All posts by Greta Wall
Coffee With Greta: Bulls In Control
Register now for this week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: +78 (+0.2%) SPX Futures: +10 (+0.2%) NASDAQ Futures: +21 (+0.1%) Good morning friends! Futures are rising as the rally continues. Let’s get right to it! Futures Extend Rally The major indexes are all inching higher ahead of the market open. The S&P 500 is currently trading just above 4,800, higher than its all-time closing high of 4,797.56 in January 2022. The Dow notched out a new closing record on Monday and the Nasdaq is still climbing as well. Fed officials have attempted to throw cold water on the market’s anticipation of rate cuts at the end of Q1 but traders seem to have brushed off those comments. For the month, the S&P 500 is up 3.8%, the Nasdaq is up 4.8%, and the Dow is up 3.8%. Bonds Continue Downtrend Treasury yields are falling this morning after rising on Monday. The 10-year yield is down 3 basis points at 3.91% with the 2-year yield down 2 basis points at 4.45%. Yields have been on a downward trend since the Fed meeting last Wednesday as traders assess the future of rate cuts. CME Group’s FedWatch Tool shows just under 66% of traders anticipating the first 25 basis point cut at the March meeting. Homebuilding Rebounds U.S. homebuilding rebounded more than expected in November. The Census Bureau reported housing starts surged 14.8% monthly and 9.3% annually to a seasonally adjusted annual rate of 1.56 million units. That topped expectations for 1.36 million and was the strongest pace since May. Single-family starts jumped 18% with multi-family starts up 8.9%. But new permits issued for future builds fell more than expected. Permits fell 2.5% monthly and 4.1% annually to a SAAR of 1.46 million units vs 1.48 million expected. Single-family permits rose 0.7% while multi-family permits dropped 9.6%. In Case You Missed It Homebuilder sentiment rebounded more than expected this month as mortgage rates dropped. The National Association of Homebuilders sentiment index rose three points to 37 vs 36 expected. That was the first increase in four months but any reading below 50 is considered negative. Sentiment about current sales conditions was unchanged at 40, buyer traffic rose three points to 24, and six-month sales expectations jumped six points to 45.
Continue Reading -->Coffee With Greta: New Week, Same Rally
Register now for this week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: +67 (+0.2%) SPX Futures: +14 (+0.3%) NASDAQ Futures: +24 (+0.1%) Good morning friends! Futures are higher, extending the market’s seven-week long rally. Let’s get right to it! Win Streak Continues The S&P 500 is on its longest win-streak since 2017, logging weekly gains for seven straight weeks. So far this month, the index is up 3.3% while the Dow is 3.8% higher and the Nasdaq is up 4.1%. Slowing inflation and optimism over the Fed’s plans for rate cuts in 2024 fueled the latest move higher in this nearly 2-month long rally. And traders will get more key inflation data this week. Economic data starts with the NAHB homebuilder sentiment index today at 10:00 a.m. ET. Housing starts and building permits for November will be out Tuesday morning followed by existing home sales on Wednesday. Thursday will see weekly jobless claims, the final Q3 GDP revision, the Philly Fed manufacturing index, and the leading economic indicators index. Then on Friday, the market will get the Fed’s preferred inflation gauge with the PCE price index at 8:30 a.m. ET, plus personal income, personal spending, durable goods orders, new home sales, and consumer sentiment. U.S. Steel Surges On Buyout Offer United States Steel Corp (X) shares are rallying 28.4% ahead of the open after receiving a buyout offer from a Japanese steel company. Nippon Steel offered to buy U.S. Steel for $55 per share, making the all-cash deal worth $14.9 billion. Nippon said the deal is expected to help it move toward its goal of 100 million tonnes of global crude steel capacity and expand its production in the U.S. All of U.S. Steel’s current commitments with employees, including union deals, would be honored. Nippon’s executive vice president said, “Standard Steel that we own is a union company in the United States, we have a good history of working with unions. We see no regulatory or antitrust issues with the deal.” The transaction is expected to close in Q2 or Q3 of 2024. Adobe, Figma Call Off Merger Adobe (ADBE) shares are up 2.0% in premarket trade after calling off the planned $20 billion merger with cloud-based design tool Figma. The companies ditched the deal due to regulatory hurdles. In a statement, the two said, “there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.” Adobe will pay Figma a $1 billion breakup fee.
Continue Reading -->Coffee With Greta: Huge Week
Register now for next week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: -28 (-0.1%) SPX Futures: -3 (-0.1%) NASDAQ Futures: +22 (+0.1%) Good morning friends! Futures are mixed as this week’s Fed-fueled surge takes a breather. Let’s get right to it! New York Fed President Speaks New York Fed President John Williams says the rate cuts are not a topic of discussion at the Fed yet. In an interview with CNBC this morning, Williams said, “We aren’t really talking about rate cuts right now. We’re very focused on the question in front of us, which as chair Powell said… is, have we gotten monetary policy to a sufficiently restrictive stance in order to ensure the inflation comes back down to 2%? That’s the question in front of us.” His comments appeared to be an attempt to rein in some market enthusiasm after the updated dot plot showed plans for three rate cuts in 2024. Williams said the Fed is ready and willing to tighten policy again if the data warranted it. He said, “One thing we’ve learned even over the past year is that the data can move and in surprising ways, we need to be ready to move to tighten the policy further, if the progress of inflation were to stall or reverse.” Key Manufacturing Index Tumbles The Empire State manufacturing index fell sharply this month into negative territory. The index dropped 24 points to -14.5. That was lower than economists’ expectations for 4 and marked the lowest reading in four months. The new orders index dropped for the third straight month by 6 points to -11.3. The six-month expectations index rose 13 points to 12.1. Costco Rises After Earnings Beat Costco (COST) shares are up 1.9% ahead of the open after beating fiscal Q1 expectations. Here’s how the big box store’s results compared to analysts’ estimates: EPS: $3.58 vs $3.41 expected Revenue: $57.8 billion, in line with expectations Same-store sales rose 3.8% year over year while e-commerce same-store sales jumped 6.3%. Costco added 72 million paid household members during the quarter, up 7.6% from a year ago. The company also announced a special cash dividend of $15 per common share, payable January 12.
Continue Reading -->Coffee With Greta: Doves Take Flight
DJIA Futures: +162 (+0.4%) SPX Futures: +22 (+0.5%) NASDAQ Futures: +66 (+0.4%) Good morning friends! Futures are rising after the Fed’s dovish rate decision and outlook on Wednesday. Let’s get right to it! Yields Tumble After Fed Turns Dovish Treasury yields are falling this morning after the Federal Reserve left rates unchanged as expected on Wednesday and signaled plans for three rate cuts in 2024. The 10-year yield is down 5 basis points at 3.97% while the 2-year yield is down 7 basis points at 4.36%. It’s the first time the 10-year yield has broken below 4% since August. The Federal Funds Rate currently stands at a range of 5.25% to 5.50% and the updated dot plot shows at least three 25 basis point cuts next year. Market pricing is a bit more aggressive with CME Group’s FedWatch Tool showing over 71% of traders expecting the first rate cut in March. The FOMC also indicated another four cuts in 2025 and three more reductions in 2026. That would bring the rate down to between 2% and 2.25%. Retail Sales Rebound Retail sales rose unexpectedly in November. The Commerce Department reported retail sales jumped 0.3% last month vs a 0.1% decrease expected. That was a turnaround from the 0.2% decrease in October. Sales jumped 4.1% year over year. Sales rose 1.6% at bars and restaurants, 1.3% at sporting goods stores, and 1% online. Gas station sales dropped 2.9% as prices went down. Excluding autos and gas, core retail sales rose 0.6%. Weekly Jobless Claims Fall Weekly jobless claims fell unexpectedly last week as the labor market maintains strength. The Labor Department reported 202,000 Americans filed initial claims for unemployment benefits. That was down by 18,000 from the week before and sharply lower than 220,000 expected. Continuing claims rose by 15,000 to 1.876 million vs 1.887 million expected. Adobe Drops On Weak Guidance Adobe (ADBE) shares are down 3.9% ahead of the open after beating fiscal Q4 expectations but issuing soft guidance. Here’s how the software maker’s results compared to analysts’ estimates: Adjusted EPS: $4.27 vs $4.14 expected Revenue: $5.05 billion vs $5.03 billion expected Revenue jumped nearly 12% year over year while net income increase 26%. Adobe forecast fiscal 2024 adjusted EPS of $17.60 to $18 on $21.3 billion to $21.5 billion in revenue. That was weaker than analysts’ expectations for adjusted EPS of $18 on $21.73 billion in revenue.
Continue Reading -->Coffee With Greta: 2023 Fed Finale
Register now for today’s free pro trader Q&A on LinkedIn with Scott Redler! DJIA Futures: +70 (+0.2%) SPX Futures: +10 (+0.2%) NASDAQ Futures: +47 (+0.3%) Good morning friends! Futures are higher as traders await today’s Fed decision. Let’s get right to it! November Wholesale Prices Unchanged Wholesale prices were lower than expected in November in another sign of easing inflation. The Bureau of Labor Statistics’ producer price index was unchanged on a monthly basis and up 0.9% year over year. That was better than economists’ expectations for a 0.1% monthly increase and 1% annually. The core PPI was also unchanged on a monthly basis and up 2% annually vs 0.2% monthly and 2.2% annually expected. That was the slowest core reading since February 2021. Producer prices are a leading indicator for consumer prices. Yields Dip Ahead Of Fed Decision Treasury yields are pulling back ahead of the Federal Open Market Committee’s interest rate decision at 2:00 p.m. ET today. The 10-year yield is down 4 basis points at 4.17% while the 2-year yield is down 4 basis points at 4.70%. CME Group’s FedWatch Tool shows 98.2% of traders anticipating no rate hike today. Focus will be on the language in the FOMC statement and Chairman Powell’s press conference about the future of monetary policy. Fed officials have given no hints about rate cuts starting any earlier than mid-2024. But the market has started pricing in a 25 basis point cut as early as the March meeting. Tesla Issues Massive Recall Tesla (TSLA) shares are down 0.9% ahead of the open after issuing a recall for nearly all of its vehicles sold in the U.S. The recall covers nearly 2 million vehicles to fix a defective system that ensures drivers are paying attention while using Autopilot. Tesla will send out a software update to fix the problems on models Y, S, 3, and X produced between October 5, 2012 and December 7, 2023. The recall comes in response to the National Highway Traffic Safety Administration’s two-year investigation into crashes that happened while Autopilot was in use. Mortgage Demand Jumps Again As Rates Drop Mortgage demand continued to rise last week as rates fell. The Mortgage Bankers Association reported purchase applications rose 4% weekly and were down 18% year over year. Refinance applications jumped 19% weekly and 27% compared to a year ago. That surge in refinance activity came as the average 30-year fixed contract rate fell to 7.07% from 7.17%. That was the lowest level since July.
Continue Reading -->Coffee With Greta: Tame Inflation
Register now for tomorrow’s free pro trader Q&A on LinkedIn with Scott Redler! DJIA Futures: +52 (+0.1%) SPX Futures: +1 (+0.02%) NASDAQ Futures: +21 (+0.1%) Good morning friends! Futures are higher after the release of the November CPI. Let’s get right to it! Inflation Remains Tame U.S. inflation pressures rose slightly more than expected on a monthly basis in November but remain muted. The Bureau of Labor Statistics’ consumer price index rose 0.1% monthly and 3.1% year over year. Economists were expecting no change monthly while the annual gain was in line with estimates. The core CPI rose 0.3% monthly and 4% annually, as expected. This data comes ahead of the final Fed decision of 2023 on Wednesday. CME Group’s FedWatch Tool shows 98.4% of traders expecting no rate hike at that meeting. CNBC’s latest Fed Survey shows expectations for rate cuts to begin in mid-2024. More than half of respondents to that survey expect a rate cut in June and 69% in July. Overall, the survey shows an expectation of about 85 basis points worth of cuts in 2024. Oracle Tumbles On Revenue Miss Oracle (ORCL) shares are dropping 9.4% ahead of the open after missing fiscal Q2 revenue expectations. Here’s how the software company’s results compared to analysts’ estimates: Adjusted EPS: $1.34 vs $1.32 expected Revenue: $12.94 billion vs $13.05 billion expected Revenue grew 5% year over year while net income jumped 44%. The overall miss was due to lower than expected revenue at its services business and its cloud and on premises licenses business. Oracle forecast fiscal Q3 adjusted EPS of $1.35 to $1.39 and 6% to 8% revenue growth. Analysts were anticipating guidance for adjusted EPS of $1.37 and 7.6% revenue growth. Hasbro Drops After Layoff Announcement Hasbro (HAS) shares are down 4.4% in premarket trade after announcing it will lay off about 1,100 employees. The cuts come as the toy maker is struggling with soft sales even into the busy holiday shopping season. In a memo to employees the CEO said, “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.” Hasbro warned trouble was ahead in its latest earnings report in October when the company slashed its full-year outlook. Ford Cuts 2024 F-150 Lightning Production Plans Ford (F) shares are up 0.1% ahead of the open after announcing it will cut planned production of its electric F-150 Lightning in half next year. The company’s updated production plans call for an average volume of around 1,600 F-150 Lightnings per week starting in January. That’s down from previous plans to produce roughly 3,200 of the trucks per week. The cuts come amid lower than anticipated demand for the electric trucks. Ford executives have said the company will match production to demand. The automaker sold 4,400 F-150 Lightnings in November, bringing the total so far in 2023 to 20,365.
Continue Reading -->Coffee With Greta: Fed Week
Register now for Wednesday’s free pro trader Q&A on LinkedIn with Scott Redler! DJIA Futures: -20 (-0.1%) SPX Futures: -4 (-0.1%) NASDAQ Futures: -22 (-0.1%) Good morning friends! Futures are slipping as traders look ahead to the final Fed meeting of the year. Let’s get right to it! Big Week This will be the last big week of economic data for traders of 2023. Things kick off with the release of the November CPI on Tuesday morning. Then the November PPI is released Wednesday morning ahead of the last Fed decision of the year that afternoon. Thursday will feature weekly jobless claims, November retail sales, import prices, and business inventories. Friday rounds out the week with the Empire State manufacturing index, industrial production, and capacity utilization. The Fed decision is the highlight of the week with CME Group’s FedWatch Tool showing 98.4% of traders expecting no rate hike. The market will be analyzing the language of the FOMC statement and chairman Jerome Powell’s press conference for any signals on when rate cuts will begin. Occidental Petroleum Agrees To Buy Private Energy Producer Occidental Petroleum (OXY) shares are slipping 0.5% ahead of the open after agreeing to buy CrownRock. CrownRock is a privately held energy producer that operates in the Permian Basin. Occidental will buy the company for $12 billion and the transaction is expected to close in Q1 2024. The deal will add 170,000 barrels of oil equivalent per day to Occidental’s production and 1,700 undeveloped locations to its operations in the Permian Basin. Macy’s Rallies On Rumored Buyout Offer Macy’s (M) shares are surging 15% in premarket trade following news the company received a $5.8 billion buyout offer. The Wall Street Journal first reported Arkhouse Management and Brigade Capital Management offered to buyout the retailer. The offer values Macy’s at $21 per share. Arkhouse is a firm that primarily targets real estate investment while Brigade Capital is an asset management firm. Sources say the two would be willing to offer a higher bid based on due diligence.
Continue Reading -->Coffee With Greta: Hot Jobs Report
Register now for next week’s free pro trader Q&A on LinkedIn with Scott Redler! DJIA Futures: -12 (-0.03%) SPX Futures: -2 (-0.04%) NASDAQ Futures: -62 (-0.4%) Good morning friends! Futures are falling as yields surge after the release of a hotter-than-expected November jobs report. Let’s get right to it! Jobs Report Comes In Hot The U.S. economy added more jobs than expected in November. The Labor Department reported employers hired 199,000 workers last month vs 190,000 expected. The unemployment rate also fell unexpectedly to 3.7% vs expectations for it to remain unchanged at 3.9%. The healthcare sector saw the largest increase, adding 77,000 jobs. Government added 49,000, leisure and hospitality added 40,000, and manufacturing added 28,000. The retail sector lost 38,000 jobs while transportation and warehousing lost 5,000. Average hourly earnings rose 0.4% monthly and 4% year over year, ahead of expectations for a 0.3% monthly increase. September’s job growth was revised lower by 35,000 to 262,000 while October was left unchanged at 150,000. Yields Pop Treasury yields are rallying this morning after that labor market data. The 10-year yield is up 7 basis points at 4.23% while the 2-year yield is up 8 basis points at 4.66%. The unexpected drop in the unemployment rate shows the labor market maintaining resilience in the face of the Fed’s rate hikes. CME Group’s FedWatch Tool still shows over 98% of traders expect no rate hike at next week’s meeting. But the question of when cuts may begin in 2024 remains up in the air. Lululemon Slips On Muted Forecast Lululemon athletica (LULU) shares are down 2.3% ahead of the open after beating Q3 expectations but issuing muted guidance. Here’s how the athleisure retailer’s results compared to analysts’ estimates: Adjusted EPS: $2.53 vs $2.28 expected Revenue: $2.20 billion vs $2.19 billion expected Sales jumped 19% year over year, up 12% in North America and 49% internationally. But Q4 guidance was light. Lululemon expects EPS between $4.85 and $4.93 on sales of $3.14 billion to $3.17 billion. $9.55 billion to $9.58 billion. Analysts were forecasting EPS of $4.94 on $3.18 billion in revenue. For the full year, the retailer forecast $9.55 billion to $9.58 billion in revenue vs $8.11 billion to $9.90 billion expected. The company’s CFO said, “We’re pleased with the trends we’ve seen at the start of the holiday season. That being said, the majority of the quarter remains in front of us. We remain aware of the uncertainties in the macro environment, and we continue to plan a business for multiple scenarios.”
Continue Reading -->Coffee With Greta: Waiting For The Jobs Report
Register now for next week’s free pro trader Q&A on LinkedIn with Scott Redler! DJIA Futures: -8 (-0.02%) SPX Futures: +10 (+0.2%) NASDAQ Futures: +72 (+0.5%) Good morning friends! Futures are mixed as the rally remains stalled ahead of Friday’s jobs report. Let’s get right to it! Weekly Jobless Claims Rise Weekly jobless claims rose again last week but still came in below expectations. The Labor Department reported 220,000 Americans filed initial claims for unemployment benefits. That was up by 1,000 from the previous week and lower than 222,000 expected. Continuing claims fell by 64,000 to 1.861 million vs 1.91 million expected in the week ending November 25. GameStop Falls After Revenue Miss GameStop (GME) shares are down 8.4% ahead of the open after missing Q3 revenue expectations. Here’s how the videogame retailer’s results compared to analysts’ estimates: Adjusted EPS: $0.00 vs $0.08 loss expected Revenue: $1.078 billion vs $1.182 billion expected GameStop said its net sales in Australia, the U.S., and Canada decreased by 16.8%, 13.3%, and 9.7% respectively. Net sales in Europe jumped 12.8%. GameStop did not provide guidance. Dollar General Jumps On Earnings Beat Dollar General (DG) shares are up 3.5% in premarket trade after beating Q3 expectations on the top and bottom line. Here’s how the discount retailer’s results compared to analysts’ estimates: EPS: $1.26 vs $1.20 expected Revenue: $9.694 billion vs $9.644 billion expected The CEO said, “While we are not satisfied with our financial results for the third quarter, including a significant headwind from inventory shrink, we are pleased with the momentum in some of the underlying sales trends, including positive customer traffic, as well as market share gains in both dollars and units.” Dollar General reiterated its full-year guidance for EPS of $7.10 to $7.60 and a sales increase of 1.5% to 2.5%. Chewy Tumbles On Sales Miss, Weak Guidance Chewy (CHWY) shares are dropping 11.6% ahead of the open after missing Q3 sales expectations. Here’s how the online pet-supplies retailer’s results compared to analysts’ estimates: Adjusted EPS: $0.15 vs $0.06 loss expected Revenue: $2.74 billion vs $2.75 billion expected Revenue rose 8.2% year over year. Chewy’s guidance was also weaker-than-expected which is dragging down the stock. The company said it expects full-year revenue between $8.08 billion and $11.1 billion vs $11.24 billion expected.
Continue Reading -->Coffee With Greta: Weakening Labor Market
Register now for today’s free pro trader Q&A on LinkedIn with Derrick Oldensmith! DJIA Futures: +70 (+0.2%) SPX Futures: +17 (+0.4%) NASDAQ Futures: +86 (+0.5%) Good morning friends! Futures are higher as new data shows labor costs falling. Let’s get right to it! Private Job Growth Slows The U.S. private sector added fewer jobs than expected in November. Payroll firm ADP reported private employers hired 103,000 workers last month vs 128,000 expected. Trade, transportation and utilities added 55,000 jobs, education and health services added 44,000, and other services added 15,000. The leisure and hospitality sector lost 7,000 jobs in November, manufacturing lost 15,000, and construction lost 4,000. October’s private job growth was also revised lower to 106,000. Pay increased 5.6% from a year ago which ADP says was the smallest gain since September 2021. The official November jobs report will be released Friday morning and is expected to show the U.S. economy added 190,000 jobs last month with the unemployment rate unchanged at 3.9%. Q3 Productivity Revised Higher U.S. worker productivity surged in the third quarter. The Bureau of Labor Statistics’ revised Q3 productivity jumped to a 5.2% annual rate from 4.7% originally. That is the fastest pace since Q3 2020 and pre-pandemic is the fastest since Q4 2009. Output was raised to 6.1% from 5.9% while hours worked was revised lower to 0.9% from 1.1%. Unit labor costs dropped 1.2% annually vs the original 0.8% decrease. Productivity has increased 2.4% in 2023, following the 1.2% gain in Q2. That marked the first two consecutive quarters of productivity growth since early 2021. Refinance Demand Jumps Lower mortgage rates led to a surge in refinancing demand last week. The Mortgage Bankers Association reported refinance applications jumped 14% weekly and were up 10% from a year ago. But purchase applications slipped 0.3% weekly and 17% year over year. The average 30-year fixed contract rate fell to 7.17% from 7.37%, the lowest level since August. It was the second consecutive annual increase in refinance demand since late 2021. Rates have continued to move lower this week with Mortgage News Daily showing the average 30-year fixed around 7.08%. Apple Closes Above $3 Trillion Market Cap Apple (AAPL) shares are up 0.3% ahead of the open after closing above a $3 trillion market cap on Tuesday. It was the first time the stock has hit that milestone since August. AAPL shares are up 48% in 2023 and hit an all-time high back in July. The company remains the most valuable publicly traded company in the U.S. In Case You Missed It Job openings dropped to the lowest level in more than 2 years in October. The Labor Department’s job openings and labor turnover survey showed there were 8.73 million available jobs vs 9.4 million expected. That was down by 617,000 or 6.6% from September, and the lowest since March 2021. The ratio of openings to available workers fell to 1.3 to 1. Activity in the U.S. services sector picked up more than expected in November. The ISM services PMI rose nearly one point to 52.7% last month vs 52.4% expected. Readings above 50% indicate expansion in the sector. The new orders index was unchanged at 55.5%, the prices paid index fell slightly to 58.3%, and the employment index improved to 50.7% from 50.2%.
Continue Reading -->