Coffee With Greta: Bank Earnings Rush
DJIA Futures: -104 (-0.3%) SPX Futures: -3 (-0.1%) NASDAQ Futures: -9 (-0.1%) Good morning friends! Futures are slipping after the release of positive inflation data as traders digest big bank earnings. Let’s get right to it! PPI Surprise Wholesale inflation pressures unexpectedly fell at the end of 2023. The Bureau of Labor Statistics’ producer price index fell 0.1% monthly in December and rose 1% year over year. That was lower than expectations for a 0.1% monthly and 1.3% annual gain. It was the third straight monthly decline. The core PPI was unchanged for the month and up 1.8% annually vs expectations for 0.2% monthly and 2% annually. The PPI is a leading indicator for consumer prices and considered a good gauge for future inflation pressures. JPMorgan Chase Beats Q4 Estimates JPMorgan Chase (JPM) shares are up 2.1% ahead of the open after beating Q4 expectations on the top and bottom line. Here’s how the largest bank in the U.S.’s results compared to analysts’ estimates: Adjusted EPS: $3.97 vs $3.35 expected Revenue: $39.9 billion vs $39.73 billion expected The bank incurred a $2.9 billion fee from the FDIC during the quarter for its rescue of regional banks. Q4 net interest income was $24 billion excluding markets vs $23 billion expected. For the full-year, net interest income excluding markets totaled $94 billion. In Q4, corporate and investment bank market revenue rose 2% to $5.8 billion. Gross investment banking and markets revenue rose 32% to $924 million. Assets under management jumped 24% to $3.4 trillion. JPMorgan forecast 2024 net interest income excluding markets of $88 billion vs $86.5 billion expected. The bank generated nearly $50 billion in profit in 2023, $4.1 billion of which came from First Republic Bank. CEO Jamie Dimon said, “The U.S. economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus.” Citigroup Tops Q4 Earnings Expectations Citigroup (C) shares are rising 1.9% in premarket trade after beating Q4 earnings expectations but missing on revenue. Here’s how the investment bank’s results compared to analysts’ estimates: Adjusted EPS: $0.84 vs $0.81 expected Revenue: $17.44 billion vs $18.74 billion expected On an unadjusted basis, the bank posted a $1.8 billion loss in the quarter after booking charges tied to overseas risks, the regional banking crisis, and CEO Jane Fraser’s corporate overhaul. Those charges hit earnings by $4.66 billion and were larger than what CFO Mark Mason had previously disclosed. Fraser called the bank’s performance “very disappointing” because of the charges but said Citigroup had made “substantial progress” simplifying the bank last year. Bank Of America Drops As Earnings Fall Bank of America (BAC) shares are down 2.5% ahead of the open after reporting a sharp drop in earnings year over year. Here’s how the bank’s results compared to analysts’ estimates: Adjusted EPS: $0.70 vs $0.53 expected Revenue: $22 billion vs $23.7 billion On an unadjusted basis, net income tumbled to $3.1 billion from $7.1 billion a year ago. Bank of America incurred a $2.1 billion fee from the FDIC related to its rescue of regional banks earlier in the year. Net interest income fell 5% to $139.9 billion while non-interest income fell by $1.8 billion to $8.0 billion. The bank boosted its loan loss reserves by $12 million to $1.1 billion. The consumer banking division had net income of $2.8 billion, with revenue down 4% to $10.3 billion. The global wealth and investment-management segment had net income of $1 billion, as client balances rose 12% to $3.8 trillion. The global banking division had net income of $2.5 billion, as investment banking fees rose 7% to $1.1 billion. The global markets division had net income of $636 million, as sales and trading revenue rose 3% to $3.6 billion. Fixed income, currencies and commodities income fell 4% to $2.1 billion. Equities trading revenue rose 13% to $1.5 billion. Wells Fargo Slips Despite Higher Profit Wells Fargo (WFC) shares are down 1.5% ahead of the open after reporting Q4 earnings that were in line with expectations and beating on revenue. Here’s how the consumer bank’s results compared to analysts’ estimates: EPS: $0.86, as expected Revenue: $20.48 billion vs $20.30 billion expected Wells Fargo boosted its loan loss reserves by 34% to $1.28 billion in the quarter. CEO Charlie Scharf said, “We are closely monitoring credit and while we see modest deterioration, it remains consistent with our expectations.” The bank’s net interest income fell 4.9% to $12.77 billion vs $12.76 billion expected. Non-interest income rose 16.8% to $7.71 billion vs $7.51 billion expected, amid higher trading revenue and investment banking fees. Delta Slides On Lower Guidance Delta Airlines (DAL) shares are dropping 5.2% in premarket trade after beating Q4 expectations but lowering guidance. Here’s how the airline’s results compared to analyst’ estimates: Adjusted EPS $1.28 vs $1.17 expected Adjusted revenue: $13.66 billion vs $13.52 billion expected The company’s net income jumped to $2.04 billion from $828 million a year ago. A record number of passengers paid to sit in higher-priced cabins during the quarter, driving premium cabin revenue up 15% vs 10% growth in standard coach revenue. Delta said it expects Q1 revenue to increase 3% to 6% year over year with EPS between $0.25 and $0.50, in line with estimates. For the full year, the airline forecast adjusted EPS between $6 and $7, below the over $7 forecast the company previously predicted.
Continue Reading -->Coffee With Greta: Hot CPI Drags Down Stocks
DJIA Futures: -46 (-0.1%) SPX Futures: -7 (-0.2%) NASDAQ Futures: -6 (-0.03%) Good morning friends! Futures are slipping as new data shows inflation running hotter-than-expected and the labor market maintaining strength. Let’s get right to it! CPI Comes In Hot Consumer prices rose more than expected at the end of 2023. The Bureau of Labor Statistics’ consumer price index rose 0.3% monthly and 3.4% year over year. That was higher than economists’ expectations for a 0.2% monthly and 3.2% annual gain. Food prices rose 0.2% monthly and energy prices rose 0.4%, a reversal from the 2.3% drop in November. The core CPI rose 0.3% monthly and 3.9% annually vs 0.3% monthly and 3.8% annually expected. The biggest contributor to that increase was rising shelter costs. That category rose 0.5% monthly, accounting for more than half of the core CPI increase, and 6.2% annually. Weekly Jobless Claims Fall Unexpectedly Weekly jobless claims fell unexpectedly in the first week of the New Year. The Labor Department reported 202,000 Americans filed initial claims for unemployment benefits last week. That was down by 1,000 from the previous week and lower than expectations for an increase to 210,000. It was the lowest level of claims since mid-October. Continuing jobless claims fell by 34,000 to 1.83 million in the week ending December 30. SEC Approves Spot Bitcoin ETFs Crypto-related stocks are higher this morning after 11 spot bitcoin ETFs were approved to begin trading by the Securities and Exchange Commission. Coinbase (COIN) shares are up 3.8% ahead of the open, Marathon Digital (MARA) shares are 5.7% higher, and Riot Platforms (RIOT) shares are up 5.2%. Bitcoin is also up 3.3% at over $47,300. Here are the approved ETFs and the ticker symbols they will trade under: Blackrock $IBIT Grayscale $GBTC Hashdex $DEFI Valkyrie $BRRR Invesco $BTCO Wisdom Tree $BTCW Franklin $EZBC Fidelity $FBTC Vaneck $HODL Ark 21 $ARKB Bitwise $BITB In a statement after the approval on Wednesday, SEC Chairman Gary Gensler said, “While we approved the listing and trading of certain spot bitcoin ETF shares today, we did not approve or endorse bitcoin.” Ethereum prices also spiked after the decision, up 7.4% and topping $2,644. The SEC is expected to make a decision on spot ETH ETF applications beginning in May.
Continue Reading -->Coffee With Greta: Waiting Game
DJIA Futures: -12 (-0.03%) SPX Futures: -3 (-0.1%) NASDAQ Futures: -13 (-0.1%) Good morning friends! Futures are flat as traders await key inflation data on Thursday. Let’s get right to it! Waiting For Data Stocks seem to be in a bit of a holding pattern as traders await key economic data on Thursday. The December CPI is set to be released at 8:30 a.m. ET tomorrow. Economists expect headline CPI to have risen 0.2% monthly and 3.2% annually with the core CPI up 0.3% monthly and 3.8% annually. Traders will be looking at this data for more clues on when the Fed may start cutting rates. The central bank’s first meeting of the year is January 30-31. CME Group’s FedWatch Tool shows over 95% of traders expecting no rate change at that meeting with over 66% anticipating the first cut at the next meeting on March 20. Crypto Stocks Drop Crypto-related stocks are pulling back this morning after a false post from the SEC’s X account that it had approved bitcoin ETFs for trading. Bitcoin prices quickly spiked after that post but then slid below $46,000 and is currently trading around $45,100. Coinbase (COIN) shares are down 3.3% ahead of the open, Marathon Digital Holdings (MARA) shares are down 3.8%, and Riot Platforms (RIOT) are 3.4% lower. The SEC later deleted the post and said its X account had been compromised. A spokesperson said, “The SEC will work with law enforcement and our partners across government to investigate the matter and determine appropriate next steps relating to both the unauthorized access and any related misconduct.” The Commission is expected to make a decision on bitcoin ETFs this week. Lennar Hikes Dividend Lennar (LEN) shares are up 2.2% in premarket trade after raising its annual dividend by 33%. The homebuilder increased its dividend by $0.50 to $2.00 a share. The company’s board also authorized a $5 billion increase to its buyback program. The Co-CEO said, “Given the strength of our balance sheet, our strong cash position and our operating strategy driving cash flow, we are focusing more of our capital allocation on maximizing total shareholder returns.” Mortgage Demand Jumps Mortgage demand jumped at the start of the New Year even as rates rose slightly. The Mortgage Bankers Association reported total application volume rose 9.9% from the previous week. Purchase applications rose 6% weekly and were down 16% year over year. Refinance applications surged 19% weekly and were 30% from a year ago. The average 30-year fixed contract rate increased to 6.81% from 6.76%.
Continue Reading -->Coffee With Greta: Failed Rally?
DJIA Futures: -186 (-0.5%) SPX Futures: -27 (-0.6%) NASDAQ Futures: -135 (-0.8%) Good morning friends! Futures are slipping as stocks fail to hold onto Monday’s gains. Let’s get right to it! Juniper Networks Pops Juniper Networks (JNPR) shares are surging 20.5% in premarket trade following a report that Hewlett Packard Enterprise (HPE) is in advanced talks to buy the company. The Wall Street Journal reported HPE is set to buy JNPR for about $13 billion. Sources say a deal could be announced as soon as this week. HPE shares are down 7.4% ahead of the open. Unity Software To Layoff 25% Of Staff Unity Software (U) shares are slipping 1.1% ahead of the open after announcing it will lay off about 25% of its workforce. The cuts will impact 1,800 jobs at the gaming technology company. In a regulatory filing, Unity said the move is part of a corporate restructuring plan. The company said it’s unable to “reasonably estimate the costs and charges in connection with this reduction, which it expects will be substantially incurred in the first quarter of 2024.” Match Group Jumps On Activist Investor Stake Match Group (MTCH) shares are jumping 12.6% in premarket trade following a Reuters report that activist investor Elliott Investment Management has built a $1 billion stake in the company. Match Group is the owner of dating apps Tinder, Hinge, Match.com, and more. Elliott reportedly plans to push the company to take steps to improve its performance and boost its stock price. In a statement, a Match spokesperson said, “Our team regularly engages with investors, and will continue to work to create great experiences for our users and value for our shareholders.”
Continue Reading -->Coffee With Greta: Key Week
DJIA Futures: -131 (-0.4%) SPX Futures: +2 (+0.03%) NASDAQ Futures: +26 (+0.2%) Good morning friends! Futures are mixed as Boeing drags down the Dow. Let’s get right to it! Important Week This will be another important week of economic data for the market and the Fed. All eyes are on Thursday as the December CPI is set to be released before the market open. This will be the final piece of inflation data for 2023 and comes before the Fed meeting at the end of the month. Economists expect headline inflation to have picked up slightly at the end of the year while core inflation cooled further. CME Group’s FedWatch Tool shows over 95% of traders expect the Fed to keep rates unchanged at the first meeting on January 31 and just under 63% currently expect the first cut at the March 20 meeting. Q4 earnings season also officially kicks off with the big banks at the end of the week. JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), UnitedHealth (UNH), and Delta Airlines (DAL) are all scheduled to report Friday morning. Boeing Drops After FAA Grounding Boeing (BA) shares are down 7.1% ahead of the open after the FAA ordered airlines to ground dozens of Boeing 737 Max 9 aircraft over the weekend. The grounding order was issued Saturday after a door plug blew out on an Alaska Airlines (ALK) flight on Friday. ALK shares are also down 4.9%. Grounded aircraft will undergo urgent inspections. The FAA said around 171 planes would be affected by the order. Alaska Airlines and United Airlines (UAL) are the largest operators of the 737 Max 9 model. Oil Prices Slide Oil is starting the new week lower amid sharp price cuts by Saudi Arabia and an increase in OPEC output. West Texas Intermediate crude futures are down 3.4% at $71.30 bbl while Brent crude futures are down 3.1% at $76.29 bbl. Due to rising supply and competition with rival producers, Saudi Arabia cut the February official selling price of its Arab Light crude to Asia on Sunday. That price is now at its lowest level in 27 months. A new Reuters survey also found OPEC output rose in December as increased production in Iraq, Angola, and Nigeria offset cuts by Saudi Arabia and other OPEC+ members.
Continue Reading -->Coffee With Greta: Yields Spike
DJIA Futures: -96 (-0.3%) SPX Futures: -13 (-0.3%) NASDAQ Futures: -55 (-0.3%) Good morning friends! Futures are falling as yields spike after the hot December jobs report. Let’s get right to it! December Jobs Report Beats The U.S. economy added far more jobs than expected in December. The Labor Department reported employers added 216,000 jobs last month while the unemployment rate was unchanged at 3.7%. That was stronger than expectations for a gain of 170,000 jobs and a 3.8% unemployment rate. Government jobs saw the largest gain rising by 52,000, leisure and hospitality added 40,000, healthcare added 38,000, social assistance increased by 21,000, construction added 17,000, and retail trade increased by 17,000. Transportation and warehousing lost 23,000 workers. October was revised down by 45,000 to 105,000 while November was revised lower by 26,000 to 173,000. There were 2.7 million total job gains in 2023, down from 4.8 million in 2022. Yields Spike After Hot Jobs Report Treasury yields are popping higher this morning after the release of that stronger-than-expected jobs data. The 10-year yield is up seven basis points at 4.07% while the 2-year yield is up seven basis points at 4.45%. If the labor market remains hot, it gives the Fed more room to hold rates higher before starting cuts. CME Group’s FedWatch Tool now shows just under 54% of traders expecting a 25 basis point cut at the March 20 meeting. Costco Reports Strong December Sales Costco (COST) shares are up 0.8% ahead of the open after reporting strong sales at the end of 2023. The warehouse retailer said revenue jumped 9.9% year over year in December to $26.2 billion. That was up from the 5.1% increase in November. Same-store sales rose 8.5% vs 3.5% In November. Foot traffic in Costco stores jumped 6.5% in the U.S. and 7.5% worldwide. Online same-store sales surged 17.7%. In Case You Missed It Peloton (PTON) shares surged 13.9% on Thursday after announcing a new partnership with TikTok. The partnership will create a new fitness hub on the social media platform, known as #TikTokFitness Powered by Peloton. It will feature short-form fitness videos, longer live classes, content from Peloton instructors, and collaborations with TikTok creators.
Continue Reading -->Coffee With Greta: Labor Market Strength
DJIA Futures: +99 (+0.3%) SPX Futures: -1 (-0.01%) NASDAQ Futures: -67 (-0.4%) Good morning friends! Futures are mixed as traders digest stronger-than-expected jobs data. Let’s get right to it! Private Job Growth Tops Expectations The U.S. private sector added more jobs than expected in December. Payroll firm ADP reported private employers added 164,000 workers last month. That was higher than 130,000 expected and a sharp increase from the downwardly revised 101,000 in November. The leisure and hospitality sector led the gains, adding 59,000 jobs. Construction added 24,000, other services added 22,000, and financial activities added 18,000. Manufacturing lost 13,000 jobs while information services and natural resources and mining both lost 2,000. The pace of wage growth continued to slow with annual pay increases of 5.4%. Weekly Jobless Claims Fall Weekly jobless claims fell more than expected in the final week of 2023. The Labor Department reported 202,000 Americans filed initial claims for unemployment benefits last week. That was down by 18,000 from the previous week and lower than 219,000 expected. Continuing claims fell by 31,000 to 1.855 million in the week ending December 23. Yields Pop On Strong Jobs Data Treasury yields are pushing higher this morning after the release of that strong labor market data. The 10-year yield is up six basis points at 3.98% while the 2-year yield is up three basis points at 4.37%. This week’s jobs data is key for traders attempting to assess the Fed’s plans for monetary policy this year. CME Group’s FedWatch Tool now shows just over 60% expecting a rate cut at the March 20 meeting, down from over 70% a few weeks ago. Walgreens Slashes Dividend Walgreens Boots Alliance (WBA) shares are down 1.5% after beating fiscal Q1 expectations but slashing its quarterly dividend. Here’s how the retail pharmacy giant’s results compared to analysts’ estimates: Adjusted EPS: $0.66 vs $0.61 expected Revenue: $36.71 billion vs $34.86 billion expected Revenue jumped 10% year over year and Walgreens reiterated its fiscal 2024 outlook. The company cut its quarterly dividend to $0.25 from $0.48. The CEO said that move is meant to “strengthen [its] long-term balance sheet and cash position.” The cut brings Walgreens’ dividend yield down to 3.9% from more than 7% previously, which had made it the highest-paying dividend stock in the Dow. In Case You Missed It Job openings fell to a 32-month low in November as the labor market cools. The Labor Department’s job openings and labor turnover survey (JOLTS) showed there were 8.8 million available jobs during the month. That was in line with expectations. Quits also dropped to a 33-month low of 3.5 million. There were 1.4 open jobs to every available worker in November, down from the 2 to 1 ratio in 2022. 5.5 million workers were hired during the month, the smallest monthly increase since April 2020. The minutes of the Fed’s December meeting showed members are not ruling out the possibility of more rate hikes. That readout was released Wednesday afternoon. Even as the dot plot showed plans for three rate cuts in 2024, the minutes said those forecasts were associated with an “unusually elevated degree of uncertainty.” They also said “several” officials discussed the need to hold rates steady for “longer than they were currently anticipated.
Continue Reading -->Coffee With Greta: Tech Decline
DJIA Futures: -113 (-0.3%) SPX Futures: -17 (-0.4%) NASDAQ Futures: -83 (-0.5%) Good morning friends! Futures are dropping as traders continue to sell-off big tech stocks. Let’s get right to it! Tech Slide Continues Tech stocks are leading the decline again this morning after the Nasdaq logged its worst day since October on Tuesday. Apple (AAPL) shares are down 0.4% ahead of the open with other Magnificent 7 names like Nvidia (NVDA), Tesla (TSLA), and Meta (META) all falling more than 1%. The pullback in tech also comes as Treasury yields push higher. The 10-year yield is up three basis points at 3.97% while the 2-year yield is up two basis points at 4.35%. Hawkish Fed Comments Richmond Fed President Thomas Barkin refuses to say rate hikes are definitely done. Speaking at an event this morning, Barking said hikes remain “on the table” if inflation does not continue on a downward path. But he also expressed optimism about the chance for a soft landing saying, “Now, everyone is talking about the potential for a soft landing, where inflation completes its journey back to normal levels while the economy stays healthy. And you can see the case for that.” Barkin compared the Fed’s fight against inflation to landing an airplane, he said, “The airport is on the horizon. But landing a plane isn’t easy, especially when the outlook is foggy, and headwinds and tailwinds can affect your course. It’s easy to oversteer and do too much or understeer and do too little.” CME Group’s FedWatch Tool still shows over 67% of traders expecting the Fed’s first rate cut at the March 20 meeting. The Fed releases the minutes of its December meeting at 2:00 p.m. ET which will give more insight into the discussion around the updated dot plot which showed plans for three rate cuts this year. Mortgage Demand Drops Mortgage demand tumbled at the end of 2023 despite lower rates. The Mortgage Bankers Association reported total application volume dropped 9.4% last week compared with two weeks earlier. Purchase applications ended the year 12% lower compared to a year ago while refinance applications were up 15% year over year. The average 30-year fixed contract rate ended 2023 at 6.76%.
Continue Reading -->Coffee With Greta: New Year
Set a reminder for today’s New Year market discussion with David Prince LIVE at 12:00 pm ET! DJIA Futures: -242 (-0.6%) SPX Futures: -40 (-0.8%) NASDAQ Futures: -183 (-1.1%) Good morning friends! Futures are dropping as the new year of trade begins on Wall Street. Let’s get right to it! Stocks Drop, Yields Climb The major indexes are all falling ahead of the open as yields rise to kick off the New Year. The 10-year Treasury yield is up 9 basis points at 3.97% while the 2-year yield is 10 basis points higher at 4.36%. The market is widely expecting the Fed to approve its first rate cut at the second meeting of the year, with over 69% of traders anticipating a cut on March 20. This will be an important week of data for that outlook on the Fed’s plans. The Labor Department reports job openings for November on Wednesday, ADP releases its private employment report for December on Thursday, and the official December jobs report will be out Friday morning. Apple Drops After Barclays Downgrade Apple (AAPL) shares are falling 2.3% in premarket trade after Barclays downgraded the stock to underweight. The group trimmed its price target to $160 from $161 due to “lackluster” sales of the iPhone 15, specifically in China. In a note, Barclays analyst Tim Long wrote, “We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables.” Long said he expects that weakness in hardware sales to continue. Tesla Tops Q4 Delivery Estimates Tesla (TSLA) shares are up 0.9% ahead of the open after reporting stronger-than-expected deliveries in Q4. The electric automaker says it delivered 484,507 vehicles in the final three months of 2023 and produced 494,989. That topped analysts’ estimates for 477,000 Q4 deliveries. 461,538 of the vehicles delivered in the quarter were Model 3 and Model Y cars. The number brings Tesla’s total deliveries for the year to 1,808,581 while production totaled 1,845,985. That was better than the company’s own forecast for 1.8 million in deliveries and represents 38% year over year growth in deliveries and 35% production growth.
Continue Reading -->Coffee With Greta: Year End
DJIA Futures: -6 (-0.02%) SPX Futures: -2 (-0.1%) NASDAQ Futures: -7 (-0.04%) Good morning friends! Futures are flat ahead of the final trading day of 2023. Let’s get right to it! Final Day of 2023 The S&P 500 enters today’s trading session less than 0.5% away from a new record high. The index is up 24.6% so far in 2023, with the Dow up 13.8%, and the Nasdaq up 44.2%. The tech-heavy Nasdaq is on track for its largest annual gain since 2003. All three major indexes are also on track for their ninth straight weekly gains, the longest streak for the S&P 500 since 2004. The gains have extended to small caps this month as the Fed signaled plans for three rate cuts in 2024. The Russell 2000 is up nearly 14% in December, on track for its best month since November 2020. Nvidia Announces Slower Gaming Chips For China Nvidia (NVDA) shares are up 0.3% ahead of the open after announcing it will launch an adjusted version of its gaming processor with slower performance in China. A spokesperson told Reuters, the new Nvidia RTX 4090D will be launched in January and has been “designed to fully comply with U.S. government export controls.” The GPU has 11% fewer Compute Unified Device Architecture or “CUDA” cores than versions of the chip sold outside of China. The spokesperson said Nvidia “extensively engaged with the U.S. government” while developing the new chip. Fisker Rallies Fisker (FSR) shares are rallying 9.3% in premarket trade after announcing strong growth in deliveries between the third and fourth quarters. The electric vehicle maker said it grew deliveries by over 300%, driven by strong demand for its Ocean SUV. Deliveries for all of 2023 totaled 4,700 vehicles as Fisker produced 10,142 EVs. The majority of those deliveries were the Fisker Ocean One which is priced at $68,999. The company said it will announce a plan in January to accelerate its sales and deliveries further in 2024. In Case You Missed It Pending home sales were flat in November even as mortgage rates declined. The National Association of Realtors pending home sales index was unchanged at 71.6 last month vs expectations for a 1% increase. Year over year, pending sales declines 5.2%.
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