Coffee With Greta: Another Hot Inflation Report
DJIA Futures: -372 (-1.1%) SPX Futures: -53 (-1.3%) NASDAQ Futures: -215 (-1.8%) Good morning friends! Futures are tumbling after the release of more hotter-than-expected inflation data. Let’s get right to it! Another Hot Inflation Reading The Fed’s preferred inflation gauge rose more than expected in January. The Bureau of Economic Analysis’ personal consumption expenditures (PCE) price index rose 0.6% monthly and 5.4% year over year. The core PCE price index, which excludes food and energy, jumped 0.6% monthly and 4.7% annually. That was hotter than economists’ expectations for the index to rise 0.5% monthly and 4.4% annually. The data showed inflation heating up at the start of the year. Consumer spending also jumped 1.8% as prices rose vs 1.4% expected. Personal income rose 1.4% vs the 1.2% estimate. And the personal saving rate increased to 4.7%. More traders are starting to believe the Fed will vote for a 50 basis point rate hike at the next meeting. CME Group’s FedWatch Tool now shows 67% expecting another 25 basis point move and 33% expecting a 50bp hike. Block Rallies On Strong Outlook Block (SQ) shares are up 5.5% ahead of the open after topping Q4 revenue expectations and issuing strong guidance. Here’s how the payments company’s results compared to analysts’ expectations: Adjusted EPS: $0.22 vs $0.30 expected Revenue: $4.65 billion vs $4.61 billion expected The company posted $1.66 billion in gross profit, up 40% year over year and better than $1.53 billion expected. Block’s Cash App business had 51 million monthly active transacting users in the quarter and generated $848 million in gross profit, up 64% year over year. For 2023, executives expect $1.3 billion in Ebitda which was in line with estimates. Block is also targeting a gross profit of 25%, up from 22% in Q4. Nikola Drops After Reporting Weak Q4 Sales Nikola (NKLA) shares are falling 2.3% in premarket trade after sharply missing Q4 sales expectations. Here’s how the electric truck maker’s results compared to analysts’ expectations: Adjusted loss per share: $0.37 vs $0.43 expected Revenue: $6.6 million vs $32.1 million expected The revenue miss came as Nikola delivered just 20 of the 133 battery-electric trucks it produced in the quarter. The company said it made a series of changes to the truck in response to early customer feedback. Nikola built 258 trucks in 2022, hitting its previous guidance of 255 to 305. In 2023, the company expects to deliver between 250 and 350 battery-electric trucks this year and 125 to 150 of its upcoming fuel-cell trucks. Nikola confirmed it is still on track to begin production of the fuel-cell version in the second half of the year. Coming Up: New Home Sales, Consumer Sentiment The Census Bureau releases its January new home sales report at 10:00 a.m. ET. That data is expected to show the pace of new sales rose to a seasonally adjusted annual rate of 620,000 units last month from 616,000 in December. The University of Michigan also releases its final February consumer sentiment index at 10:00 a.m. That index is expected to be unchanged from the preliminary reading of 66.4 earlier this month. In Case You Missed It JPMorgan Chase (JPM) CEO Jamie Dimon said Thursday that the Fed has lost control of inflation and it remains a work in progress. Dimon told CNBC Thursday, “the fact is we lost a little bit of control of inflation.” He said it may take “a while” for the Fed to get inflation down to its goal of 2% and he expects interest rates to remain higher for longer. He remained positive about the strength of the economy currently but uncertain about the future. Dimon said, “The U.S. economy right now is doing quite well. Consumers have a lot of money. They’re spending it. Jobs are plentiful. That’s today. Out in front of us, there’s some scary stuff.”
Continue Reading -->Coffee With Greta: Earnings Boost Stocks
DJIA Futures: +40 (+0.1%) SPX Futures: +15 (+0.4%) NASDAQ Futures: +104 (+0.9%) Good morning friends! Futures are higher as the market looks to rebound from a 4-day losing streak and Nvidia’s earnings beat boosts tech stocks. Let’s get right to it! Nvidia Rallies On Earnings Beat Nvidia (NVDA) shares are jumping 11% ahead of the open after beating Q4 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted EPS: $0.88 vs $0.81 expected Revenue: $6.05 billion vs $6 billion expected Nvidia forecast $6.5 billion in Q1 revenue, topping analysts’ estimates of $6.33 billion. The company appears poised to benefit from the growing popularity of AI. Nvidia’s data center business, which includes chips used for AI, continued to grow last quarter and the CEO said, “Generative AI’s versatility and capability has triggered a sense of urgency at enterprises around the world to develop and deploy AI strategies.” Alibaba Shares Jump After Earnings Alibaba (BABA) shares are up 5.7% in premarket trade after sharply beating fiscal Q3 expectations. Here’s how the Chinese e-commerce giant’s results compared to expectations: Earnings per American depositary share: 19.26 yuan vs 16.26 yuan expected Revenue: 247.76 yuan vs 245.18 billion yuan expected The company benefited from China’s economic reopening as consumer demand rebounded. The CEO said, “Looking ahead, we expect continued recovery in consumer sentiment and economic activity.” Lucid Misses Q4 Revenue Expectations Lucid (LCID) shares are dropping 13.5% ahead of the open after missing Q4 sales expectations. Here’s how the electric automaker’s results compared to analysts’ expectations: Loss per share: $0.28 Revenue: $257.7 million vs $303 million expected The company built just 7,180 of its Air luxury sedans last year, sharply missing its original goal of 20,000. Lucid expects to manufacture between 10,000 and 14,000 this year. The company ended 2022 with roughly $4.4 billion in cash and $500 million available via credit. The CFO said that is enough to last until Q1 2024. Lucid said it has more than 28,000 reservations for its vehicles, down from 34,000 in November. Moderna Drops After Earnings Miss Moderna (MRNA) shares are falling 4.5% in premarket trade after missing Q4 profit expectations. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: Adjusted EPS: $3.61 vs $4.68 expected Revenue: $5.1 billion vs $5 billion expected Profits tumbled 68% year over year and revenue dropped 30% amid shrinking demand for the company’s Covid vaccine. Costs also rose 25% in Q4 due to expired vaccines, unused manufacturing capacity, and a royalty payment to the National Institute of Allergy and Infectious Diseases. Q4 GDP Revised Lower The U.S. economy expanded less than initially estimated at the end of 2022. The Commerce Department’s first revision of Q4 GDP was lowered to 2.7% from 2.9% initially. The revision was due to slower consumer spending which grew just 1.4% vs 2.1% initially estimated. Weekly Jobless Claims Fall Weekly jobless claims fell unexpectedly last week as the U.S. labor market remains tight. The Labor Department reported 192,000 Americans filed initial claims for unemployment benefits. That was down by 3,000 from the previous week’s revised level and better than 200,000 expected. In Case You Missed It The February 1 Fed minutes show the bank is committed to its fight against inflation and members believe “ongoing” rate hikes are still necessary. FOMC officials said inflation is still “well above” their target and the labor market remains “very tight”. Fed members did say that recent data has shown inflation beginning to cool but they need “substantially more evidence of progress” . The minutes showed a “few” members were in favor of a 50 basis-point hike at the latest meeting but ultimately voted for the quarter-point move.
Continue Reading -->Coffee With Greta: Traders Await Fed Minutes
DJIA Futures: +51 (+0.2%) SPX Futures: +7 (+0.2%) NASDAQ Futures: +33 (+0.3%) Good morning friends! Futures are higher as traders await the release of the Fed minutes. Let’s get right to it! Bullard Calls For Faster Hikes, Traders Await Fed Minutes St Louis Fed President James Bullard is calling for a more aggressive rate hike at the central bank’s next meeting. Bullard told CNBC this morning he is still pushing for a 50 basis point hike at the March 22nd meeting. He said, “It has become popular to say, ‘Let’s slow down and feel our way to where we need to be.’ We still haven’t gotten to the point where the committee put the so-called terminal rate. Get to that level and then feel your way around and see what you need to do. You’ll know when you’re there when the next move could be up or down.” The comments come ahead of the release of the Fed’s February 1 meeting minutes at 2:00 p.m. ET today. That readout will give traders more insight into the discussion around rates at the most recent meeting. Bullard warned the Fed risks the reacceleration of inflation if it does not act aggressively enough now. CME Group’s FedWatch Tool shows 76% of traders expecting another 25 basis point hike at the next meeting and 24% anticipating a 50 basis point move. Intel Slashes Dividend Intel (INTC) shares are falling 0.8% ahead of the open after cutting its dividend this morning. The chipmaker slashed that dividend by nearly 66% to 12.5 cents from 36.5 cents. The new dividend will be payable on June 1. Intel also reiterated its Q1 outlook for a profit loss but did not issue a full-year outlook. Coinbase Slips On Disappointing Outlook Coinbase (COIN) shares are slipping 0.5% in premarket trade after beating Q4 expectations but issuing weak guidance. Here’s how the crypto platform’s results compared to analysts’ expectations: Loss per share: $2.46 vs $2.55 expected Revenue: $629 million vs $590 million expected Revenue plunged nearly 75% year over year as the crypto market collapsed. Coinbase also continued to lose users during the quarter, reporting 8.3 million monthly transacting users down from 8.5 million in Q3. Transaction revenue dropped 12% from Q3 to $322 million vs $327 million expected. Coinbase expects subscription and services revenue of $300 million to $325 million in Q1 and restructuring costs of $150 million. Target Spends Big On E-commerce Hubs Target (TGT) shares are up 0.8% ahead of the open after announcing plans to build more supply chain hubs for online orders. The retailer will spend $100 million to build at least 15 of what it is calling sortation centers by the end of January 2026. Target has already opened nine of the hubs with the goal of speeding up and lowering the cost of delivering online orders. In Case You Missed It Existing home sales fell unexpectedly in January. The National Association of Realtors reported existing sales fell 0.7% last month to a seasonally adjusted annual rate of 4 million units vs 4.2 million expected. January marked the 12th straight monthly decline in existing sales, which is the longest streak since NAR began tracking sales in 1999. It was the slowest pace of sales since October 2010.
Continue Reading -->3 AI Stocks to Watch
We have mostly red arrows around the world as traders focus on inflation and geopolitical stresses. President Biden did a surprise visit to the Ukraine and Putin gave a delusional speech this morning. SPX futures are -32. Last week, the index broke the 4103 upper area to have us reduce risk. I bought SPY puts and shorted SPY calls which helps me this morning. We’ll see if the active bears have any power. Friday’s low is 4047. Some think we see the 3949 area in the week ahead. For that to happen, we need to see a move below 4047, then 4015. But let’s take things day-by-day. Let’s dig into some individual names, starting with 3 AI stocks: AI is still all the rage. It’s rebuilding. Maybe today it goes red to green for an opportunity. It needs to hold $22.65 now. MSFT strength was sold above the $270 area. For today, see how it handles the $254-$255 area. GOOGL got beat up fast post on the AI event. Last Tuesday it put in a bottom tail at $92.26. Some went long vs. that for a bounce. It hit $97+. See if the $92-$93 area holds today. TSLA gave a way to exit swing longs last Thursday around the $214.66 pivot. On Friday it was very resilient and went green with some power as $201.84 was reclaimed. We’ll see how it acts today. Maybe it goes red to green. We’ll see if we get a 5-15-30 minute low to trade against. AAPL got m3 out with a reversal around the $155 area. It might have broken the accelerated trend. See how it handles Friday’s low of $150.85. Does it hold that? $149 is a spot below. Watch it for market sentiment. Scott Redler’s positions disclosure as of 2023-02-21 at 7.19.34 AM
Continue Reading -->Coffee With Greta: Traders On Edge
DJIA Futures: -339 (-1%) SPX Futures: -39 (-0.9%) NASDAQ Futures: -149 (-1.2%) Good morning friends! Futures are falling as traders remain on edge about inflation and digest some disappointing corporate guidance. Let’s get right to it! Yields Climb As New Week Kicks Off Treasury yields are climbing this morning as a new week kicks off with traders worried about inflation. The 2-year yield is up 6 basis points to 4.69% while the 10-year yield is up 8 basis points to 3.90%. The market will get more details on the Fed’s latest meeting and future plans later this week. The central bank is set to release the minutes of its February 1 meeting on Wednesday afternoon. The Fed’s favorite inflation gauge, the PCE price index, will also come out on Friday morning. That data comes after both the CPI and PPI rose more than expected in January. Walmart Slides On Weak Outlook Walmart (WMT) shares are falling 2.7% in premarket trade after beating Q4 expectations but issuing weak guidance. Here’s how the retailer’s results compared to analysts’ estimates: Adjusted EPS: $1.71 vs $1.51 expected Revenue: $164.05 billion vs $159.72 billion expected Revenue rose 7.3% year over year while same-store sales in the U.S. jumped 8.3%. Walmart also made progress on getting rid of inventory with levels roughly flat compared to a year ago and down 3% in the U.S. But the company issued soft guidance as it expects inflation to continue pressuring consumers this year. Walmart forecast full-year adjusted EPS between $5.90 and $6.05 vs analysts’ estimates of $6.53. The CEO said, “If you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods. And so that’s why we take a pretty cautious outlook on the rest of the year.” Home Depot Drops After Revenue Miss, Weak Guidance Home Depot (HD) shares are down 4.4% in premarket trade after reporting mixed Q4 results and issuing a weak outlook. Here’s how the home improvement retailer’s results compared to analysts’ estimates: EPS: $3.30 vs $3.28 expected Revenue: $35.83 billion vs $35.97 billion expected It was the first time Home Depot has missed sales expectations since November 2019. The company attributed that miss to lower lumber prices which impacted comparable sales by 0.7%. Home Depot said it expects earnings per share to decline by a mid-single-digit percentage this year, falling short of analysts’ expectations for EPS to be flat. The company also expects full-year sales to be flat vs analysts’ projections for a slight increase. Home Depot also announced it will spend $1 billion to give hourly workers a raise. Existing Home Sales Expected To Rise The National Association of Realtors reports January existing home sales at 10:00 a.m. ET. That data is expected to show sales rose at the start of the year to a seasonally adjusted annual rate of 4.12 million units. It would be the first monthly increase in sales in 11 months. That expectation comes after pending home sales rose 2.5% in December.
Continue Reading -->Coffee With Greta: Inflation Fears Spook Traders
DJIA Futures: -111 (-0.3%) SPX Futures: -23 (-0.6%) NASDAQ Futures: -91 (-0.7%) Good morning friends! Futures are dropping as Treasury yields jump amid new fears about inflation and the Fed’s response. Let’s get right to it! Yields Pop After Fed Comments U.S. Treasury yields are rising this morning as concerns rise about the Fed continuing rate hikes due to persistently high inflation. The 2-year Treasury yield is up 7 basis points to 4.67% while the 10-year yield is surging 24 basis points to 3.89%. The jump comes after the January PPI came in way hotter-than-expected on Thursday and Fed officials put their support behind continued rate hikes. Cleveland Fed President Loretta Mester said in a speech Thursday that she would have preferred a 50 basis point rate hike at the last meeting. She said, “The upside risks to inflation and historical experience suggest to me that the costs of undershooting on policy or prematurely loosening policy still outweigh the costs of overshooting.” St Louis Fed President James Bullard echoed that sentiment in a later speech, saying he is advocating for a 50 basis point hike at the March meeting. He said, “continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets, by keeping inflation expectations low.” The two are not voting members of the FOMC in 2023. DoorDash Reports Best Quarter Ever DoorDash (DASH) shares are up 3.8% ahead of the open after reporting mixed Q4 results. Here’s how the delivery platform’s results compared to analysts’ expectations: Loss per share: $1.65 vs $0.67 expected Revenue: $1.8 billion vs $1.77 billion expected Adjusted Ebitda: $117 million vs $109 million expected DoorDash said the loss was caused by impairment charges related to its acquisition of Europe-based delivery company Wolt and stock-based compensation related to layoffs announced in December. The company had a record 467 million orders in Q4 with a gross order value of $14.4 billion, topping analysts’ estimates. For the full year, DoorDash reported a net loss of $1.37 billion on revenue of $6.58 billion. That compared to analysts’ expectations for a $989 million loss on $6.55 billion in revenue. DoorDash ended 2022 with 32 million monthly active users, up by 7 million from the end of 2021. The company forecast Q1 adjusted Ebitda of $120 million to $170 million and gross order value of $15.1 billion to $15.5 billion. That topped analysts’ outlook for $128 million in Ebitda and gross order value of $15 billion. DraftKings Surges On Record Revenue, Stronger Guidance DraftKings (DKNG) shares are rallying 11.9% in premarket trade after reporting record revenue in Q4 and hiking its 2023 guidance. Here’s how the online sports betting company’s results compared to analysts’ expectations: Loss per share: $0.53 vs $0.62 expected Revenue: $855.1 million vs $801 million expected It was the first quarter DraftKings cleared $800 million in quarterly revenue. The company raised its 2023 revenue guidance to $2.85 billion to $3.05 billion amid optimism as more states legalize sports gambling. In Case You Missed It Tesla (TSLA) shares dropped 5.7% on Thursday after the automaker issued a massive recall. The EV maker recalled 362,758 vehicles due to an issue with the Full Self-Driving Beta software. The National Highway Traffic Safety Administration said that software may increase the risk of crashes by allowing the vehicles to “exceed speed limits or travel through intersections in an unlawful or unpredictable manner.” Tesla will release an over-the-air software update to fix the issue.
Continue Reading -->Coffee With Greta: Stocks Slide After More Hot Inflation Data
DJIA Futures: -282 (-0.8%) SPX Futures: -49 (-1.2%) NASDAQ Futures: -186 (-1.5%) Good morning friends! Futures are dropping after the release of more hot inflation data. Let’s get right to it! Wholesale Inflation Runs Hot Wholesale inflation pressures came in way hotter than expected in January. The Bureau of Labor Statistics’ producer price index jumped 0.7% monthly and 6% year over year. That was sharply higher than economists’ expectations for a 0.4% monthly gain and the largest jump since June. Energy prices saw the largest gain, surging 5% monthly. The core PPI also rose more than expected, up 0.5% monthly vs 0.3% expected. This data is bad news for traders hoping for a Fed pivot soon as PPI is a leading indicator for consumer prices in the months ahead. Housing Starts Tumble U.S. home construction slowed more than expected in January. The Census Bureau reported housing starts dropped 4.5% last month to a seasonally adjusted annual rate of 1.31 million units vs 1.35 million expected. That’s the lowest annual rate since June of 2020 and starts were down 21.4% year over year. Single-family starts fell 4.3% while multi-family starts dropped 5.4%. Building permits were relatively unchanged for the month, up just 0.1% to a seasonally adjusted annual rate of 1.34 million units vs 1.35 million expected. That signals the slowdown in building will continue. Weekly Jobless Claims Fall Unexpectedly Weekly jobless claims fell unexpectedly last week, remaining under 200,000 for the fifth straight week. The Labor Department reported 194,000 Americans filed initial claims for unemployment benefits. That was down by 1,000 from the previous week and better than expectations for an increase to 200,000. Continuing claims meantime rose by 16,000 to 1.70 million in the week ending February 4. Roku Rallies After Earnings Beat, Strong Guidance Roku (ROKU) shares are up 9.2% ahead of the open after beating Q4 expectations on the top and bottom line and issuing strong guidance. Here’s how the streaming giant’s results compared to analysts’ expectations: Loss per share: $1.70 vs $1.72 expected Revenue: $867 million vs $803 million expected Roku said it had 70 million active streaming accounts during the quarter, up from 65.4 million in Q3 and better than 69 million expected. Streaming hours also jumped to 23.9 billion from 21.9 billion in Q3 and higher than 23.2 billion expected. Roku forecast Q1 revenue of $700 million beating analysts’ estimates of $692 million. Cisco Tops Earnings Estimates, Hikes Guidance Cisco (CSCO) shares are 3.2% higher in premarket trade after topping fiscal Q2 expectations and hiking its full-year guidance. Here’s how the computer networking company’s results compared to analysts’ expectations: Adjusted EPS: $0.88 vs $0.86 expected Revenue: $13.59 billion vs $13.43 billion expected Total revenue jumped 7% year over year and the CEO said “demand remains stable.” Cisco expects fiscal Q3 adjusted EPS of $0.96 to $0.98 and 11% to 13% revenue growth. That topped analysts’ outlook for adjusted EPS of $0.89 and 6% revenue growth to $13.58 billion. The company also lifted its 2023 guidance, now expecting $3.73 to $3.78 in adjusted EPS and 9$ to 10.5% revenue growth. In Case You Missed It Homebuilder sentiment improved by the largest amount in more than a decade this month. The National Association of Homebuilders’ sentiment index jumped 7 points to 42. That was better than expectations for 37. Anything below 50 is still considered negative but it’s the highest reading since September and largest monthly gain since June 2013. Sentiment about current sales conditions rose 6 points to 46, 6-month sales expectations jumped 11 points to 48, and buyer traffic improved by 6 points to 29. Builders are feeling more confident about the market as buyer demand picks up heading into spring.
Continue Reading -->Momentum Trading 101
JR Romero explains how momentum trading works through a simple series of price action lessons. Learn simple technical analysis methods for: Understanding the true nature of momentum in stocks and etfs How to use past momentum to predict future momentum Why the stock market likes symmetry The law of cause and effect in trading
Continue Reading -->Coffee With Greta: Stocks Slip As Retail Sales Surge
DJIA Futures: -100 (-0.3%) SPX Futures: -13 (0.3%) NASDAQ Futures: -23 (-0.2%) Good morning friends! Futures are falling after the release of more hotter-than-expected economic data. Let’s get right to it! January Retail Sales Smash Expectations Retail sales were stronger than expected at the start of 2023 as consumers remain resilient despite inflation. The Commerce Department reported retail sales jumped 3% in January to $697 billion. That was sharply higher than expectations for a 1.9% increase and was the largest monthly increase since March 2021. Excluding autos, retail sales rose 2.3% vs 0.9% expected. Restaurants and bars saw the largest increase in spending, up 7.2% monthly and 25.2% year over year. Sales at auto dealers jumped 6.4% monthly and 2.5% annually. The data is not adjusted for inflation and the increase is partly due to consumers paying higher prices. The report supports the Fed’s plan to continue raising rates to lower inflation and slow consumer spending. Roblox Rallies On Q4 Earnings Beat Roblox (RBLX) shares are surging 17.7% ahead of the open after beating Q4 expectations. Here’s how the video game company’s results compared to analysts’ expectations: Adjusted loss per share: $0.48 vs $0.50 expected Bookings: $899.4 billion vs $871.2 billion The CFO said, “Bookings accelerated meaningfully in December and January, with year over year growth exceeding 20% in both months. Growth was strong across all geographies and age groups with particular strength among users above 17 years old.” Roblox said that growth has continued in the new year with January’s estimated bookings between $267 million and $271 million, up 22% to 24% from a year ago. Average daily users in January were 65 million vs 61.5 million in December. Airbnb Reports First Profitable Year Airbnb (ABNB) shares are rallying 9% in premarket trade after reporting record Q4 results and strong guidance. Here’s how the company’s results compared to analysts’ estimates: EPS: $0.48 vs $0.26 expected Revenue: $1.9 billion vs $1.86 billion expected Adjusted ebitda: $506 million vs $434 million expected For the full year, Airbnb reported a profit of $1.89 billion on $8.4 billion in revenue. That topped analysts’ expectations for $1.74 billion in profit on $8.36 billion in revenue. In a letter to shareholders, the company said, “All regions saw material growth in 2022 as guests increasingly crossed borders and returned to cities on Airbnb.” Airbnb forecast Q1 revenue between $1.75 billion and $1.82 billion vs $1.68 billion expected. Mortgage Demand Drops Mortgage demand dropped last week as rates jumped higher. The Mortgage Bankers Association reported total application volume fell 7.7% last week. That came as the average 30-year fixed contract rate rose to 6.39% from 6.18%. Refinance applications tumbled 13% weekly and 76% year over year. Purchase applications were down 6% weekly and 43% annually. Homebuilder Sentiment Expected To Improve The National Association of Homebuilders releases its sentiment index for February at 10:00 a.m. ET. That survey is expected to rise to 37 from 35 in January. Although that would still represent negative sentiment among builders, it would be the second straight monthly increase and 12 consecutive months of decline. In Case You Missed It Ford (F) shares slipped 0.9% on Tuesday after the company halted production and shipments of the F150 Lightning. The automaker said that pause was due to a potential battery issue found during pre-delivery quality inspections. A Ford spokeswoman said, “The team is diligently working on the root cause analysis” and the company is “doing the right thing by our customers”.
Continue Reading -->Coffee With Greta: Stocks Fall Flat On Hot CPI
DJIA Futures: +39 (+0.1%) SPX Futures: +5 (+0.1%) NASDAQ Futures: +8 (+0.1%) Good morning friends! Futures are flat after the January CPI came in hotter than expected. Let’s get right to it! CPI Runs Hot U.S. inflation pressures rose more than expected at the start of 2023. The Bureau of Labor Statistics’ consumer price index jumped 0.5% in January and 6.4% year over year. That was higher than economists’ expectations for a 0.4% monthly and 6.2% annual gain. But it was still cooler than the 6.5% annual gain in December. Rising shelter costs drove that gain, up 0.7% monthly and 7.9% year over year. Consumers also paid higher prices for food and energy. Grocery prices were up 0.4% monthly and 11.3% annually while gas prices rose 2.4% monthly and 1.5% year over year. The core CPI, which excludes food and energy, rose 0.4% monthly and 5.6% annually. That was also hotter than expectations for 0.3% monthly and 5.5% annually. The higher prices translated into a loss in real pay for workers. Average hourly earnings fell 0.2% monthly and 1.8% year over year when adjusted for inflation. Higher Prices Boost Coca-Cola Earnings Coca-Cola (KO) shares are up 0.3% ahead of the open after topping Q4 expectations. Here’s how the beverage giant’s results compared to analysts’ expectations: Adjusted EPS: $0.45, as expected Revenue: $10.13 billion vs $10.02 billion expected Coke said its unit case volume fell 1% in Q4 as higher prices hurt demand. Prices were up 12% year over year and the company sold a more expensive mix of drinks during the quarter. The company forecast comparable revenue growth of 3% to 5% in 2023 and EPS growth of 4% to 5%. The revenue outlook was in line with expectations while the earnings outlook was better than expected. Palantir Reports First Profitable Quarter Palantir Technologies (PLTR) shares are surging 15% in premarket trade after beating Q4 expectations and reporting its first profitable quarter ever. Here’s how the software company’s results compared to analysts’ expectations: Adjusted EPS: $0.04 vs $0.03 expected Revenue: $509 million vs $502 million expected Revenue jumped 18% year over year with U.S. commercial revenue up 12%. Palantir grew from 80 U.S. commercial customers a year ago to 143 in Q4. The CEO said, “With this result, Palantir is profitable. This is a significant moment for us and our supporters.” The company forecast Q1 revenue between $503 million and $507 million and full-year revenue between $2.18 billion and $2.23 billion. Marriott Beats Q4 Expectations, Issues Strong Guidance Marriott (MAR) shares up 0.5% ahead of the open after beating Q4 expectations on the top and bottom line and issuing strong guidance. Here’s how the hotel chain’s results compared to analysts’ expectations: Adjusted EPS: $1.96 vs $1.83 expected Revenue: $5.9 billion vs $5.37 billion expected Revenue per available room was up 5% compared to pre-pandemic levels and jumped 29% year over year. That increase was driven by an 11% jump in the average daily room rate in the U.S. and Canada. Marriott’s CEO said, “As we look ahead, while concerns about the macroeconomic environment persist around the world, booking trends remain robust and we have significant momentum in our business.” The company forecast Q1 EPS of $1.82 to $1.88 vs $1.65 expected. For the full year, Marriott forecast a profit of $7.23 to $7.91 per share vs $7.44 expected. In Case You Missed It Americans’ short-term inflation expectations remained stable at the start of 2023. The New York Fed’s released its January survey of consumer expectations on Monday. Respondents said they believe inflation will be at 5% 1-year from now, unchanged from December. Consumers expect inflation to be at 2.7% 3-years from now vs 2.9% in December. But the 5-year projection ticked higher to 2.5% from 2.4%. Ford (F) shares jumped 2.8% on Monday after the company unveiled plans to build a new EV battery plant. The automaker announced it will spend $3.5 billion to build that plant in Michigan with a Chinese supplier, CATL. The plant is expected to create 2,500 jobs and begin production in 2026. Ford will manufacture lithium iron phosphate batteries at the facility and says it will be the first U.S. automaker to make those batteries in the U.S.
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