. Continuing claims fell by 3,000 to 1.328 million in the week ending June 18. Walgreens Slips Despite Earnings Beat Walgreens (WBA) shares are down 2.3% ahead of the open despite beating fiscal Q3 expectations. The drugstore chain reported adjusted earnings of $0.96 per share on $32.6 billion in revenue. That beat analysts’ expectations for adjusted EPS of $0.92 on $32.06 billion in revenue. Sales were down year-over-year as demand fell for Covid vaccines. The company administered 4.7 million vaccines in Q3, down from 11.8 million in Q2 and 15.6 million in Q1. Walgreens reiterated its full-year forecast, expecting adjusted earnings growth in the low single-digits. RH Tumbles After Slashing Outlook RH (RH) shares are tumbling 8.6% in premarket trade after slashing its full-year outlook after-hours on Wednesday. The high-end furniture chain now expects annual sales to fall between 2% and 5% this year. That’s down from previous guidance for sales to rise 0% to 2%. In a statement, RH’s CEO said, “With mortgage rates double last year’s levels, luxury home sales down 18% in the first quarter, and the Federal Reserve’s forecast for another 175 basis point increase to the Fed Funds Rate by year-end, our expectation is that demand will continue to slow throughout the year.” Gas Prices Continue Decline U.S. gas prices are continuing to fall. AAA shows the national average for regular gas fell to $4.857/gal today. That’s down about 16 cents from the record high earlier this month. Diesel prices are also continuing to decline. The national average for diesel slipped to $5.772/gal today, down from the peak of $5.816/gal on June 19. Oil Prices Slip Oil prices are falling today as the market weighs supply concerns against an increase in fuel product inventories in the U.S. West Texas Intermediate crude futures are down 1.2% at $108 bbl while Brent crude futures are slipping 0.8% to $115 bbl. U.S. oil inventories fell more than expected last week. The Energy Information Administration reported crude stockpiles fell by 2.8 million barrels vs 800,000 barrels expected. But U.S. crude-oil production also rose by 100,000 barrels per day to 12.1 million bpd, the highest level since mid-April 2020. The EIA reported gas inventories rose by 2.6 million barrels last week vs expectations for an 800,000 barrel drop. The gas increase comes as U.S. refineries are running at 95% capacity in an effort to keep up with demand and lower prices. Bitcoin Drops Below $19,000 The crypto crash is continuing with Bitcoin briefly falling below $19,000 today. Currently, the largest coin in the world is down 4.3% at $19,200. Ethereum is down 6.8% at just over $1,000 per coin. Crypto has been hit hard by macroeconomic pressures like inflation and the possibility of a recession. Bitcoin has fallen more than 70% from its record-high. In Case You Missed It Fed Chair Jerome Powell told other Central Bankers around the world on Wednesday that the Fed cannot “guarantee” a soft-landing for the U.S. economy. Speaking at a conference in Portugal, Powell said the bank is still optimistic the economy can handle tighter monetary policy. But he said recent events have made that goal more challenging. He said the Fed is aiming to “growth moderate” to allow the supply chain to catch up with demand. JPMorgan (JPM) analysts say they now see a “reasonable” risk of a recession this year. In a note on Wednesday, Bruce Kasman and Joseph Lipton said “it is reasonable to consider the risk that the US and/or global economy slips into recession this year.” They added, “rising concern about persistent inflation shocks has combined with news of a more aggressive Fed and sliding sentiment to materially shift our views on 2022 growth.” This is a reversal from last week’s global markets outlook that showed no risk of a recession this year.
Continue Reading -->Coffee With Greta: Recession Alarms Go Off
DJIA Futures: +33 (+0.1%) SPX Futures: -1 (-0.03%) NASDAQ Futures: -20 (-0.2%) Good morning friends! Futures are falling flat after new data shows the U.S. economy contracted further than initially estimated in Q1. Let’s get right to it! Q1 GDP Contraction Was Worse Than Originally Estimated The U.S. economy contracted further than originally estimated in the first quarter. The Commerce Department released its final Q1 GDP revision this morning, showing the economy shrank 1.6% annually. That was worse than the initial estimate of a 1.4% contraction. All eyes are now on the first Q2 GDP estimate on July 28. If that report shows another contraction it would meet the official criteria for a recession. Bed Bath & Beyond Sales Plunge Bed Bath & Beyond (BBBY) shares are tumbling 12.6% ahead of the open after missing fiscal Q1 expectations on the top and bottom line. The retailer reported a loss of $2.83 per share on $1.46 billion in revenue. That was worse than analysts’ expectations for a loss of $1.39 per share on $1.51 billion in revenue. Same-store sales tumbled 24% year-over-year, worse than the 20.1% drop in the previous quarter. Bed Bath & Beyond also announced it is replacing CEO Mark Tritton. Sue Gove, who serves as an independent director on the board, will tak over as interim CEO. In a statement, Gove said, “We must deliver improved results. Our shareholders, Associates, customers, and partners all expect more.” General Mills Tops Fiscal Q4 Expectations General Mills (GIS) shares are up 2.4% in premarket trade after topping fiscal Q4 expectations on the top and bottom line. The company reported adjusted earnings of $1.12 per share on $4.89 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.03 on $4.81 billion in revenue. Sales rose 8% year-over-year and General Mills said price increases helped offset supply chain challenges and higher costs. The Chairman and CEO said, “Though significant inflation and supply chain disruptions put pressure on our margins, we responded quickly to address those challenges and keep our brands on shelf for our customers and consumers.” The company said it expects double-digit inflation on its costs of goods sold in the next fiscal year and plans to raise prices further. Gas Prices Continue to Tumble U.S. gas prices are continuing to tumble. AAA shows the national average for regular gas fell to $4.868/gal today. That’s down about 15 cents from the record high earlier this month. Diesel prices are also continuing to decline. The national average for diesel slipped to $5.78/gal today, down from the peak of $5.816/gal on June 19. Oil Prices Rise on Supply Worries Oil prices are rising for the fourth straight session as supply concerns outweigh economic growth worries. West Texas Intermediate crude futures are up 1.5% at over $113 bbl while Brent crude futures are up 1.4% to just under $120 bbl. The market is concerned OPEC will not be able to make up for lost Russian oil supply. Saudi Arabia and the UAE have so far been seen as the only two countries with spare capacity to fill that gap. Tesla Begins Layoffs Tesla (TSLA) shares are down 1% in premarket trade after the automaker layed off about 200 autopilot workers. CNBC confirmed the automaker is shutting down its office in San Mateo, CA and eliminating the jobs located there. The employees at that location labeled videos from Tesla cars to improve the Autopilot system. The layoffs are part of a wider cost-cutting effort at the company after CEO Elon Musk said he has a “super bad feeling” about the economy. Pinterest CEO Steps Down Pinterest (PINS) shares are up 4.3% ahead of the open after announcing its CEO Bel Silbermann is stepping down. The company made that announcement after the close on Tuesday and said a former Google executive, Bill Ready, will take his place. Ready also previously served as the vice president and COO of PayPal (PYPL). In a statement, Silbermann said, “In our next chapter, we are focused on helping Pinners buy, try and act on all the great ideas they see. Bill is a great leader for this transition. He is a builder who deeply understands commerce and payments.” Ready said in a LinkedIn post, “As someone who has spent most of my career in commerce and payments, it’s so clear to me that Pinterest has the opportunity to build something unique—something special.”In Case You Missed It Consumer confidence tumbled to a 16-month low as Americans deal with high inflation. The Conference Board’s consumer confidence index fell to 98.7 this month from 103.2 in May. That was worse than economists’ expectations for 100. Confidence in current conditions fell to 147.1 from 147.4 while six month expectations plunged to 66.4 from 73.7.
Continue Reading -->Coffee With Greta: All Eyes On Powell
DJIA Futures: -464, (-1.5%) SPX Futures: -64 (-1.7%) NASDAQ Futures: -208 (-1.8%) Good morning friends! Futures are lower as traders turn their focus back to the Fed and the looming possibility of a recession. A quick note that I will be out of the office tomorrow through Tuesday, June 28 so there will be no Coffee With Greta during that time. Let’s get right to it! Jerome Powell Prepares for Senate Testimony Focus is back on the Fed as Chairman Jerome Powell is set to deliver his report on monetary policy to the Senate Banking Committee today. Powell’s testimony begins at 9:30 a.m. ET. This is a routine hearing but comes at a time when the Fed is working to tackle sky-high inflation. Analysts expect the questioning to focus on what the Central Bank got wrong about inflation, what the rate hike schedule looks like moving forward, and whether Powell sees a recession on the horizon. President Biden Set to Call on Congress for Gas Tax Holiday White House officials say President Biden will call on Congress today to suspend federal taxes on gas and diesel for 3 months. He’s also expected to call on states to suspend their own taxes. The federal gas tax is 18.4 cents per gallon while the diesel tax is 24.4 cents a gallon. The suspension would save Americans roughly 3.6% on gas. But the move has been viewed in the past as a bad idea as it would impact funding for infrastructure projects. White House officials say the $10 billion cost of the tax suspension would be paid for without impacting the Highway Trust Fund, but did not detail new sources of revenue for it. The plan requires approval from both the House and the Senate. Biden is expected to make the announcement at 2:00 p.m. ET today. Gas Prices Continue to Fall U.S. gas prices are continuing to fall after peaking last week. AAA shows the national average for regular gas fell to $4.955/gal today from $4.968/gal yesterday. Diesel prices are unchanged at $5.812/gal. The recent drop comes as gasoline demand dipped but more Americans are expected to drive over the July 4 holiday weekend. Oil Slumps Oil prices are falling amid Biden’s push to suspend federal taxes on fuel. West Texas Intermediate crude futures are down 5.3% at under $104 bbl while Brent crude futures are down 4.7% at just above $109 bbl. The Energy Information Administration reported Tuesday that U.S. oil refining capacity fell in 2021 for the second year in a row. That capacity declined by 125,790 barrels per day last year on top of the 800,000 bpd drop in 2020. Capacity is down 5.4% from its peak in 2019. The American Petroleum Institute will release its weekly report on oil and gasoline inventories later today. Mortgage Demand Rises Despite Biggest Rate Jump in 13 Years Mortgage demand rose last week even as rates continued to soar. The Mortgage Bankers Association reported purchase applications rose 8% weekly but were still down 10% year-over-year. That increase was boosted by higher demand for adjustable-rate mortgages. ARM applications made up more than 10% of all purchase applications. The average 30-year contract rate soared to 5.98% from 5.65% the prior week. Refinance applications fell 3% last week and tumbled 77% compared to a year ago. In Case You Missed It The National Association of Realtors reported existing home sales fell 3.4% in May to a seasonally adjusted annual rate of 5.41 million units. That was the lowest reading since June 2020. Supply rose 12.6% from April to 1.16 million units but the median price still hit a new record-high at $407,600. Twitter’s (TWTR) board of directors voted unanimously Tuesday to recommend shareholders approve Elon Musk’s $44 billion takeover. The $54.20 per share offer requires shareholder approval. Musk meantime said debt financing is still needed and he is awaiting a resolution on the dispute over fake users.
Continue Reading -->Coffee With Greta: Stocks Try To Recover From Brutal Sell-Off
DJIA Futures: +417 (+1.4%) SPX Futures: +58 (+1.6%) NASDAQ Futures: +182 (+1.6%) Good morning friends! Futures are rebounding after the market suffered its worst week since 2020. Let’s get right to it! Biden Considers Gas Tax Holiday President Biden told reporters Monday he is strongly considering a federal gas tax holiday. He said he could make a decision on that proposal by the end of this week. The White House is aiming to do something to lower gas prices before the July 4 weekend. But a gas tax holiday would require Congressional approval. A gas tax holiday would eliminate some funding for the massive infrastructure law Biden signed last year. Gas Prices Continue To Cool The average U.S. gas price is continuing to cool after peaking last week. AAA shows the national average for regular gas fell to $4.968/gal today, down from the record $5.016/gal a week ago. Diesel prices also slipped today after peaking over the weekend. The national average for slipped to $5.812/gal today from the record-high $5.816/gal on Sunday. Oil Prices Rise On High Demand, Tight Supply Oil prices are rising today as high summer demand weighs on tight supply issues. West Texas Intermediate crude futures are up 2.5% at just under $111 bbl while Brent crude futures are up 1.8% at over $116 bbl. Analysts say oil demand has remained solid despite recent concerns about economic growth. Elon Musk Clarifies Tesla Layoff Plan Speaking at a Bloomberg event today, Tesla (TSLA) CEO Elon Musk clarified layoff plans at the automaker. Musk said the company will layoff 10% of salaried workers in the next three months and simultaneously expand the number of hourly employees. A leaked email to employees last week said he simply wanted to cut 10% of jobs because he had a “super bad feeling” about the economy. The cuts will end up affecting about 3.5% of Tesla’s overall workforce. Tesla shares are up 3% ahead of the open. Kellogg To Split Into 3 Companies Kellogg (K) shares are jumping 6.6% in premarket trade after announcing plans to split into three independent companies. Those will include a snacking, cereal, and plant-based company. Kellogg’s CEO said, “These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities.” The company expects the spinoffs to be complete by the end of 2023. The current CEO will lead the snacking company and executives for the other two will be announced at later dates. JetBlue Sweetens Spirit Buyout Offer Spirit Airlines (SAVE) shares are rallying 8.4% ahead of the open after JetBlue (JBLU) upped its buyout offer for the discount airline. JetBlue raised its offer to $33.50 a share from $31.50. The new offer is an effort to push Spirit into accepting this offer over the Frontier (ULCC) merger. Spirit has said it will decide between the two by the end of June.In Case You Missed It Pixar’s “Lightyear” had the best animated domestic opening since the beginning of the pandemic. The film brought in $51 million in domestic ticket sales over the weekend and $34.6 million in international ticket sales. Although that was the strongest animated film opening since before the pandemic, it fell short of analysts’ expectations for $70 million to $85 million domestically. Universal’s “Jurassic World: Dominion” brought in $58.6 million over the weekend while Paramount’s “Top Gun: Maverick” sold $44 million in tickets.
Continue Reading -->Coffee With Greta: Stocks Jump As Volatility Continues
DJIA Futures: +212 (+0.7%) SPX Futures: +32 (+0.9%) NASDAQ Futures: +118 (+1.1%) Good morning friends! Futures are rebounding despite looming recession fears as volatility continues on Wall Street. A quick reminder the market will be closed in observance of Juneteenth on Monday, so there will be no Coffee With Greta that day. Let’s get right to it! Dow Bounces After Giving Up 30,000 Dow futures are rebounding after the bluechip index plunged below 30,000 on Thursday. Wall Street gave back all, plus more, of its post-Fed rally during the session, pushing the Dow below that level for the first time since January 2021. Reality seemed to set in after the largest Fed rate hike in 28 years, that the U.S. is unlikely to avoid a recession. The Central Bank’s dot plot shows more aggressive rate hikes are expected this year. Meanwhile, Fed Chair Jerome Powell is delivering the welcoming remarks at the Inaugural Conference on the International Roles of the U.S. Dollar in Washington, D.C. this morning. All three major indexes are on track for steep weekly losses. The S&P 500 is on course for its worst week since March 2020. Biden Insists U.S. Can Avoid A Recession President Biden told AP Thursday that a recession is “not inevitable” as the Fed works to tackle inflation. Citing the 3.6% unemployment rate, Biden claimed the U.S. is “in a stronger position than any nation in the world to overcome this inflation.” He said claims that the Democrats’ American Rescue Plan in 2021 caused inflation to get worse, calling the argument “bizarre”. But Biden did admit the American people are “really, really down” after the pandemic, volatility in the economy, and soaring prices. He said, “Be confident, because I am confident we’re better positioned than any country in the world to own the second quarter of the 21st century. That’s not hyperbole, that’s a fact.” Adobe Slips On Weak Full-Year Guidance Adobe (ADBE) shares are down 4.4% ahead of the open despite beating Q2 expectations. The software maker reported adjusted earnings of $3.35 per share on $4.39 billion in revenue. That topped analysts’ expectations for adjusted EPS of $3.31 on $4.34 billion in revenue. Revenue was up 14% year-over-year. Adobe forecast Q3 revenue will rise to $4.43 billion with full-year 2022 revenue of about $17.65 billion. That’s down from its previous forecast for $17.9 billion in full-year revenue. Gas Prices Fall Again U.S. gas prices declined today for the third day in a row. AAA shows the national average for regular gas dipped to $5.000/gal today, down from $5.009/gal on Thursday. The recent drop in prices comes as gasoline demand has pulled back a bit. The Energy Information Administration says U.S. demand fell to 9.09 million barrels per day from 9.2 million. But diesel prices are still pushing to new records. The national average for diesel jumped to $5.798/gal today from $5.786 on Thursday. Oil Prices Dip Oil prices are slightly lower this morning as the market continues to weigh tight supply concerns against recession fears. West Texas Intermediate crude futures are down 0.4% at $117 bbl while Brent crude futures are 0.1% lower at just under $120 bbl. Prices are on track for a weekly decline following the Fed rate hike. It would be the first weekly drop for Brent crude in five weeks and WTI crude in eight weeks. Leading Economic Indicators Expected to Fall Economists expect the U.S. economy softened further in May. The Conference Board releases its leading economic index at 10:00 a.m. ET today. That index is expected to fall to 0.4% after slipping 0.3% in April. The LEI is a weighted gauge of 10 economic indicators. One of those indicators is building permits, which plunged 7% in May. Another is consumer confidence, which fell 2.2 points last month. In Case You Missed It Elon Musk held a town hall meeting with Twitter (TWTR) employees on Thursday. Employees submitted questions beforehand that they wanted the Tesla (TSLA) CEO to answer. Musk emphasized his focus on free speech, building trust with employees, in-person work, and the possibility of layoffs. He said “Right now the costs exceed the revenue… Anyone who is a signification contributor has nothing to worry about.” He also set a goal of reaching 1 billion daily active users. In Q1, Twitter said it had 229 million DAUs. The U.S. Global Jets ETF (JETS) tumbled 5.9% on Thursday as recession fears threaten to dent surging travel demand. American Airlines (AAL) plunged 8.6% to $12.16, its lowest level since November 2020. Southwest Airlines (LUV) hit a nearly two-year low, dropping 6% to $34.98.
Continue Reading -->Coffee With Greta: The Post-Fed Rally Collapses
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -461 (-1.5%) SPX Futures: -68 (-1.8%) NASDAQ Futures: -231 (-2%) Good morning friends! Futures are tumbling as the market gives up Wednesday’s post-Fed rally. Let’s get right to it! Treasury Yields Jump Treasury yields are rising today as central banks around the world join the U.S. Fed in getting more aggressive on inflation. The 10-year yield is up 13 basis points at 3.42% while the 2-year yield is up just 4 basis points at 3.26%. Those yields rise as traders sell-off Treasury notes and bonds. The recent spike in yields is a signal the market does not have faith in the short-term strength of the economy and a recession is likely looming. Fed Gets Aggressive Stocks rallied on Wednesday after the Fed approved a 0.75% rate hike, its largest since 1994. The Dow closed up 1% while the Nasdaq settled 2.5% higher and the S&P 500 rose 1.5%. Fed Chair Jerome Powell signaled the Central Bank will stay aggressive on inflation moving forward. In his post-meeting press conference, Powell said the Fed determined the larger rate hike was needed after the “upward surprise” in the May CPI. He said the bank will consider either a 50 or 75 basis point hike at the July meeting and they believe “front-loading” rate hikes is appropriate. The Fed also modified its projections for rates and the economy. The bank now sees the federal funds rate rising to 3.4% by the end of this year, up 1.5% from the March forecast. The Fed is projecting PCE inflation to remain at 5.4% at the end of 2022 vs 4.3% in March. The bank also slashed its 2022 GDP forecast to 1.7% from 2.8% in March. Check out the updated projections here. Weekly Jobless Claims Fall Less Than Expected Weekly jobless claims fell less than expected last week, remaining near a 5-month high. The Labor Department reported 229,000 Americans filed initial unemployment claims. That was down 3,000 from the previous week’s revised level but higher than expectations for 220,000. Continuing jobless claims were unchanged at 1.31 million in the week ending June 4. Housing Starts, Building Permits Tumble In May Homebuilder stocks are falling ahead of the open after U.S. home construction slowed sharply in May. The Census Bureau reported housing starts plunged 14.4% last month to a seasonally adjusted annual rate of 1.55 million units. That missed economists’ expectations for a SAAR of 1.68 million units. Toll Brothers (TOLL) shares are down 2.3% while Lennar (LEN) is slipping 2.5%. That slowdown in building is expected to continue as building permits fell 7% to a SAAR of 1.7 million units vs 1.78 million expected. Starts on single-family homes fell 9.2% with permits falling 5.5%. Apartment starts plunged 26.8% and permits dropped 10%. Higher mortgage rates are slowing demand across the housing market, including for new construction. Mortgage News Daily shows the average 30-year rate slipped to 6.03% today after hitting 6.28% earlier this week. Gas Prices Fall U.S. gas prices fell further overnight. AAA shows the national average for regular gas dipped to $5.009/gal today, down from $5.014/gal on Wednesday. That price is still 52 cents higher than a month ago and $1.934 higher than a year ago. But diesel prices are still pushing to new records. The national average for diesel jumped to $5.786/gal today from $5.780 on Wednesday Oil Prices Fall After Fed Rate Hike Oil prices are falling today on economic growth concerns after the Fed rate hike on Wednesday. West Texas Intermediate crude futures are down 1.3% at under $114 bbl while Brent crude futures are down 1.2% at $117 bbl. The Energy Information Administration reported Wednesday that U.S. crude production increased by 100,000 barrels per day last week to 12 million bpd. That’s the highest level since April 2020. The EIA also reported that U.S. crude inventories rose by 2 million barrels vs expectations for 1.1 million barrel decrease. But gas stockpiles fell by 700,000 barrels vs expectations for a 100,000 barrel increase. In a letter to Exxon Mobil (XOM) and Chevron (CVX), President Biden said, “At a time of war – historically high refinery profit margins being passed directly onto American families are not acceptable.” He demanded U.S. refineries “take immediate actions to increase the supply of gasoline, diesel, and other refined product.” Revlon Files for Bankruptcy Revlon (REV) shares have been halted in the premarket session after the cosmetics giant filed for Chapter 11 bankruptcy protection. The company filed Wednesday evening, citing a large debt load and supply chain struggles. Revlon said it expects to receive $575 million in debtor-in-possession financing from its existing lenders. The filing said the company is unable to timely fill nearly 1/3 of consumer demand due to issues in the supply chain. The President and CEO said, “Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth.” She added, “Our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand.” In Case You Missed It Homebuilder sentiment tumbled to a 2-year low this month. The National Association of Homebuilders sentiment index fell 2 points to 67, in line with economists’ expectations. That was the lowest reading since June 2020. Buyer traffic tumbled 5 points to 48, falling into negative territory for the first time since June 2020.
Continue Reading -->Coffee With Greta: Stocks Bounce on Fed Decision Day
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +191 (+0.6%) SPX Futures: +31 (+0.8%) NASDAQ Futures: +115 (+1%) Good morning friends! Futures are rising as traders brace for a big Fed rate hike. Let’s get right to it! Fed Decision Day The Federal Reserve releases its rate hike decision at 2:00 p.m. ET today with Chair Jerome Powell’s press conference at 2:30 p.m. ET. CME Group’s FedWatch Tool shows the market sees a 98.6% chance the Central Bank will raise the federal funds rate by 0.75%. Traders ramped up those expectations after the May CPI and PPI both came in hot. It would be the biggest hike in 28 years, as inflation stands at a more than 40-year high. Analysts expect a steep sell-off if the Fed sticks with a 50 basis point hike instead as the bank appears to be way behind on inflation. The bank is also expected to adjust its future outlook for more aggressive hikes. Economists expect the Fed to lower its GDP forecast and raise its forecast for inflation and unemployment. Retail Sales Drop U.S. retail sales fell for the first time in five months in May as inflation squeezes consumer spending. The Commerce Department reported retail sales fell 0.3% last month to $672.9 billion. That missed economists’ expectations for a 0.1% increase. Gasoline sales surged 43.2% compared to a year ago as gas prices began their record-breaking climb in May. The monthly drop in overall retail sales was mostly due to a decline in auto purchases. Excluding autos and gasoline, so-called core retail sales rose 0.1%. But that was lower than expectations for a 0.8% increase. And when adjusted for inflation, real retail sales tumbled more than 1%. Crypto Collapse Continues The meltdown in the crypto market is continuing. Bitcoin is down 4.6% in the past 24 hours at just over $21,000 while Ethereum is 7.6% lower at $1,100. Bitcoin hit a low of around $20,200 earlier in the morning. The coin is down more than 70% from its all-time high in November. Coinbase (COIN) shares are sliding 1.9% ahead of the open. Gas Prices Slip from Record-High U.S. gas prices took a break from their record-breaking climb today. AAA shows the national average for regular gas dipped back to $5.014/gal today, down from $5.016/gal on Tuesday. That price is still 54 cents higher than a month ago and $1.938 higher than a year ago. But diesel prices did not follow suit. The national average for diesel jumped to $5.780/gal today from $5.775 on Tuesday. Oil Prices Fall Ahead of Fed Rate Hike Oil prices are slipping amid fears of an economic slowdown ahead of the Fed rate hike. West Texas Intermediate crude futures are down 0.4% at $118 bbl while Brent crude futures are falling 0.2% to $121 bbl. The American Petroleum Institute reported late Tuesday that U.S. crude inventories rose by 736,000 barrels last week while gasoline stockpiles fell by 2.2 million barrels. The Energy Information Administration reports official inventory levels today. Analysts expect the EIA to report a 1.1 million barrel decline in crude inventories and a 100,000 barrel increase in gas inventories. Mortgage Demand Rebounds, Rates Soar Mortgage demand rose slightly last week but is still down sharply compared to a year ago. The Mortgage Bankers Association reports new purchase applications rose 8% weekly but were down 16% year-over-year. Refinance applications were up 4% weekly and plunged 76% annually. Overall application volume was down 52.7% compared to a year ago. The average 30-year contract rate rose to 5.65% last week from 5.40% the week before. But that rate has since skyrocketed. Mortgage News Daily shows the average 30-year rate rose 10 basis points on Tuesday alone, to 6.28%. That jump came after a 33 basis point increase on Monday. It’s the first time mortgage rates have been above 6% since 2008. Homebuilder Sentiment Expected To Fall The National Association of Homebuilders releases its June sentiment index at 10:00 a.m. ET. That survey is expected to fall to 67 from the 2-year low of 69 in May. The index measures sentiment about current market conditions, buyer traffic, and expectations for 6-months from now. It would be the fifth straight month of declining sentiment as builders struggle with ongoing supply chain issues, a labor shortage, and now rising mortgage rates. In Case You Missed It Compass (COMP) and Redfin (RDFN) announced job cuts on Tuesday as the housing market slows. Compass is cutting 10% of its total workforce while Redfin is laying off about 8% of its employees. The job cuts come as rapidly rising mortgage rates have squeezed homebuyers.
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