All posts by Greta Wall
Coffee With Greta: Housing Market Still Strong
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: +9 (+0.02%) SPX Futures: -1.5 (-0.03%) NASDAQ Futures: -15 (-0.1%) Good morning friends! Futures are mixed as traders digest new economic data and Q1 earnings. Let’s get right to it! Housing Starts, Building Permits Beat Expectations U.S. home construction rose more than expected last month even as mortgage rates surged. The Census Bureau reported housing starts rose 0.3% in March to a seasonally adjusted annualized rate of 1.79 million units. That was better than economists’ expectations for a SAAR of 1.73 million units. Housing starts were 4% higher year-over-year. But that growth was centered in multi-family units. Single-family starts fell 1.7% from February to March while multi-family starts jumped 7.5%. The strength in building is expected to continue as the number of permits approved for future projects also rose more than expected. The Census Bureau reported permits rose 0.4% to a SAAR of 1.87 million units vs 1.82 million units expected. Single-family permits fell 4.8% monthly while multi-family starts surged 10.9%. Johnson & Johnson Lowers 2022 Outlook Johnson & Johnson (JNJ) shares are down 0.7% ahead of the open after beating Q1 profit expectations and lowering its full-year guidance. The pharmaceutical giant reported earnings of $2.67 per share vs $2.58 expected. Revenue came in short at $23.4 billion vs analysts’ expectations for $23.6 billion. The company said it sold $457 million of its Covid vaccine globally last quarter. But J&J is no longer providing specific guidance for Covid vaccine sales. The company lowered its 2022 sales forecast by about $1 billion to between $94.8 billion and $95.8 billion. J&J lowered its earnings forecast by about $0.25 per share to between $10.15 and $10.35. Hasbro Misses Q1 Earnings Expectations Hasbro (HAS) shares are up 0.3% in premarket trade despite missing Q1 profit expectations. The toymaker reported adjusted earnings of $0.57 per share vs analysts’ estimates for $0.61. Revenue of $1.16 billion was better than $1.15 billion expected. Hasbro warned Russia’s invasion of Ukraine will cost it about $100 million in revenue this year. The company forecast fiscal 2022 profit growth in the mid-single digits, up from the previous guidance for growth in the low-single digits. Netflix Earnings On Deck Netflix (NFLX) shares are flat ahead of the open as traders look ahead to the streaming giant’s Q1 earnings this afternoon. The company will be the first of the FAANG stocks to report this earnings season. Netflix had a weak Q1 forecast in its Q4 earnings in January, projecting just 2.5 million net new subscribers. The company forecast revenue of $7.9 billion. Traders are focused on Netflix’s outlook for Q2, which has historically been the company’s weakest each year. Treasury Yields Jump U.S. Treasury yields are continuing to rally as traders remain concerned about inflation. The yield on the 10-year Treasury note is up 5 basis points at 2.92%. That’s the highest level since late-2018. But the curve between the 2-year and 10-year yield remains positive. The 2-year yield is up 6 basis points to 2.53% Oil Slides on Demand Concerns Oil prices are falling today amid new demand concerns. West Texas Intermediate crude futures are down 2.4% to under $106 bbl while Brent crude futures are down 2.4% to about $110 bbl. The drop comes despite Libya halting some exports due to closures at some of its facilities. The IMF is set to release its World Economic Outlook today. Analysts expect that growth forecast to be lower due to the war in Ukraine. Natural Gas Prices Cool After Hitting 13-year High U.S. natural gas prices are cooling today after surging to the highest level in more than 13 years on Monday. LNG futures are down 4.9% at $7.44 per million British thermal units. This comes after futures hit a high of $8.05 per million British thermal units Monday, the highest price since September 2008. U.S. LNG prices are still up more than 100% YTD. The rally comes as the war in Ukraine continues to squeeze the global energy market. Forecasters are also now expecting cooler spring temperatures this year, heightening the potential demand for natural gas. In Case You Missed It A federal judge in Florida overturned the CDC’s mask mandate for public transportation Monday. The judge ruled the agency overstepped its authority when issuing the mandate. The Biden Administration confirmed TSA is no longer enforcing the mandate after that decision. The White House press secretary said they are reviewing the ruling and the Justice Department will decide whether or not to appeal. The National Association of Homebuilders Sentiment Index fell 2 points this month to 77. That drop was in-line with expectations and marks the 4th straight decline. Sentiment about current sales conditions fell 2 points to 85, buyer traffic tumbled 6 points to 60, and 6-month sales expectations rose 3 points to 73. The drop in sentiment comes as mortgage rates have spiked over the past month, squeezing more buyers out of the market.
Continue Reading -->Coffee With Greta: 3-Year High for the 10-Year Yield
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: -37 (-0.1%) SPX Futures: -11 (-0.3%) NASDAQ Futures: -48 (-0.4%) Good morning friends! Futures are lower as Treasury yields pop and traders prepare for a big week of earnings. Let’s get right to it! 10-Year Yield Spikes to Fresh 3-Year High The 10-year Treasury yield spiked to a new 3-year high this morning as traders continue to assess the inflation picture. That yield is currently up three basis points to 2.86% after hitting a high above 2.87% earlier today, the highest level since late 2018. The rally in the bond market comes after the CPI hit the highest level since 1981 in March and the PPI hit a record-high. CME Group’s FedWatch Tool shows 88.8% of traders expect a 0.5% rate hike at the next Fed meeting in response to that high inflation. Oil Prices Hold Higher Oil prices are sitting at nearly three-week highs as Russia continues its attacks in Ukraine. West Texas Intermediate crude futures are 0.5% higher at $107.50 bbl while Brent crude futures are up 0.7% to $112.50 bbl. The EU has been discussing a phased-in ban of Russian oil imports but Germany has so far not supported the embargo. The Biden Administration is resuming selling leases for oil and gas drilling on federal lands. The Interior Department is set to release a sale notice today for leases to drill on 144,000 acres. The move comes as the White House has faced increased pressure to give Americans relief from high gas prices. But experts say it will take at least 6 months to a year for any new drilling to produce additional supply that would impact the price of gas. Bank of America Gains on Earnings Beat Bank of America (BAC) shares are up 0.9% ahead of the open after topping Q1 expectations. The bank reported earnings of $0.80 per share on $23.33 billion in revenue. That was better than analysts’ expectations for earnings of $0.75 per share on $23.2 billion in revenue. Net loan charge-offs dropped 52% year-over-year to $392 million. That was sharply lower than Wall Street’s expectations for $848.7 million. Bank of America also released $362 million from its loan loss reserves. DiDi Global Tumbles on Revenue Drop, De-listing Plans DiDi Global (DIDI) shares are plunging 18.7% in premarket trade after reporting a sharp decline in Q4 revenue. The Chinese ride-share service’s revenue tumbled 12.7% year-over-year to $6.4 billion at the end of 2021. Revenue from its core ride-hailing business in China plunged 15.1% annually. DiDi also said it will hold a shareholder’s meeting on May 23 to vote on delisting from the New York Stock Exchange. The company is under a cybersecurity investigation in China. Chinese Q1 GDP Stronger Than Expected China’s economy expanded faster than expected in the first quarter. Beijing’s National Bureau of Statistics reported today that GDP rose 4.8% year-over-year last quarter vs 4.4% growth expected. Fixed asset investment rose 9.3% annually vs 8.5% expected. The increase came as China’s industrial production rose 5% year-over-year in March vs 4.5% expected. But retail sales tumbled 3.5% annually last month vs a 1.6% decline expected. Economic growth is expected to slow in China in Q2 after a new Covid outbreak prompted new lockdowns. Homebuilder Optimism Preview The National Association of Homebuilders releases its optimism index for April at 10:00 a.m. ET. That survey is expected to show confidence among builders fell by 2 points this month to 77. Builders have struggled with severe supply and labor shortages while buyer demand remains at a record high. In Case You Missed It Twitter’s (TWTR) board of directors voted unanimously Friday to adopt a limited duration shareholder rights plan. That vote came in response to Tesla (TSLA) CEO Elon Musk’s $43 billion offer to buy the company. The so-called “poison pill” will allow shareholders to buy more TWTR stock at a discounted price if any person or group purchases a 15% or greater stake without board approval. The plan will expire on April 14, 2023. Twitter shares are up 2.8% ahead of the open.
Continue Reading -->Coffee With Greta: Elon Musk Wants to Buy Twitter
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: +7 (+0.03%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -22 (-0.2%) Good morning friends! A quick heads up there will be no Coffee with Greta tomorrow morning, the market is closed! Futures are flat as traders assess a huge Twitter buyout offer from Elon Musk, Q1 earnings, and new economic data. Let’s get right to it! Elon Musk Offers to Buyout Twitter Twitter (TWTR) shares are up 6.3% ahead of the open after Tesla (TSLA) CEO Elon Musk offered to buy the social media company for $43 billion. A new SEC filing shows Musk offered to buy the company for $54.20 per share. In a letter to Twitter Chairman Bret Taylor, Musk said, “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy”. He said the company “will neither thrive nor serve this social imperative in its current form. Twitter needs to be transformed as a private company”. Musk said this is his “best and final offer” and he will have to reconsider holding the stock if it is not accepted. In a statement, Twitter said, “The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders”. Morgan Stanley Tops Q1 Expectations Morgan Stanley (MS) shares are up 1.5% in premarket trade after reporting strong Q1 earnings. The bank reported earnings of $2.02 per share on $14.8 billion in revenue. That topped analysts’ expectations for EPS of $1.68 on $14.2 billion in revenue. The beat came as trading revenue rose more than expected. Morgan Stanley reported $3.2 billion in equity trading revenue vs $2.7 billion expected. Fixed income trading revenue rose to $2.9 billion vs $2.2 billion expected. But the bank’s $5.9 billion wealth management revenue was shy of expectations for $6.2 billion. Investment banking revenue came in at $1.6 billion vs the $1.8 billion estimate. Citigroup Beats Q1 Estimates Citigroup (C) shares are 1.8% higher ahead of the open as strong trading revenue boosted its Q1 results. The bank reported earnings of $2.02 per share on $19.19 billion in revenue. That was better than analysts’ expectations for EPS of $1.55 on $18.15 billion in revenue. Earnings were down 46% year-over-year due to higher expenses and credit costs and lower revenues. Revenue dipped 2% annually. Citigroup is expected to take the biggest hit of all U.S. banks from the war in Ukraine. The bank has operations in more than 100 countries. Goldman Sachs Crushes Q1 Expectations Goldman Sachs (GS) shares are up 1.5% in premarket trade after crushing Q1 expectations. The bank reported earnings of $10.76 per share on $12.93 billion in revenue. That dominated analysts’ expectations for EPS of $8.89 on $11.83 billion in revenue. CEO David Solomon said, “The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill.” Fixed income, currency, and commodities trading revenue surged 21% from a year earlier to $4.72 billion. That topped analysts’ estimates for $3.04 billion. Equities trading revenue fell 15% year-over-year to $3.15 billion but still beat expectations. Wells Fargo Q1 Revenue Falls Short Wells Fargo (WFC) shares are down 3.4% ahead of the open after missing Q1 revenue expectations. The consumer bank reported earnings of $0.88 per share vs expectations for $0.80 EPS. But $17.59 billion in revenue was short of analysts’ expectations for $17.8 billion. That miss came as rising mortgage rates caused a 33% year-over-year decline in home lending. Mortgage banking totaled just $693 million in Q1 vs analysts’ expectations for $880 million. UnitedHealth Group Raises Forecast After Strong Q1 UnitedHealth Group (UNH) shares are up 0.5% in premarket trade after a better-than-expected Q1. The health insurance giant reported earnings of $5.49 per share on $80.1 billion in revenue. That topped analysts’ expectations for EPS of $5.37 on $78.8 billion in revenue. Revenue at its pharmacy division, Optum, rose 19% year-over-year to $43.1 billion. UnitedHealth boosted its full-year earnings forecast by $0.10 to between $21.20 and $21.70 per share. Rent the Runway Beats Fiscal Q4 Expectations Rent the Runway (RENT) shares are down 1.2% ahead of the open after crushing fiscal Q4 expectations. The clothing rental service reported a loss of $0.62 per share on $64.1 million in revenue. That was better than analysts’ expectations for a loss of $0.71 per share on $63.3 million in revenue. The CEO said, “the inflationary environment is basically a competitive advantage for Rent the Runway.” The company forecast fiscal Q1 between $63.5 million to $64.5 million and full-year fiscal 2022 revenue between $295 million and $305 million. Retail Sales Fall Short in March U.S. retail sales rose less than expected last month. The Commerce Department reported retail sales rose 0.5% to $665.7 billion. Economists were expecting a gain of 0.6%. But the increase was all thanks to higher gas prices as gasoline sales surged 8.9%. Spending at gas stations was up 37% compared to March 2021 while spending at restaurants and bars jumped 19.4%. Excluding gas stations, retail sales fell 0.3% in March. February’s retail sales were revised higher to $662.4 billion. This data is not adjusted for inflation. Weekly Jobless Claims Rise Weekly jobless claims rose more than expected last week. The Labor Department reported 185,000 Americans filed initial claims for unemployment benefits. That was up 18,000 from the previous week’s revised level and higher than expectations for 172,000. Continuing claims fell by 48,000 to 1.48 million in the week ending April 2. Fed’s Waller Predicts 0.5% Rate Hikes Fed Governor Christopher Waller told CNBC Wednesday that he expects multiple 0.5% rate hikes at future meetings. In an interview, Waller said, “I
Continue Reading -->Coffee With Greta: Another Inflation Record!
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: -10 (-0.03%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +40 (+0.3%) Good morning friends! Futures are flat after more inflation data and the beginning of Q1 earnings season. Let’s get right to it! Producer Inflation Hits Record High Producer side inflation pressures hit a record high in March. The Bureau of Labor Statistics’ producer price index surged 11.2% year-over-year. That’s the strongest gain on record in the survey which dates back to November 2010. The PPI rose 1.4% monthly vs 1.1% expected. The core PPI, which excludes food, energy, and trade services, rose 0.9% monthly and 7% year-over-year. The PPI is a forward-looking indicator for consumer prices as producers pass down higher costs. This comes after the CPI surged 8.5% year-over-year in March, marking the fastest pace of inflation since December 1981. Inflation Eats into Wage Gains The Bureau of Economic Analysis reported real average hourly earnings fell 0.8% from February to March. The decline came as earnings rose 0.4% while consumer prices rose 1.2%. Real average weekly earnings plunged 3.6% year-over-year, the largest decline on record. JPMorgan Chase Slips on Earnings Miss JPMorgan Chase (JPM) shares are down 3.6% ahead of the open after missing Q1 expectations. The largest bank in the U.S. reported earnings of $2.63 per share on $30.7 billion in revenue. That missed analysts’ expectations for EPS of $2.72 on $30.59 billion in revenue. JPMorgan set aside $902 million in loan loss reserves and said it lost $524 million due to the market impact of Russia’s invasion of Ukraine. The bank announced a $30 billion buyback program. Delta Airlines Rallies on Strong Forecast Delta Airlines (DAL) shares are up 5.6% in premarket trade after beating Q1 expectations. The airline reported an adjusted loss of $1.23 per share on $9.35 billion in revenue. That was better than analysts’ expectations for a per-share loss of $1.27 on $8.92 billion in revenue. Delta’s fuel bill was 6% higher in Q1 compared to 2019 despite capacity being 17% lower. The company forecast costs will rise 17% this quarter. Delta logged the highest bookings in company history in March. The airline said it expects to return to profitability in Q2 and plans to fly 84% of its 2019 capacity levels. Bed Bath and Beyond Tumbles on Surprise Loss Bed Bath & Beyond (BBBY) shares are down 11.3% ahead of the open after reporting a surprise Q4 loss. The retailer reported a loss of $0.92 per share on $2.05 billion in revenue. That sharply missed analysts’ expectations for a profit of $0.03 per share on $2.07 billion in revenue. Same-store sales fell 12% year over year while digital sales tumbled 18%. The CEO blamed the loss on “major headwinds in the macro-environment” that have slowed the company’s turnaround efforts. Oil Prices Rise on Supply Worries Oil prices are rising for the second day in a row as supply concerns remain. West Texas Intermediate crude futures are up 1.6% to over $102 bbl while Brent crude futures are up 1.8% to $106.50 bbl. Moscow said peace talks with Ukraine hit a dead end, killing hope that the situation would be de-escalated anytime soon. At an event in Iowa Tuesday, President Biden announced the EPA will allow higher ethanol levels in gas this summer to combat high prices. The agency issued a waiver allowing gas with 15% levels of ethanol to be sold between June 1 and September 15. Ethanol levels are usually limited to 10% during the summer. The White House estimates this initiative will save Americans 10 cents per gallon on average. Federal Budget Deficit Narrows Sharply The U.S. federal budget deficit narrowed 71% in March from a year earlier as pandemic spending plunged. The government ran a $193 billion deficit last month. The Treasury Department reported spending fell 45% year-over-year to $508 billion while government receipts rose 18% to $315 billion. Revenue totaled $2.1 trillion through March, a record-high for the first six months of a fiscal year. In that same time period, the federal deficit was at $668 billion. That’s down 61% compared to a year ago. The huge annual decline in the deficit reflected a sharp drop in pandemic spending as the last stimulus package was approved by Congress in March 2021. In Case You Missed It Small business optimism tumbled to a 1-year low in February. The NFIB Optimism Index dropped 2.4 points to 93.2 vs expectations for 95.3. 26% of small business owners cited inflation as their #1 problem, the highest since Q3 1981. A record-high 68% of owners said they are raising prices. U.S. airfares surged in March as high fuel prices hit travelers. The Adobe Digital Economy Index shows consumers spent $8.8 billion on domestic airline tickets last month. That’s up 28% compared to March 2019. Prices were up 20% compared to pre-pandemic levels while bookings only rose 12%.
Continue Reading -->Coffee With Greta: Inflation Skyrockets in March
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: +133 (+0.4%) SPX Futures: +31 (+0.7%) NASDAQ Futures: +196 (+1.4%) Good morning friends! Futures are higher as the latest CPI data shows inflation may be peaking. Let’s get right to it! Red HOT Inflation U.S. inflation pressures skyrocketed in March. The Bureau of Labor Statistics’ Consumer Price Index surged 8.5% year-over-year last month. That was hotter than the 8.4% expected and is the highest since December 1981. The Core CPI, which excludes food and energy prices, jumped 6.5% annually. That was the hottest reading since August 1982. On a monthly basis, headline inflation rose 1.2% and core inflation rose 0.3%. Energy prices led the gains last month as oil and gas prices soared due to Russia’s invasion of Ukraine. The CPI shows gas prices jumped 48% year-over-year while fuel oil prices surged 70.1%. Food prices continued to see strong gains with grocery prices up 10% year-over-year. The White House blamed Russian President Vladimir Putin for the latest spike in inflation. In a briefing Monday, press secretary Jen Psaki warned, “We expect March CPI headline inflation to be extraordinarily elevated due to Putin’s price hike”. Consumer Inflation Fears Hit Record U.S. consumers are expecting inflation to remain a major problem. The New York Fed’s released its March Survey of Consumer Expectations Monday, which showed Americans expect inflation to still be at 6.6% 1-year from now. That’s a record high for the survey which dates back to 2013. Consumers’ 3-year inflation expectations came in at 3.7%. 1-year and 3-year inflation uncertainty also hit a record high at 4.5% and 4.0% respectively. Household spending expectations surged to a record 7.7%. Treasury Yields Slip After Hot Inflation Reading U.S. Treasury yields are slipping after the release of the March CPI. The 10-year yield is down seven basis points to 2.71% after popping to 2.82% earlier this morning. That was the highest yield seen since December 2018. Bitcoin Tumbles Below $40,000 Bitcoin is sitting at $40,300 after falling below $40,000 Monday for the first time since March 16. The largest cryptocurrency in the world is down 2.2% in the past 24 hours. Tech stocks and cryptocurrencies have suffered from traders dumping risk assets as Treasury yields surge. Crypto trades independently of the stock market but there has been a higher correlation between the two in recent months with the Fed preparing to tighten more aggressively. Oil Prices Rise After OPEC Supply Warning Oil prices are rebounding after a supply warning from OPEC. West Texas Intermediate crude futures are up 3.9% to $98 per barrel while Brent crude futures are up more than 4% to over $102 per barrel. This comes after OPEC said Tuesday it expects a loss of 7 million barrels per day or Russian oil and other exports. The group said it would be impossible to replace that supply. CarMax Slides on Earnings Miss CarMax (KMX) shares are down 4.5% ahead of the open after missing fiscal Q4 profit expectations. The auto retailer reported earnings of $0.98 per share vs $1.27 expected. But revenue of $7.687 billion beat the consensus estimate for $7.499 billion. The CEO blamed”declining consumer confidence, the omicron-fueled surge in COVID cases, vehicle affordability, and the lapping of stimulus benefits paid in the prior year period” for the profit miss. CarMax plans to open 10 new stores in fiscal 2023. Albertsons Slips Despite Earnings Beat Albertsons (ACI) shares are down 3% in premarket trade despite beating fiscal Q4 expectations. The grocery chain reported earnings of $0.79 per share on $17.384 billion in revenue. That topped analysts’ expectations for EPS of $0.75 on $16.773 billion in revenue. Identical sales jumped 7.5% year-over-year, crushing expectations for 4.3%. Albertsons forecast fiscal 2022 identical sales growth between 2% and 3% and adjusted EPS between $2.70 and $2.85. That was better than the consensus estimate for 1.8% growth and EPS of $2.79. Beyond Meat Expands Distribution Beyond Meat (BYND) shares are rising 4.1% ahead of the open after announcing it is expanding its meatless chicken tenders distribution. The company’s tenders will now be available at 8,000 new grocery, pharmacy, and big-box retail locations. Those include select Albertsons, Sprouts, Whole Foods Market, and CVS locations. All Kroger locations in the U.S. will carry the meatless chicken tenders by the end of the month. In Case You Missed It Elon Musk decided not to join Twitter’s (TWTR) board of directors after becoming the company’s largest shareholder. Twitter CEO Parag Agrawal announced that decision in a tweet over the weekend. But he said, “Elon is our biggest shareholder and we will remain open to his input.” Musk holds a 9.4% stake in the social media giant. Shopify (SHOP) shares closed 2.4% higher Monday after announcing plans for a 10:1 stock split. The e-commerce company plans to implement that split after the market closes on June 28. The plan still needs approval from two-thirds of shareholders.
Continue Reading -->Coffee With Greta: Inflation Week Begins
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: -149 (-0.4%) SPX Futures: -33 (-0.7%) NASDAQ Futures: -175 (-1.2%) Good morning friends! Futures are lower as the market gets ready for a new week of trade focused on inflation and earnings. Let’s get right to it! Inflation Week Begins Traders are gearing up for a big week of economic data and the start of Q1 earnings season. All eyes are on Tuesday morning, with the Labor Department set to release the March Consumer Price Index. That’s expected to show inflation surged to an 8.4% annualized rate last month, with the Core CPI jumping 6.6%. The Producer Price Index will be released Wednesday morning and then retail sales Thursday morning. The Q1 earnings season “unofficially” begins with JPMorgan Chase (JPM) Wednesday morning. Other key earnings reports this week include Delta Airlines (DAL), Wells Fargo (WFC), Morgan Stanley (MS), Goldman Sachs (GS), and Citigroup (C). Elon Musk Snubs Twitter Board Twitter (TWTR) shares are down 3.6% ahead of the open after the company’s CEO announced Elon Musk will not join the board of directors after all. In a tweet, Parag Agrawal said “Elon has decided not to join our board”. Elon has decided not to join our board. I sent a brief note to the company, sharing with you all here. pic.twitter.com/lfrXACavvk — Parag Agrawal (@paraga) April 11, 2022 Agrawal included a note he sent to the company which said, “We have and will always value input from our shareholders whether they are on the Board or not. Elon is our biggest shareholder and we will remain open to his input.” It’s unclear what Musk now plans to do with his stake or whether he will purchase more shares of the company. Shopify Plans 10-for-1 Stock Split Shopify (SHOP) shares are up 2.1% in premarket trade after the ecommerce start-up announced plans for a stock split. The company proposed a 10-for-1 split of both the Class A and Class B shares. That plan must be approved by at least two-thirds of shareholders and the split would take effect after the close on June 28. Shopify is also requesting a “founder share” for CEO Tobi Lutke. That plan would issue a new class of non-transferable founder shares to Lutke. When combined with his existing Class B shares, that move would give him 40% voting power. Nio Raises Prices, Suspends Production NIO (NIO) shares are tumbling 10% ahead of the open after the Chinese electric automaker announced new price hikes and production delays. The company raised the price for its three SUVs by 10,000 yuan, effective May 10. Nio blamed the price hikes on rising material costs with the CEO saying, “We have no alternative but to raise prices. Please be understanding.” The automaker also suspended production due to new Covid restrictions in China impacting its suppliers. JetBlue Cuts Down Summer Flight Schedule JetBlue (JBLU) shares are up 0.7% in premarket trade after the airline informed staff it’s planning to trim its summer schedule. In an email to employees Saturday, JetBlue’s COO and president said “We’ve already reduced May capacity 8-10% and you can expect to see a similar size capacity pull for the remainder of the summer”. The company canceled more than 300 flights over the weekend. The schedule announcement comes after the airline offered its flight attendants $1,000 bonuses for the spring travel season. Flight attendants are eligible for that bonus if they do not call out sick between April 8 and May 31. U.S. airlines have struggled with severe staffing shortages following the pandemic. Oil Extends Slide Oil prices are still sliding on plans for a major global reserve release and demand concerns caused by Covid lockdowns in China. West Texas Intermediate crude futures are down 4.3% to $94 per barrel while Brent crude futures are down 4% to over $98 per barrel. The drop comes as the 240 million barrel release announced by IEA member nations and the U.S. is expected to ease market pressures over the next few months. The release will equal about 1.3 million barrels per day, offsetting the shortfall of 1 million barrels per day of Russian oil. But the EU is still considering a possible ban of Russian oil, which would create a more severe gap in supply. Treasury Yields Extend Rally The 10-year Treasury yield hit a fresh 3-year high over the weekend as the market gets ready for key inflation data this week. The yield is currently up 10 basis points to 2.76% after topping 2.77% Sunday evening. The recent spike in yields comes as the market prepares for the Fed to get more aggressive on inflation at upcoming meetings. Fed Governor Michelle Bowman is set to speak at 9:30 a.m. ET. NY Fed Inflation Expectations The New York Fed releases its March Survey of Consumer Expectations at 11:00 a.m. ET. The survey includes consumer forecasts for inflation in 1-year and 3-years. In February, consumers expected inflation to remain at 6% 1-year from now and 3.8% 3-years from now.
Continue Reading -->Coffee With Greta: Spirit Considers JetBlue’s Offer
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: +110 (+0.3%) SPX Futures: +9 (+0.2%) NASDAQ Futures: +13 (+0.1%) Good morning friends! Futures are up as the market looks to shake off the Fed’s aggressive tightening plans. Let’s get right to it! Spirit Considers JetBlue’s Takeover Offer Spirit Airlines (SAVE) shares are up 1.4% in premarket trade after the discount airline said it will begin talks with JetBlue (JBLU) about a takeover. JetBlue offered Spirit a $3.6 billion cash buyout earlier this week. Spirit said the JetBlue deal could likely lead to a “superior proposal” to the planned merger with Frontier (ULCC). JetBlue’s CEO said, “We look forward to engaging with the Spirit Board to finalize our combination, to create a national low-fare challenger to the four large dominant U.S. carriers that will result in lower fares and better service for customers”. 10-Year Treasury Yield Hits Fresh 3-Year High The 10-year Treasury yield popped over night, rising to a fresh 3-year high at 2.69%. That yield ended last week at just 2.38% and started 2022 at 1.63%. The recent rally in the 10-year yield has been prompted by the Fed’s aggressive plans to tighten monetary policy. The 2-year yield is sitting at 2.52%, meaning the spread between the 10-year and 2-year is positive. But the 30-year and 5-year yield curve remains inverted. The 30-year yield is 2.72% while the 5-year yield is 2.76%. Oil On Track for Losing Week Oil prices are up this morning but headed for a losing week. West Texas Intermediate crude futures are 0.9% higher at $97 per barrel while Brent crude futures are up 0.5% to $101 per barrel. The U.S. Senate voted unanimously Thursday to ban all Russian oil and gas imports and revoke Russia’s most favored nation trade status with the U.S. Both measures were sent back to the House for final approval before being sent to the President’s desk. This move brings Congress in-line with an executive order signed by President Biden in early March. Passing the oil ban through Congress ensures the executive order can not be undone by a future president. Tesla Opens GigaTexas Tesla (TSLA) shares are flat ahead of the open after the electric automaker opened its new gigafactory in Austin, Texas. GigaTexas opened its doors with a Cyber Rodeo celebration Thursday evening. The Austin factory is designed to produce 500,000 Tesla vehicles and is expected to be expanded in the future. Analysts expect production of 100,000 vehicles at the location this year. This is the second major factory Tesla has opened this year after opening GigaBerlin in late March. GigaTexas will also serve as Tesla’s new headquarters, officially moving away from the Gigafactory in Fremont, California. The new location is expected to create 10,000 new low-skilled jobs for the Austin economy. The automaker also partnered with local community colleges to offer a 14-week training program for a manufacturing career at Tesla. Consumer Credit Levels Soar The Federal Reserve reported consumer credit in the U.S. surged in February. Total credit rose at a seasonally adjusted annual rate of 11.3% to $41.8 billion. That was a $32.9 billion increase from January and sharply higher than economists’ expectations for a $15 billion increase. Revolving credit, which includes things like credit cards, surged 20.7%. Non-revolving credit, which includes fixed-rate loans like car loans, jumped 8.4%. In Case You Missed It Weekly jobless claims fell to a nearly 54-year low last week. The Labor Department reported 166,000 Americans filed initial claims. That was down 5,000 from the previous week and better than 200,000 expected. It’s the lowest level since November 1968. HP Inc (HPQ) shares soared to a record high Thursday after Warren Buffett’s Berkshire Hathaway (BRK.A) revealed it took a massive stake in the company. HPQ shares closed 14.8% at $40.07. SEC filings show Berkshire purchased 121 million HPQ shares earlier this week, bringing its stake to 11.4%. That makes Berkshire HP’s largest shareholder.
Continue Reading -->Coffee With Greta: Jobless Claims Fall to 54-Year Low
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: -53 (-0.2%) SPX Futures: -1 (-0.02%) NASDAQ Futures: +10 (+0.1%) Good morning friends! Futures are flat following a two-day sell-off. Let’s get right to it! Weekly Jobless Claims Hit 54-Year Low Weekly jobless claims fell to a fresh 54-year low last week. The Labor Department reported 166,000 Americans filed initial claims for unemployment benefits. That was down 5,000 from the week before and sharply beat expectations for claims to rise to 200,000. It’s the lowest level of weekly jobless claims since 1968. Continuing claims rose by 17,000 to 1.523 million vs 1.311 million expected in the week ending March 25. The previous week of continuing claims was revised higher to 1.506 million from 1.302 million. Swift Fed Balance Sheet Runoff Traders finally got answers on the Fed’s plans to reduce its balance sheet. The March meeting minutes show officials agreed to a three-month phase-in of that runoff, topping out at $95 billion per month. There was no decision made on when that process will begin but several Fed officials have hinted this week to it starting at the May meeting. The runoff includes $60 billion worth of Treasury securities and $35 billion worth of mortgage-backed securities per month. The Fed will allow those securities to mature without purchasing new ones but officials did not agree to sell off securities in more aggressive action. The bank’s last balance sheet runoff between 2017-2019 moved at a pace of $50 billion per month. The minutes also showed more FOMC members are in favor of larger rate hikes. The report said, “Many participants noted that— with inflation well above the Committee’s objective, inflationary risks to the upside, and the federal funds rate well below participants’ estimates of its longer-run level — they would have preferred a 50 basis point increase in the target range for the federal funds rate at this meeting.” That prompted traders to raise their expectations for the May meeting. CME Group’s FedWatch Tool now shows 81% of traders expect a 0.5% rate hike next month. Oil Rebounds Oil prices are rebounding today despite the announcement of a major global reserve release. West Texas Intermediate crude futures are up 1.9% to over $98 per barrel with Brent crude futures rising 1.6% to over $102 per barrel. The increase comes despite the International Energy Agency announcing member countries will release 60 million barrels from reserves. That’s on top of the 180 million barrel release announced by the U.S. last week. But supply still remains tight with those releases, the U.S. alone consumes about 20 million barrels of oil per day. Nuclear deal talks between Iran and the U.S. remain stalled, delaying the potential for Iran to help alleviate some of the supply issues. HP Soars on Warren Buffett Investment HP Inc (HPQ) shares are jumping 11.7% in premarket trade Warren Buffett’s Berkshire Hathaway (BRK.A) unveiled a major stake in the company. An SEC filing shows Berkshire purchased nearly 121 million HPQ shares. That amounts to a stake of 11.4%. Constellation Brands Tops Q4 Expectations Constellation Brands (STZ) shares are up 0.9% ahead of the open after beating Q4 expectations. The maker of Corona Beer reported adjusted earnings of $2.37 per share on $2.1 billion in revenue. That beat analysts’ expectations for adjusted EPS of $2.09 on $2.02 billion in revenue. Constellation Brands forecasted full-year 2022 adjusted earnings between $11.20 and $11.50 per share. Wall Street was looking for guidance at $11.27 per share. Levi Strauss Rallies on Strong Q1 Earnings Levi Strauss (LEVI) shares are 1.7% higher in premarket trade after beating Q1 expectations. The denim retailer reported earnings of $0.46 per share on $1.59 billion in revenue. That topped analysts’ expectations for EPS of $0.42 on $1.55 billion in revenue. Revenue rose 22% year-over-year but Levi said it lost about $60 million in sales due to supply chain issues. Levi reaffirmed its fiscal 2022 outlook, forecasting revenue growth between 11% and 13% annually. Costco Sales Surge in March Costco (COST) shares are up 1.1% ahead of the open after reporting a strong month of sales in March. The retailer reported $21.61 billion worth of sales in March, up 18.7% compared to March 2021. Same-store sales across the U.S. surged 19.1% annually. The March retail month included an extra shopping day, which boosted comparable-store sales by 1.5% to 2%. In Case You Missed It Spirit Airlines (SAVE) shares fell 2.4% Wednesday after the discount airline said its board is considering a buyout offer from JetBlue (JBLU). JetBlue offered Spirit a $3.6 billion cash takeover deal late Monday. Spirit said the board will “pursue the course of action it determines to be in the best interests of Spirit and its stockholders.” Frontier (ULCC) shares plunged 11% as the offer threatens to kill its planned merger with Spirit. The Biden Administration extended the moratorium on federal student loans through August 31. This is the sixth time the program has been extended after it was implemented under the Trump Administration due to Covid. Federal student loan borrowers will have no payment due and no new interest will accrue until September 1.
Continue Reading -->Coffee With Greta: Fed Officials Spook Traders
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: -226 (-0.7%) SPX Futures: -41 (-0.9%) NASDAQ Futures: -225 (-1.5%) Good morning friends! Futures are lower as traders have their focus on the Fed as the bank is set to release the minutes of its March meeting this afternoon. Let’s get right to it! Fed Officials Spook Traders The market is gearing up for the release of the Fed’s March meeting minutes at 2:00 p.m. ET. This comes after Fed Governor Lael Brainard and San Francisco Fed President Mary Daly made headlines with their hawkish comments on Tuesday. Speaking at the Minneapolis Fed, Brainard said, “inflation is much too high and is subject to upside risks”. She said she expects the balance sheet reduction to be “rapid” and begin as early as the May meeting. Daly reiterated that inflation is far too high, saying “inflation is as harmful as not having a job” in a speech Tuesday afternoon. Those comments were specifically spooky for the market as both Brainard and Daly are typically dovish on monetary policy. The market is looking ahead to this afternoon’s minutes to get more clarity on the Fed’s plans for the immediate future. CME Groups FedWatch Tool shows 76.6% of traders expect a 0.5% rate hike at the May meeting. 10-Year Treasury Yield Spikes The yield on the 10-year Treasury note spiked to the highest level since March 2019 following Brainard’s comments. That yield hit a high of 2.67% this morning after topping out at 2.562% on Tuesday. That put the 2-year/10-year Treasury yield curve back in positive territory after being inverted since last Thursday. The 2-year Treasury yield is at 2.55%. But the curve remains inverted between the 5-year and 30-year yields. The 5-year yield is 2.76% while the 30-year yield is 2.66%. Mortgage Rates Spike, Demand Tumbles The spike in the 10-year yield also caused a spike in mortgage rates. Mortgage News Daily shows the average 30-year contract mortgage rate standing at 5.02%. It’s the first time rates have topped 5% since 2011. And those surging rates are pushing more buyers out of the market. The Mortgage Bankers Association says total mortgage application volume fell 6% last week and was down 41% year-over-year. Refinance applications plunged 10% weekly and 62% annually. New purchase applications were down 3% weekly and 9% lower year-over-year. The average 30-year rate during that time rose to 4.90% from 4.80%, increasing for the fourth straight week. Oil Rises Ahead of New Russia Sanctions Oil prices are rising as the threat of new Russian sanctions outweighs demand concerns. West Texas Intermediate crude futures are up 1.2% to over $103 per barrel while Brent crude futures are up 0.9% to over $107 per barrel. NBC News reported the U.S. and its allies are set to impose new sanctions targeting Russian financial institutions, Kremlin officials, and their family members. The sanctions package is in partnership with the EU and G7 member nations and will also ban new investment in Russia. The EU sanctions would ban Russian coal imports and block Russian ships from entering EU ports. The actions come in response to new allegations of Moscow committing war crimes against civilians in northern Ukraine. Spirit to Consider JetBlue Buyout Offer Spirit Airlines (SAVE) shares are down 2.8% ahead of the open following a $3.6 billion buyout offer from JetBlue Airways (JBLU). Spirit said its board will consider the takeover offer. SAVE shares originally soared after the New York Times report ahead of the close on Tuesday. Trading was halted after shares spiked more than 22%. JetBlue offered Spirit $33 per share or $3.6 billion total in cash. This offer is a 40% premium to Spirit’s planned cash and share merger with Frontier Group (ULCC). Spirit said the board will “pursue the course of action it determines to be in the best interests of Spirit and its stockholders.” JBLU shares are down 4.6% in premarket trade. Tilray Jumps on Surprise Profit Tilray (TLRY) shares are up 8% ahead of the open after reporting an unexpected Q3 profit. The company reported earnings of $0.09 per share on $151.9 million in revenue. That profit beat analysts’ expectations for a loss of $0.08 per share but revenue was shy of the $156.2 million estimate. Tilray reaffirmed its revenue guidance and said it is on track to achieve $4 billion in revenue by the end of fiscal 2024. In Case You Missed It Carnival (CCL) shares rallied 2.3% Tuesday after reporting its busiest week of bookings ever. Carnival said the week between March 28 and April 3 set a new record for weekly bookings. The company saw a double-digit increase in bookings from the previous record week. Twitter (TWTR) shares rose 2% Tuesday after announcing Tesla (TSLA) CEO Elon Musk will join the company’s board of directors. Musk will serve as a Class II director with his term expiring in 2024. In a tweet, he said he is looking forward to making “significant improvements” to Twitter. Musk bought a 9.2% stake in Twitter on March 14.
Continue Reading -->Coffee With Greta: Elon Musk Joins Twitter Board
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: -69 (-0.2%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -44 (-0.3%) Good morning friends! Futures are slipping as the market gives up Monday’s tech rally. Let’s get right to it! Musk Joins Twitter’s Board of Directors Twitter (TWTR) shares are up 5.4% in premarket trade after the company announced Elon Musk will join the board of directors. In a tweet, Twitter CEO Parag Agrawal said he was “excited to share” they are appointing Musk to the board. I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board. — Parag Agrawal (@paraga) April 5, 2022 An SEC filing shows Musk will serve as a Class II director and his term will expire in 2024. During that term and 90 days after, his stake cannot surpass 14.9%. TWTR shares surged 27% on Monday, marking the company’s best day since its IPO in November 2013. That rally came after a new SEC filing revealed Tesla (TSLA) CEO Elon Musk had purchased a 9.2% stake in the social media company on March 14. His purchase of 73,486,938 TWTR shares makes him the largest shareholder in the company. Many analysts expect him to use his stake to push for change at Twitter after being an outspoken critic of the social media platform in the past. In a tweet Monday night, Musk asked his followers if they want an edit button on Twitter. Do you want an edit button? — Elon Musk (@elonmusk) April 5, 2022 Cruisers Are Back Carnival Corp (CCL) shares are jumping 5.1% ahead of the open after reporting its busiest week of bookings ever. Carnival said the week between March 28 and April 3 set a new record for weekly bookings. The company saw a double-digit increase in bookings from its previous record week. 22 of Carnival’s 23 ships are back in operations at U.S. ports. The final ship will return on May 2 and a new ship will be introduced in November. Foreign Trade Deficit Dips The U.S. trade deficit dipped in February. The Commerce Department reported the deficit fell 0.1% to $89.2 billion. The decline came as exports jumped 1.8$ to $228.6 billion and imports rose 1.3% to $317.8 billion. That was the fourth month in a row imports topped $300 billion. The U.S. trade deficit has been volatile as the American economy reopened faster than our global trading partners. Oil Climbs Ahead of New Russia Sanctions Oil prices are higher today as the U.S. and Europe plan a new round of sanctions against Moscow. West Texas Intermediate crude futures are up 1.1% to over $104 per barrel while Brent crude futures are up 1% to over $108 per barrel. Talks remain stalled between the U.S. and Iran to revive the Iran nuclear deal. That deal is expected to allow Iran to help alleviate supply issues in the global oil market. Treasury Yield Curve Remains Inverted Two parts of the Treasury yield curve remain inverted as traders look ahead to the Fed minutes this week. The yield on the 2-year Treasury note is 2.48% while the yield on the 10-year note is 2.47%. The 5-year Treasury yield is 2.62% while the 30-year bond yield is 2.53%. Several Fed officials are set to speak about the economy today. Fed Governor Lael Brainard speaks at 11:00 a.m. ET, San Francisco Fed President Mary Daly speaks at 12:30 p.m. ET, and New York Fed President John Williams speaks at 2:00 p.m. ET. Former Fed Governor Lawrence Lindsey warned inflation will cause a recession in Q3. Lindsey told CNBC on Monday, “Inflation is eating into consumer spending power, they’re going to have to cut back”. He said the Fed is “nowhere close” to getting inflation under control and he sees those pressures rising further this year. In Case You Missed It Tesla (TSLA) shares rallied 5.6% on Monday after the electric automaker reported a record number of deliveries in Q1. Tesla delivered 310,048 vehicles and produced 305,407 vehicles last quarter. Model 3 and Model Y vehicles made up 295,324 of those deliveries.
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