Coffee With Greta: Stocks Jump Ahead Of Jobs Data
DJIA Futures: +21 (+0.1%) SPX Futures: +9 (+0.2%) NASDAQ Futures: +32 (+0.2%) Good morning friends! Futures are rising as traders prepare for key labor market data over the next few days. Let’s get right to it! Jamie Dimon Warns Banking Crisis Is Not Over JPMorgan Chase (JPM) CEO Jamie Dimon says the banking crisis is still a threat and the regulatory process needs to be reimagined. In his annual letter to shareholders on Tuesday, Dimon said, “As I write this letter, the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come.” But he also said the recent issues are “nothing like what occurred during the 2008 global financial crisis.” Dimon said regulation should be “less academic, more collaborative” moving forward. He pointed out that the Fed’s recent bank stress tests didn’t appropriately assess the risk of a rapid rise in interest rates on government bonds. Dimon said, “This is not to absolve bank management – it’s just to make clear that this wasn’t the finest hour for many players. All of these colliding factors became critically important when the marketplace, rating agencies and depositors focused on them.” Oil Prices Rise Oil prices are rising again today, extending the large gains seen on Monday. West Texas Intermediate crude futures are up 0.8% at over $81 bbl while Brent crude futures are up 0.7% at over $85.50 bbl. The gains come after OPEC+ voted to cut production over the weekend. Those cuts have led most analysts to raise their Brent price forecasts to around $100 per barrel by year-end. Virgin Orbit Files For Bankruptcy Virgin Orbit (VORB) shares are plunging 20.6% ahead of the open after filing for Chapter 11 bankruptcy protection. The company submitted that filing after failing to secure funding and CEO Dan Hart told employees it would cease operations last week. In a statement today, he said, “While we have taken great efforts to address our financial position and secure additional financing, we ultimately must do what is best for the business.” Virgin Orbit is looking to sell its assets with Hart saying, “We believe that the cutting-edge launch technology that this team has created will have wide appeal to buyers as we continue in the process to sell the Company. At this stage, we believe that the Chapter 11 process represents the best path forward to identify and finalize an efficient and value-maximizing sale.” Coming Up: JOLTS The first piece of key labor market data is set to be released today. The Labor Department releases its job openings and labor turnover survey for February at 10:00 a.m. ET. That survey is expected to show the number of job openings dropped to 10.5 million from 10.8 million in February. In Case You Missed It Activity in the U.S. manufacturing sector declined more than expected in March. The Institute for Supply Management’s manufacturing PMI dropped to 46.3% from 47.7% in February. That was the lowest level since May 2020 and the fifth straight monthly decline. Any reading below 50% signals a contraction in the sector.
Continue Reading -->Coffee With Greta: Second Quarter Kicks Off
DJIA Futures: +107 (+0.3%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -119 (-0.9%) Good morning friends! Futures are mixed as oil prices surge and Q2 begins. Let’s get right to it! Oil Prices Surge After Surprise OPEC+ Production Cuts Oil prices are surging this morning after OPEC+ announced it was cutting output by 1.16 million barrels per day over the weekend. West Texas Intermediate crude futures are up 6.1% to over $80 bbl while Brent crude futures are up 6.1% to just under $85 bbl. The cuts will start in May until the end of 2023 and Saudi Arabia called it a “precautionary measure” targeted at stabilizing the oil market. Analysts are warning oil may hit $100 bbl again due to the cuts as China reopens, Russia has cut its output, and demand is higher in the summer months ahead. WWE, UFC Agree On Merger World Wrestling Entertainment (WWE) shares are falling 6.3% in premarket trade after agreeing to merge with UFC. The merger will create a new publicly traded company controlled by Endeavor Group (EDR). EDR shares are up 3.9% ahead of the open. Endeavor will own a 51% stake in the new company and WWE shareholders will own the remaining 49%. The deal values WWE at $9.3 billion and UFC at $12.1 billion. The name of the new company will be announced at a later date. Tesla Q1 Deliveries Tesla (TSLA) shares are slipping 3.6% ahead of the open after the company reported Q1 deliveries and production numbers over the weekend. On Sunday, the electric automaker reported it delivered 422,875 vehicles last quarter and produced 440,808. That was a 36% year over year increase in deliveries and up 4% from Q4 2022. But it was short of analysts’ average estimate for 432,000 deliveries. Tesla delivered 10,965 of the higher-priced Model S and Model X vehicles and 412,180 of the lower-priced Model 3 and Model Y. McDonald’s Expected To Announce Corporate Layoffs McDonald’s (MCD) shares are up 0.4% in premarket trade following reports the company is temporarily closing its U.S. offices this week and preparing to announce corporate layoffs. The Wall Street Journal reported that McDonald’s asked employees to work from home Monday through Wednesday this week so it can deliver staffing decisions virtually. In a memo, McDonald’s said, “During the week of April 3, we will communicate key decisions related to roles and staffing levels across the organization.” In Case You Missed It Consumer sentiment dropped more than expected at the end of March, hitting a 3-month low on Friday. The index dropped to 62 from the flash reading of 63.4. Sentiment about current economic conditions fell more than 4 points to 66.3, while the 6-month expectations index dropped more than 2 points to 59.2. But inflation expectations improved. Consumers expect inflation to be at 3.6% 1-year from now, down from 4.1% in in February.
Continue Reading -->Coffee With Greta: Quarter End
DJIA Futures: +115 (+0.4%) SPX Futures: +9 (+0.2%) NASDAQ Futures: +7 (+0.1%) Good morning friends! Futures are rising on the final day of Q1 after the release of better-than-expected inflation data. Let’s get right to it! PCE Inflation Cooler Than Expected The Fed’s preferred inflation gauge rose less than expected in February. The personal consumption expenditures (PCE) price index rose 0.3% monthly and 5.0% year over year. That was better than expectations for a 0.4% monthly gain and 5.1% annually. The core PCE price index, which excludes food, energy, and trade, rose 0.3% monthly and 4.6% year over year. That was also cooler than 0.4% monthly and 4.7% annually expected. Both were a cooldown from January as the Fed’s fight against inflation continues. Personal incomes also rose more than expected up 0.3% monthly in February vs 0.2% expected. But personal spending was lower than expected, rising 0.2% vs 0.3% estimated. Virgin Orbit To Cease Operations Virgin Orbit (VORB) shares are plummeting 41.9% ahead of the open as the company is set to shut down. CEO Dan Hart told employees during an all-hands meeting Thursday afternoon that the company is ceasing operations “for the foreseeable future” and nearly all employees will be laid off. Hart said, “Unfortunately, we’ve not been able to secure the funding to provide a clear path for this company.” All but 100 employees will be eliminated, representing about 90% of the workforce. Each laid off employee will receive a severance package with a cash payment, extension of benefits, and support in finding a new job. Hart said a “direct pipeline” has been set up with sister company Virgin Galactic (SPCE) for hiring. Quarter-End Today is the final day of March, officially marking the end of the first quarter. The major indexes are mixed for the quarter. The S&P 500 and the Nasdaq are both on track for winning quarters, up 5.5% and 14.8% respectively. The Dow Jones meantime is down slightly for Q1. For the month, the S&P has gained 2%, the Nasdaq is up 4.9%, and the Dow is up 0.6%. Coming Up: Consumer Sentiment The University of Michigan releases its final March consumer sentiment index at 10:00 a.m. ET. That index is expected to decline slightly to 63 from the flash reading of 63.4 earlier this month. The survey also includes consumers’ inflation expectations which the Fed has been monitoring in recent months. In Case You Missed It Ford (F) shares rose 2% on Thursday after the automaker resumed production and hiked prices on the F-150 Lightning electric pickup truck. The company said it has resumed full production of the truck after pausing back in February due to a battery fire. The F-150 Lightning Pro will now start at a base price of $60,000, roughly 50% higher than the original starting price last Spring. The mid-level Lariat trim will range from $74,500 to just under $76,000. And the top-line Platinum trim will range between $96,900 to just over $98,000.
Continue Reading -->Coffee With Greta: Stocks Extend Gains
DJIA Futures: +210 (+0.6%) SPX Futures: +27 (+0.7%) NASDAQ Futures: +96 (+0.7%) Good morning friends! Futures are rising as traders bet the banking crisis has stabilized. Let’s get right to it! Q4 GDP Revised Lower U.S. economic growth was revised lower in the final quarter of 2022. The Commerce Department revised GDP growth down to 2.6% from 2.7% previously. It was the second downward revision to economic growth and reflected lower exports and consumer spending during the quarter. Imports, which are subtracted from GDP, were also revised slightly lower. The U.S. economy expanded at a 2.1% annual rate for all of 2022, with 2 quarters of negative growth and 2 quarters of positive growth. Weekly Jobless Claims Hit 3-Week High Weekly jobless claims rose more than expected last week. The Labor Department reported 198,000 Americans filed initial claims for unemployment benefits. That was up by 7,000 from the week before and higher than 195,000 expected. It was also the highest level in three weeks. Continuing claims decreased by 5,000 to 1.69 million vs 1.70 million expected. Treasury Yields Rise U.S. Treasury yields are rising this morning as investors digest the latest economic data. The 2-year yield is up 10 basis points to 4.16% while the 10-year yield is up 2 basis points to 3.59%. Turmoil in the banking sector seems to be settling after the collapse of Silicon Valley Bank earlier this month. CME Group’s FedWatch Tool still shows the market is split on what the Fed will do next with rates. 55% are anticipating a pause at the May 3 Fed meeting while 45% are expecting another 25 basis point rate hike. The Boston, Richmond, and Minneapolis Fed presidents are all scheduled to speak today. Traders will be monitoring those speeches for any insight on the bank’s plans. EVgo Surges On Earnings Beat EVgo (EVGO) shares are rallying 15.5% ahead of the open after reporting a smaller loss and higher revenue than expected in Q4. Here’s how the EV charging network operator’s results compared to analysts’ estimates: Loss per share: $0.06 vs $0.16 expected Revenue: $27.3 million vs $21.8 million expected Revenue surged 283% year over year and the company reported full-year revenue of $54.6 million. EVgo’s network throughput, which is a measure of the total energy provided to charging customers, jumped 76% annually in Q4. That jump came as the company added about 59,000 new customers accounts and ended 2022 with over 2,800 fast-charging stalls in operation. For 2023, the company expects revenue between $105 million and $150 million, an adjusted EBITDA loss between $78 million and $60 million, and 3,400 to 4,000 fast-charging stalls in operation or under construction by year-end. In Case You Missed It Pending home sales rose unexpectedly in February. The National Association of Realtors reported pending sales rose 0.8% last month vs expectations for a 3% decline. It was the third straight monthly increase. But pending sales were still down 21.1% compared to February 2022 as higher mortgage rates put pressure on buyers. February’s pending sales represent contracts signed with the sale expected to close in 30 to 60 days.
Continue Reading -->Coffee With Greta: Stocks Rebound
DJIA Futures: +214 (+0.7%) SPX Futures: +31 (+0.8%) NASDAQ Futures: +106 (+0.8%) Good morning friends! Futures are rising as traders attempt to shake off Tuesday’s loss. Let’s get right to it! Fed Governor Barr Testimony Federal Reserve Governor Michael Barr will appear in the House Financial Services Committee today for his second day of testimony about the Silicon Valley Bank collapse and broader banking crisis. Barr testified in the Senate Banking Committee on Tuesday. He told the committee that $100 billion of withdrawals were scheduled for March 10, the day the bank was shut down. That rush came after customers withdrew $42 billion from the bank the day before. He said, “They were not able to actually meet their obligations to pay their depositors over the course of that day and they were shut down.” Barr blamed the collapse on mismanagement by bank executives and said banks with more than $100 billion of assets may need stricter regulations moving forward. He said the Fed began warning SVB’s management about the risk of higher interest rates to its balance sheet in November 2021 but the bank “failed to address” those concerns in a timely way. Micron Shakes Off Weak Fiscal Q2 Micron Technology (MU) shares are up 2.6% ahead of the open despite reporting weaker fiscal Q2 results than expected. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted loss per share: $1.91 vs $0.86 expected Revenue: $3.69 billion vs $3.7 billion expected Revenue plunged 53% year over year and dropped 10% from Q1. Micron announced plans to increase its staff cuts to 15% vs 10% previously as part of its cost-reduction program. The CEO said, “Customer inventories are getting better, and we expect gradual improvements to the industry’s supply-demand balance. We remain confident in long-term demand and are investing prudently to preserve our technology and product portfolio competitiveness.” Micron expects fiscal Q3 revenue of $3.7 billion, in line with expectations. Lululemon Jumps After Earnings Beat Lululemon (LULU) shares are rallying 16.7% in premarket trade after beating Q4 expectations on the top and bottom line. Here’s how the company’s results compared to analysts’ expectations: Adjusted EPS: $4.40 vs $4.26 expected Revenue: $2.8 billion vs $2.7 billion expected Sales jumped 30% but gross margins declined more than expected. Gross margins were down 3% to 55.1% last quarter, worse than the company’s guidance for a 0.9% to 1.1% decline. Lululemon forecast Q1 EPS between $1.93 and $2 vs analysts’ expectations of $1.64. For the full year, the company expects net revenue to range between $9.3 billion and $9.41 billion vs $9.1 billion expected. Mortgage Demand Rises Mortgage demand jumped last week as the banking crisis pushed rates lower. The Mortgage Bankers Association reported total application volume rose 2.9% from the week before. Purchase applications increased 2% weekly but were 35% lower year over year. Refinance applications rose 5% weekly and were down 61% annually. The average 30-year fixed contract rate fell to 6.45% from 6.48%. But rates have since jumped sharply, rising more than 20 basis points at the start of this week. Coming Up: Pending Home Sales The National Association of Realtors reports pending home sales for February at 10:00 a.m. ET. The number of contracts signed to purchase a home last month is expected to fall 3% monthly. Pending sales are a forward-looking indicator for the housing market as they represent contracts signed during the month with sales expected to close in 30 to 60 days. In Case You Missed It Consumer confidence rose unexpectedly in March. The Conference Board’s consumer confidence index rose to 104.2 from 103.2 in February. The 6-month expectations index also improved to 73 from 70.4. But that remains the key 80 level which is considered a recession warning sign. U.S. home prices cooled for the seventh straight month in January. The S&P Case-Shiller National Home Price Index fell 1.8% monthly and was up 3.8% year over year. Four cities saw year-over-year decreases in prices – San Francisco, Seattle, San Diego, and Portland.
Continue Reading -->Coffee With Greta: Stocks Under Pressure
DJIA Futures: -35 (-0.1%) SPX Futures: -7 (-0.2%) NASDAQ Futures: -22 (-0.2%) Good morning friends! Futures are falling as higher rates put pressure on the market. Let’s get right to it! Treasury Yields Pop U.S. Treasury yields are rising this morning with the 2-year yield pushing back above 4%. Currently, the 2-year yield is up 4 basis points at 4.0% while the 10-year yield is up 1 basis point to 3.54%. The recovery in yields comes as fears over the banking crisis ease. Fed Governor Michael Barr is set to testify in Congress about the failure of Silicon Valley Bank today and tomorrow. In prepared remarks released on Monday, Barr called that failure a “textbook case of mismanagement” and said the Fed will investigate it risk testing and assessment processes. Alibaba Splitting Up Alibaba (BABA) shares are rallying 9.8% ahead of the open after the Chinese e-commerce giant announced it will split its company into six separate business groups. Each of those groups will be able to go public on its own and will be managed by its own CEO and board of directors. Alibaba said the move is “designed to unlock shareholder value and foster market competitiveness.” These are the new business groups: Cloud Intelligence Group Taobao Tmall Commerce Group Local Services Group Cainiao Smart Logistics Global Digital Commerce Group Digital Media and Entertainment Group Alibaba’s current CEO Daniel Zhang will be the head of the Cloud Intelligence Group. Lyft Co-Founders Step Down, Company Names New CEO Lyft (LYFT) shares are up 5% in premarket trade after the company named a new CEO on Thursday. The company’s co-founders are stepping back from their roles as CEO and President. Lyft announced that former Amazon retail executive David Risher will take over as CEO on April 17. Risher said, “I am honored to step into the CEO role at such an important moment in the company’s history, and am prepared to take this business to new levels of success.” Walgreens Earnings Top Expectations Walgreens Boots Alliance (WBA) shares are up 1.2% ahead of the open after beating fiscal Q2 expectations on the top and bottom line. Here’s how the drug store chain’s results compared to analysts’ expectations: Adjusted EPS: $1.16 vs $1.10 expected Revenue: $34.86 billion vs $33.53 billion expected Walgreens reiterated its full-year guidance for EPS of $4.45 to $4.65. Coming Up: Home Prices, Consumer Confidence Today’s upcoming economic data focuses on the housing market and the U.S. consumer. Both the S&P Case-Shiller and Federal Housing Finance Agency’s home price indexes for January will be released momentarily. The S&P Case-Shiller index is expected to rise 2.5% vs the 4.6% gain in December. Then the Conference Board releases its March consumer confidence index at 10:00 a.m. ET. That index is expected to fall to 101.3 from 102.9 in February. In Case You Missed It Coinbase (COIN) shares tumbled 7.8% on Monday after the Commodity Futures and Trading Commission filed a complaint against crypto exchange Binance. That filing alleges Binance violated provisions of the Commodity Exchange Act to solicit U.S. users more millions of dollars in revenue. Binance’s CEO and former compliance officer were both named in the complaint. Disney (DIS) shares rose 1.6% Monday as the company is set to begin the first of three rounds of layoffs. In an internal memo, CEO Bob Iger said they will begin notifying impacted employees this week. The layoffs will total around 7,000 job cuts and are part of a broader effort to cut corporate spending and boost Disney’s free cash flow.
Continue Reading -->7 Tech Names to Watch
We have mixed-to-mostly green markets to start the week. News that SVB assets are being bought is lifting regional banks and some majors. In Europe, the DAX is +1.3% with the CAC +1.2% and FTSE +0.9%. Asia is mixed. On Friday, the SPX reclaimed 3909 to close well to get some to cover shorts and balance things out with a few longs. There’s a big down trendline in the SPX. If it can get and stay above 4010ish with authority this week, perhaps it opens the door for a surprise rally. Tech has a lot of constructive patterns. We’ll see if the sector stays special to buy dips if the QQQ’s hold the 8 day like Friday. Some are long vs. $306 and others are waiting for a high-volume close above $313-$315. Friday’s high is $311. Now let’s dig into some individual names: AAPL was a big focus of ours from $153 to $162+. I bought some back into Friday’s weakness. I’ll stay in vs. the $157 area and see if it can rebuild to see $162+ in time. MSFT has had go-to status since the Red Dog Reversal buy around the $247.60 pivot on March 21. It peaked at $283. It seems like it’s been setting up again for more upside. I’m long vs. $275 and might add if it can get and stay above $283. It could go towards $294. META has led tech the past few months. It hit a new 2023 high of $207.88. Buying dips vs. the 8 day continues to work. Some are long vs. $203ish. Others are waiting for a high-volume move to clear $207.88. Be careful because it’s a little choppy up here. TSLA didn’t lead this past tech move but it gave opportunities. I did sell mine above $200 from the $178 area. On Friday it held the $187 area. See if it can stay above $192.36 to get a little better today. GOOGL started acting better as it gave a few entries like $89.42 and then $97ish. Some are long vs. the $103 area. Others are waiting for it to show some power by clearing and holding $106.60, then $108. ADBE has a nice bull flag if tech wants leaders. Some are long vs. $360. Others are waiting for a high-volume move and hold above $377.40. CRM continues to act better than most names. Some are long vs. $186. Others are waiting for a high-volume move and close above $191, then $194. Scott Redler Positions Disclosure as of 2023-03-27 at 7.02.04 AM
Continue Reading -->Coffee With Greta: Banks Bounce Back
DJIA Futures: +226 (+0.7%) SPX Futures: +26 (+0.7%) NASDAQ Futures: +41 (+0.3%) Good morning friends! Futures are rising as regional bank stocks rebound. Let’s get right to it! First Citizens To Buy Silicon Valley Bank Assets First Citizens Bancshares (FCNCA) shares are surging 49% ahead of the open after reaching a deal to buy Silicon Valley Bank’s deposits and loans. The bank will purchase around $72 billion of SVB assets at a discount of $16.5 billion from regulators. Another $90 billion in securities and other assets will remain “in receivership for disposition by the FDIC”. The FDIC said it “received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million.” The 17 former SVB branches that were opened as bridge banks after the collapse will open as “First-Citizens Bank & Trusty Company” today. Regional Banks Bounce First Republic Bank (FRC) shares are rallying 31.9% in premarket trade, leading the rebound in regional banks. The SPDR S&P Regional Banking ETF (KRE) is up 4%. The jump comes after several positive developments for regional banks over the weekend. Bloomberg reported on Saturday that U.S. officials are considering expanding the federal programs that provide more liquidity to banks. That’s reportedly meant to help First Republic while it continues to search for a buyer. CNBC reported that the deposit inflows to large banks from smaller regional banks has also slowed significantly. Minneapolis Fed President On Banking Crisis Minneapolis Fed President Neel Kashkari commented on the banking crisis in an interview with CBS’ Face The Nation on Sunday, saying “it definitely brings us closer” to a recession. Kashkari said, “What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. And then that credit crunch, just as you said, would then slow down the economy.” But he also expressed confidence in the strength of the banking system saying, “The banking system has a strong capital position and a lot of liquidity and has the full support of the Federal Reserve and other regulators standing behind it.” Kashkari said it’s too early to predict how this will impact the next interest rate decision in May. CME Group’s FedWatch Tool shows 61.3% of traders expect the bank to keep rates unchanged while 38.7% expect another 25 basis point hike. The Fed’s preferred inflation gauge for February will be released this Friday.
Continue Reading -->Coffee With Greta: More Bank Worries
DJIA Futures: -323 (-1.0%) SPX Futures: -34 (-0.9%) NASDAQ Futures: -70 (-0.5%) Good morning friends! Futures are dropping due to renewed worry about the global banking system. Let’s get right to it! Banks Fall Again Bank stocks are falling again today amid fresh concerns about the global banking system. The SPDR S&P Regional Banking ETF (KRE) is down 2.0% ahead of the open with the Financial Select Sector SPDR ETF (XLF) falling 1.8%. The fresh concern was prompted by a spike in credit default swaps at German lender Deutsche Bank overnight. Deutsche Bank’s (DB) U.S. shares are down 10.1%. Credit default swaps are a form of insurance for a company’s bondholders against its default. Those jumped to 173 basis points Thursday night from 142 basis points on Wednesday. Treasury Yields Fall On Bank Concerns U.S. Treasury yields are falling as investors buy up bonds amid the latest developments in the banking sector. The 2-year yield is down 25 basis points to 3.60% while the 10-year yield is down 11 basis points to 3.31%. Investors are also weighing the impact of the Fed’s interest rate policy on the economy. CME Group’s FedWatch Tool shows traders betting the central bank is done hiking rates with over 98% predicting a pause at the next meeting. Oil Prices, Energy Stocks Slide Oil prices are sliding this morning on concerns about potential oversupply. West Texas Intermediate crude futures are down 3.7% to $67.37 bbl while Brent crude futures are down 3.4% to $73.33 bbl. Energy stocks are sliding amid the drop in oil prices with the Energy Select Sector SPDR ETF (XLE) down 1.8% in premarket trade. The U.S. Energy Secretary told lawmakers on Thursday it may take several years to refill the U.S. Strategic Petroleum Reserve. The stockpile is at the lowest level since 1983 but she said it will be difficult to take advantage of the low oil prices this year. But the White House said in October that it would buy back oil for the SPR when prices were at or below $67-$72 per barrel. With the U.S. not currently buying oil, prices are expected to slide further due to oversupply. Durable Goods Orders Fall Durable goods orders fell more than expected in February due to lower demand for passenger planes and cars. The Commerce Department reported orders fell 1% last month vs expectations for a 0.3% decline. Orders were up 2.3% year over year, the smallest increase since 2020. Airplane orders dropped 6.6% while new car orders fell 1%. Durable goods orders excluding transportation were unchanged. But business investment rose for the second month in a row, with core orders up 0.2%. That shows the industrial sector is still expanding but at a slower pace. In Case You Missed It New home sales rose in February as buyers took advantage of a dip in mortgage rates. The Census Bureau reported Thursday that new home sales jumped 1.1% to a seasonally adjusted annual rate of 640,000 units last month. That was basically in line with expectations and January’s data was revised lower to an SAAR of 630,000 units from 670,000 previously. New sales were still down 19% year over year. The number of new homes for sale at the end of February slipped 1.1% from January but still represented an 8-month supply at the current sales pace.
Continue Reading -->Coffee With Greta: Is The Fed Done?
DJIA Futures: +102 (+0.3%) SPX Futures: +25 (+0.6%) NASDAQ Futures: +133 (+1.0%) Good morning friends! Futures are rising as traders bet the Fed is ready to pause rate hikes. Let’s get right to it! Fed Recap The Federal Reserve hiked the federal funds rate by 25 basis points as expected on Wednesday. That put the rate in a range of 4.75% to 5%. The FOMC statement removed language about “ongoing increases” being appropriate instead saying, “The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.” The statement also addressed the recent banking crisis saying, “The U.S. banking system is sound and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain.” The Fed forecast it will enact one more 25 basis point hike this year, putting the terminal rate at 5.1%. CME Group’s FedWatch Tool shows traders expecting one more hike and three rate cuts this year. But in his press conference, Fed Chair Jerome Powell said, “Participants don’t see rate cuts this year… that’s not our baseline expectation.” Powell said the costs of bringing inflation down to the bank’s 2% target are high but “the costs of failing are higher.” He said the banking crisis will likely cause tighter credit conditions which will aid in bringing down demand and inflation. Weekly Jobless Claims Dip Weekly jobless claims dipped to a fresh 3-week low last week as the labor market maintains strength. The Labor Department reported 191,000 Americans filed initial unemployment claims, down by 1,000 from the previous week. That was better than expectations for claims to rise to 198,000. Continuing claims rose by 4,000 to 1.694 million in the week ending March 18. Coinbase Sinks After SEC Warning Coinbase (COIN) shares are dropping 15.4% ahead of the open after the company disclosed it had received a Wells notice from the SEC. In a blog post, the crypto exchange said, “We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead. Rest assured, Coinbase products and services continue to operate as usual — today’s news does not require any changes to our current products or services.” The company says the warning from regulators and potential charges relate to its staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet. Coinbase said the investigation is “still at a very early stage” and it has turned in documents and provided two witnesses. The company maintains that the entities under investigation are not securities. Carvana Jumps On Q1 Guidance Carvana (CVNA) shares are up 5.4% in premarket trade after issuing preliminary Q1 guidance. The used car retailer said it expects a first-quarter loss of $50 million to $100 million. That would be an improvement from the $348 million loss it reported in Q1 2022. The company also announced a debt restructuring. An SEC filing shows unsecured noteholders will have the option to exchange those notes at a premium to current trading prices for new secured notes. The company said that move will provide noteholders with “collateral while reducing Carvana’s cash interest expense and maintaining significant flexibility.” The restructuring could reduce the face value of Carvana’s unsecured bond debt by $1.3 billion and its annual cash interest bill by $100 million. Block Plunges After Hindenburg Research Takes Short Position Block (SQ) shares are plunging 19.7% ahead of the open after short-seller Hindenburg Research announced it was its news short position. Hindenburg said, “Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping.” The report claims Block’s Cash App facilitates fraud and does not have strong compliance controls. To test its theory, Hindenburg says it opened accounts in the names of Donald Trump and Elon Musk. It says it then opened a Cash App card under the “obviously fake Donald Trump account” and that card arrived “promptly” in the mail. The report said, “Former employees estimated that 40%-75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.”
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