Coffee With Greta: Stocks Slip After Big Rally
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: -123 (-0.4%) SPX Futures: -18 (-0.4%) NASDAQ Futures: -84 (-0.6%) Good morning friends! Futures are lower as the market gives up its two-day rally and focus turns back to the war in Ukraine. Let’s get right to it! Oil Prices Jump on Supply Warning Oil prices are surging today after the International Energy Agency sent out a supply warning. West Texas Intermediate crude futures are up about 6% and back above $100 per barrel. Brent crude futures are also 6% higher, topping $104 per barrel. The IEA is expecting a loss of three million barrels per day of Russian oil and products next month, which outweighs the expected demand drop of 600,000 barrels per day. Russia denied a Financial Times report that there had been “substantial progress” in peace talks with Ukraine. Kremlin spokesman Dmitry Peskov said, “On the whole, that’s wrong… When there’s progress, we’ll tell you.” The two sides are expected to meet again today. Weekly Jobless Claims Beat Expectations Weekly jobless claims fell to the lowest level since the beginning of 2022. The Labor Department reported 214,000 Americans filed initial unemployment claims last week. That’s down 15,000 from the previous week and better than expectations for 215,000. It’s the lowest total since January 1 and shows the economy nearing full employment. Continuing claims fell by seven million to 1.42 million vs 1.48 million expected. Housing Starts, Building Permits U.S. home construction rose more than expected last month. The Census Bureau reports housing starts rose 6.8% to a seasonally adjusted annual rate of 1.77 million units in February. That was better than economists’ expectations for a SAAR of 1.70 million units. Building permits for future projects meantime fell 1.9% to a SAAR of 1.86 million units vs 1.85 million units expected. This comes a day after the National Association of Homebuilders sentiment index fell to a 6-month low at 79. Confidence in current sales conditions fell 3 points to 86 while sentiment about sales conditions over the next 6 months plummeted 10 points to 70. Builders have struggled with high material costs, supply shortages, and labor shortages amid record-high buyer demand. Nickel Trading Resumes Nickel trading was once again resumed on the London Metal Exchange today after being halted Wednesday. The exchange placed an 8% up or down limit on the metal. The three-month contract hit limit-down right at the open, falling to $41,945 per metric ton. Trading was halted last week as nickel prices more than doubled and topped $100,000 per metric ton. Fed Turns Hawkish The Federal Reserve raised the federal funds rate by 25 basis points to a range of 0.25% to 0.5% as expected on Wednesday. St Louis Fed President James Bullard was the only FOMC member to vote against the 0.25% rate hike and in favor of a 0.5% hike instead. The Central Bank also penciled in 6 more rate hikes this year, three in 2023, and zero in 2024. Treasury yields popped on the news with the 10-year yield jumping 8 basis points to a high of 2.24%, the highest level since 2019. Currently that rate is _______. Fed Chair Jerome Powell told reporters they could begin their balance sheet reduction as early as May and that process will move faster this time than last. It took the Fed 2 years between 2017 and 2019 to reduce the size of its $4.5 trillion balance sheet following the 2008 recession. The bank currently holds nearly $9 trillion of Treasury and mortgage-back securities on its balance sheet. Berkshire Hathaway Soars to $500,000 Berkshire Hathaway Class A (BRK.A) shares topped $500,000 for the first time Wednesday. The stock closed 1.3% higher at $504,036 per share. The rally pushed Berkshire Hathaway’s market cap to $737 billion, making it the sixth most valuable company in the U.S. BRK.A is up 11.8% YTD as it’s benefited from the market rotation back into value stocks. The company also owns 90% of Berkshire Hathaway Energy which has a portfolio of 11 energy companies across the U.S. Those businesses have benefited from surging energy prices in recent months. In Case You Missed It U.S. retail sales slowed more than expected in February as inflation squeezes consumers. The Census Bureau reported retail sales rose 0.3% last month to $658.1 billion vs 0.4% expected. Retail sales excluding autos rose 0.2% vs 0.8% expected. The data is not adjusted for inflation and the CPI rose 0.8% in February. January’s retail sales were revised higher to 4.9% from 3.8%. Ukrainian President Volodymyr Zelenskyy addressed Congress virtually Wednesday morning. He called for the U.S. to implement a no-fly zone over Ukraine, asked for more weapons to be sent to Ukraine, and for more sanctions on Russia. Zelenskyy compared the Russian invasion to Pearl Harbor and 9/11 saying, “Just like nobody else expected it, you could not stop it. Our country experienced the same every day, right now at this moment, every night, for three weeks now.”
Continue Reading -->Options In Play – The VXX Disconnect
Rule of thumb when it comes to trading…if something doesn’t make sense, the best thing to do is scale back risk or avoid trading it. VXX has had an unusual few days this week that hasn’t made much sense.
Continue Reading -->Options In Play – Setting The Line For The FOMC Meeting
The closely-watched FOMC rate decision day is finally here, and traders are expecting a volatile session tomorrow. QQQ and SPY are both pricing in sizable moves for Wednesday and the remainder of the week.
Continue Reading -->Coffee With Greta: 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: +340 (+1%) SPX Futures: +45 (+1.1%) NASDAQ Futures: +203 (+1.5%) Good morning friends! Futures are higher as the market gears up for today’s Fed decision. Let’s get right to it! Fed Decision Day The market is laser focused on the Fed as the Central Bank is set to announce its rate hike decision at 2:00 p.m. ET. This will be the bank’s first rate hike since 2018 after lowering rates to near zero in March 2020. CME Group’s FedWatch Tool shows more than 98% of traders believe this will be a 0.25% rate hike. The market is also hoping for more clarity on the bank’s plans to reduce the size of its balance sheet. Chairman Jerome Powell told Congress in early March that process will start after rate hikes have begun. Consumer inflation pressures hit a fresh 40-year high in February as the CPI surged 7.9% year-over-year. And wholesale inflation hit a record high as the PPI skyrocketed 10% annually. Retail Sales Slow U.S. retail sales slowed more than expected in February as consumers were dragged down by inflation. The Census Bureau reported retail sales rose 0.3% last month to $658.1 billion. That was weaker than economists’ expectations for 0.4%. January’s retail sales were revised higher to show a gain of 4.9% vs the previous 3.8%. Core retail sales, which exclude gas auto sales, rose 0.2% vs expectations for a 0.9% increase. Import Prices Surge U.S. import prices jumped 1.4% in February, continuing to fuel inflation. That was better than economists’ expectations for a 1.6% increase and lower than 1.9% in January. January and February combined marked the largest increase in 11 years. Oil made up most of February’s gain, rising 8.1%. Excluding fuel, import prices rose just 0.8% last month. Export prices meantime jumped 3%, the largest increase on record, and surged 16.6% year-over-year. Oil Falls Below $100 Oil prices are rising slightly today after tumbling below $100 on Tuesday. West Texas Intermediate crude futures are up 0.6% to just over $97 per barrel while Brent crude futures are up 0.2% to just over $100 per barrel. The oil market has cooled amid ongoing peace talks between Ukraine and Russia. Ukraine’s President said today those talks were sounding “more realistic” but more time is needed. Russia’s Foreign Minister said some deals are close. Nickel Trading Shut Down Again Nickel trading resumed on the London Metal Exchange today after a week-long halt. The LME halted trading March 8 after Nickel prices more than doubled and topped $100,000 per tonne for the first time in history. Price moves today were limited to 5% above or below the last closing price before trading was suspended. But LME was forced to halt trading again after an error allowed trades to go through below the daily price limit. The exchange said it is investigating the glitch and will try to reopen the market ASAP. The trades executed below the limit will be canceled. LME also imposed 15% limits on aluminum, copper, lead, tin, and zinc. This is the first time the exchange has ever placed limits on physical contracts. Metals trading has been volatile amid the war in Ukraine as both Russia and Ukraine are key global suppliers of several metals. Starbucks CEO Retiring Starbucks (SBUX) shares are up 5.7% ahead of the open after CEO Kevin Johnson announced his retirement. In a statement, Johnson said, “A year ago, I signaled to the Board that as the global pandemic neared an end, I would be considering retirement from Starbucks. I feel this is a natural bookend to my 13 years with the company.” Founder and former CEO Howard Schultz will take over as interim CEO. Starbucks plans to find a permanent replacement by the fall. Chair of the board, Mellody Hobson said, “We have a great slate of candidates. People want this job, and we’re fully confident we’ll have a new leader in the fall.” Raskin Withdraws Fed Nomination In other Fed related news, Sarah Bloom Raskin withdrew her nomination to serve on the Federal Reserve board Tuesday. Raskin had been nominated by President Biden to be the Central Bank’s next vice chair for supervision. But she faced an uphill battle for confirmation in the Senate over her views on climate policy. All 50 Senate Republicans were opposed to her confirmation. Then West Virginia Democrat Senator Joe Manchin confirmed this week he would not confirm her. That made it virtually impossible for her nomination to move forward in the 50-50 Senate. Homebuilder Sentiment Preview The National Association of Homebuilders releases its sentiment index at 10:00 a.m. ET. The survey is expected to show confidence among builders slipped two points this month to 80. Builders have seen their business boom due to low supply of existing homes on the market. But they’ve faced severe supply chain and labor shortages as they struggle to keep up with record high demand. In Case You Missed It U.S. airline stocks rallied Tuesday after three major airlines hiked their 2022 revenue forecasts. Delta (DAL) shares jumped 8.7%, while United (UAL) surged 9.2%, and Southwest (LUV) rose 4.9%. All three companies raised their revenue forecasts, predicting a strong rebound in travel demand this year. Delta said its bookings are already outpacing 2019 levels. Tesla raised prices for the second time in a week amid high inflation pressures. The automaker hiked prices on all of its models in the U.S. as well as the Model Y and Model 3 in China. TSLA shares rose 4.6% Tuesday. The price hikes range from $2,000 to $10,000 depending on model. Tesla did not specify the reason for the price hikes but the decision comes days after CEO Elon Musk said they were “seeing significant recent inflation pressure in raw materials & logistics”.
Continue Reading -->Coffee With Greta: Wholesale Inflation Surges 10%
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: +172 (+0.5%) SPX Futures: +28 (+0.7%) NASDAQ Futures: +130 (+1%) Good morning friends! Futures are higher on day one of the Fed’s two-day policy meeting. Let’s get right to it! Wholesale Inflation Hits Double Digits The Bureau of Labor Statistics Producer Price Index shows prices surged 10% year-over-year in February. That was in line with expectations and is the second straight month of double digit wholesale inflation after January was revised higher. On a monthly basis, prices rose 0.8% vs 0.9% expected. Nearly 40% of that gain was due to the gasoline index, which jumped 14.8% year-over-year. The Core PPI, which excludes food, energy, and trade services, jumped 0.2% monthly and 6.6% annually. PPI is a forward indicator for consumer prices as manufacturers and service providers pass-down higher costs. This new inflation data comes on day one of the Fed’s two-day policy meeting. The central bank is expected to announce its first rate hike since 2018 on Wednesday and provide more clarity on its plans to reduce the size of its balance sheet. Oil Prices Slide to 2-Week Low Oil prices are continuing to tumble, hitting a new two-week low. West Texas Intermediate crude futures are down more than 8% to just under $95 per barrel with Brent crude futures falling nearly 8% to under $99 per barrel. The two-day drop in prices comes amid continued talks between Russia and Ukraine and as new Covid lockdowns in China threaten to weaken global demand. China is the largest importer of crude oil in the world. Russia, Ukraine Continue Ceasefire Negotiations Ukraine’s capital city of Kyiv announced a 35-hour curfew will begin tonight after several missile strikes on residential buildings in the city. A fifth round of talks between Ukrainian and Russian officials is set to take place today after the fourth round failed on Monday. Several NATO prime ministers are now heading to Ukraine to meet with the president and prime minister. The PMs of Poland, Slovenia, and the Czech Republic will visit Kyiv today. The group said, “The purpose of the visit is to confirm the unequivocal support of the entire European Union for the sovereignty and independence of Ukraine.” The EU and U.K. both rejected Russia’s “most favored nation” trading status today, allowing harsh tariffs to be imposed on Russian goods. Britain is also set to ban exports of high-end luxury goods to Russia. The EU approved new sanctions today banning transactions with state-owned businesses, a ban of Russian steel imports, a ban on new investments in Russia’s energy security, and a ban on luxury goods exports to Russia. Traders Sell Risk, Treasury Yields Spike Tech stocks sold off sharply on Monday as traders reevaluate their risk positions with the impending Fed rate hike. The Nasdaq was the largest loser of the session, closing 2% lower on Monday. High-growth tech stocks took the brunt of that drop. Cathie Wood’s Ark Innovation ETF (ARKK) plunged 6% and is now down nearly 45% YTD. ARKK shares are up 1.3% ahead of the open. Netflix (NFLX) shares have officially given up all of their pandemic gains. The streaming giant closed 2.7% lower Monday at $331.01 after notching out a new 52-week low at $329.82 earlier in the session. But NFLX shares are rebounding in premarket trade, up 1.7%. On the other side of that tech sell-off, Treasury yields popped. The 10-year yield hit a high of 2.145% Monday, its highest since July 2019. Currently the yield on the 10-year note is down 3 basis points to 2.11%. Airlines Raise Outlook Shares of the major airlines are rallying ahead of the open after hiking their revenue outlooks. Delta (DAL) shares are up 5.9%, United (UAL) is rallying 4.9%, and Southwest (LUV) shares are rising 4%. All three companies said air travel is rebounding from the Omicron slump and they expect travel demand to be stronger than previously forecast this year. Tesla Hikes Car Prices Tesla (TSLA) shares are flat in premarket trade after the electric automaker announced a price hike for its cars. The company raised prices on all models in the U.S. and the Model 3 and Model Y in China. This is the second increase in just a week. Tesla did not give a reason for the price hike but the decision comes after CEO Elon Musk warned about inflation pressures over the weekend. Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics — Elon Musk (@elonmusk) March 14, 2022 In a tweet Sunday he said, “Tesla & SPaceX are seeing significant recent inflation pressure in raw materials & logistics”. In Case You Missed It Lyft (LYFT) followed Uber’s (UBER) lead in adding a fuel surcharge for riders as gas prices remain at record highs. Lyft did not disclose how much that temporary charge will be but Uber’s fee will range between $0.45 to $0.55 per ride. The companies say that extra charge will go directly to drivers. Shares of the major vaccine makers popped on news of renewed Covid lockdowns in China Monday. Pfizer (PFE) shares jumped 3.9%, while BioNTech (BNTX) surged 12%, and Moderna (MRNA) rallied 8.6%. Shenzhen became the first city in China to be placed under a full lockdown with only essential businesses able to be open. That closure is prompting fears of more supply chain issues and worsening inflation as the city is a global tech hub and the fourth largest port in the world.
Continue Reading -->Oil Bulls Back Off
Traders are still cautious towards risk assets like stocks and Bitcoin. And interestingly, traders grew less bullish on oil this week, just in front of today’s drop in crude prices. IMPORTANT: when we reference “traders” in this article, we are specifically referring to T3 Sentiment Survey respondents. SPX: Traders Are Still Cautious Four weeks ago, bullish sentiment on SPX fell to 19% – by far the lowest reading we’ve ever had in our admittedly short 20 week history.It has since rebounded to 39%, which is still a fairly bearish reading. Bitcoin Sentiment Not Bouncing Bitcoin Sentiment was at record lows four weeks ago, and it has since bounced to 41%. That is definitely in the bearish category, even with traders speculating that the conflict in Ukraine is increasing demand for cryptos. Apple Optimism Edging Higher… Optimism towards Apple grew for the fourth week in a row, hitting 50%. That’s split right down the middle. Tesla Split Down the Middle Tesla (TSLA) sentiment is at 50% – split down the middle, just like Apple. Gold Bullishness Sliding Lower Even with the Ukraine-Russia war intensifying and inflation going through the roof, gold sentiment has drifted lower for weeks now. Oil Sentiment Drops Oil has led the market in 2022, but sentiment is dropping as many traders anticipate the highs being in. What Happens Now? Traders are still cautious on the market for good reason, including:The massive inflation spikeCentral banks pulling back accommodationThe conflict in UkraineThe overall crash in risky stocksNow we’ll see if traders are merely complacent ahead of another potential drop.
Continue Reading -->Options In Play – Earnings On The Radar Week Of 3/18/22
There will be a few big names reporting this coming week, though earnings may be overshadowed by the FOMC meeting taking place. Expect a volatile week of news, with headlines, the Fed, and earnings pushing stocks around.
Continue Reading -->When Will the Market Bottom Out?
The market doesn’t seem to have hit a bottom yet, but it’s on it’s way downward and looks like it will hit Sami’s next support area. What has to happen before you start looking at the support area after that? In this video, Sami explains: – How CRWD differed from QQQ last week – What he doesn’t like about DDS – The mistake he made on DTE – Which chart he prefers for EPAM – How to find a transition A breakout in MULN
Continue Reading -->Scott Redler’s Dog Bytes: Managing Big Metal Moves
SPX futures are +17 after closing on the lows Friday as the misdirection continues. We have the Fed Wednesday. We’re trying to figure out if SPX 4111-4222 holds and if oil put in its highs of the year. SPX pivot resistance is 4250, then 4299. The longer we stay below that, the more control the active bears can have. Tech still feels challenged. I’d watch 2022 lows in key names for clues.GLD had a big move from $170 to $193+ and it is digesting. My $174/$177 call spread expired this Friday,. You can manage it and lose a little premium, or try and max it. Now see if GLD holds the $183 area. Otherwise it can see the 21 day near $180 so be careful. SLV hit a high of $24.90 early this week. I’d think the 21 day near $22.90 holds. I managed some of my $22/$23.50 spread. Some might sell higher calls against spreads. The China issues might drag down semis. See if AMD stays below $103 or reclaims it. $99.35 is the 2022 low. Make sure to have a plan. NVDA remains trapped in its downtrend line. There are only small tactical things to do since it got rejected into the $232 area. Now see how it handles the $218 area. If it gets and stays below that, watch the 2022 lows.Positions Disclosure as of 3/14/2022 at 8:55 a.m. ET
Continue Reading -->Coffee With Greta: Fed 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: +169 (+0.5%) SPX Futures: +15 (+0.4%) NASDAQ Futures: -12 (-0.1%) Good morning friends! Futures are mixed as the market gears up for a new week of trade with the Fed set to meet. Let’s get right to it! Fed in Focus Traders are eyeing the Federal Reserve as the Central Bank prepares to meet. The Federal Open Market Committee meets Tuesday and Wednesday. The bank is expected to enact its first rate hike since 2018 and provide more clarity on plans for the balance sheet runoff. CME Group’s FedWatch Tool shows nearly 95% of traders believe the Fed will raise rates by 0.25%. Chairman Jerome Powell recently told Congress the war in Ukraine poses “uncertain” risks to the U.S. economy but the bank has no plans to alter monetary policy at this point. The Fed is under pressure to get inflation under control after the CPI hit a fresh 40-year high at 7.9% in February. Oil Prices Fall Oil prices are falling amid optimism over talks between Russia and Ukraine. West Texas Intermediate crude futures are down 4.2% to $104.74 per barrel with Brent crude futures falling 3.5% to $108.73 per barrel. U.S. gas prices cooled over the weekend after hitting a fresh record last week. According to AAA the average price for a gallon of regular gasoline is $4.325 today. Although the pace of increases slowed over the weekend, that’s up from $4.065 a week ago. Russia, Ukraine Hold Talks Ukrainian and Russian officials resumed peace talks over video today. Ukraine is still seeking to establish a cease-fire and wants all Russian troops to immediately be withdrawn from the country. Ukraine says two civilians were killed and three were injured in a Russian shelling attack on a residential building in the Obolon district of Kyiv. It’s unclear if Russia will agree to Ukraine’s demands after reports emerged that Moscow has requested military equipment from China to help in its invasion of Ukraine. Russia and China both denied those reports. Treasury Yields Rally U.S. Treasury yields are rallying ahead of the Fed meeting this week. The yield on the 10-year Treasury bond jumped more than eight basis points to 2.08% today, the highest it’s been since July 2019. The 30-year yield is also up eight basis points to 2.44%. China Lockdowns Prompt Supply Chain Worries China locked down the city of Shenzhen over the weekend, with all non-essential businesses closed or working from home. The city is a major manufacturing hub and the fourth largest port in the world. Apple (AAPL) supplier Foxconn is among the businesses that have been shutdown. The lockdown is likely to worsen the supply chain issues and inflation pressures in the U.S. economy. Only 400 cases of Covid have been confirmed in the city but China has followed a “zero Covid” policy amid the pandemic. Other major cities, including Shanghai and Beijing are on the brink of a lockdown as well. The lockdowns prompted a sell-off in Chinese stocks. Hong Kong’s Hang Seng Index fell 5.0%, while the Shanghai Composite dropped 2.6% and the Shenzhen Component fell 3.1%. In Case You Missed It The U.S. Treasury Department added more than 20 new Russian elites to the list of sanctioned individuals Friday. They include the family of Kremlin spokesman Dmitry Peskov, Russian parliament members, the management board of VTB Bank, and one Russian oligarch. The sanctions also target two Russian nationals who helped North Korea obtain material for nuclear weapons. Congress passed a $1.5 trillion omnibus spending bill to fund the government through the end of the fiscal year on September 30. The legislation includes $13.6 billion in humanitarian and security aid for Ukraine. Covid relief funding was scratched from the bill after Republicans said it was a non-starter issue. President Biden is expected to sign the bill into law this week.
Continue Reading -->