Coffee With Greta: Piping Hot Jobs Report
DJIA Futures: -189 (-0.6%) SPX Futures: -45 (-1.1%) NASDAQ Futures: -224 (-1.7%) Good morning friends! Futures are tumbling after the release of a piping-hot January jobs report. Let’s get right to it! Job Growth Surges U.S. job growth surged past expectations in January. The Labor Department reported the U.S. economy added 517,000 jobs last month with the unemployment rate falling to 3.4%. That was sharply higher than expectations for 187,000 jobs and the unemployment rate to tick up to 3.6%. It was the strongest monthly gain since July 2022 and the lowest unemployment rate since May 1969. The leisure and hospitality sector continued to lead the monthly gains, adding 128,000 jobs. While job creation surged, wages also posted solid gains. Average hourly earnings rose 0.3% monthly and 4.4% year over year. The data is bad news for traders who are betting the Fed will pause rate hikes after March and approve two rate cuts at the end of the year. The central bank has said it needs to see a weakening in the labor market to make a real difference on inflation. Treasury Yields Surge After Hot Jobs Report U.S. Treasury yields are rallying this morning after the release of that hot jobs report. The 2-year yield is up 14 basis points to 3.42% while the 10-year yield is up 9 basis points to 3.5%. The new data underscored the strength of the U.S. labor market even in the face of the Fed’s aggressive monetary policy. Apple Drops On Big Earnings Miss Apple (AAPL) shares are falling 1.9% ahead of the open after reporting its largest quarterly revenue decline since 2016. Here’s how the iPhone maker’s fiscal Q1 results compared to analysts’ expectations: EPS: $1.88 vs $1.94 expected Revenue: $117.15 billion vs $121.10 billion expected That was Apple’s first EPS miss vs expectations in nearly seven years. Sales in the key holiday quarter dropped 5.5% from a year ago, the first year-over-year decline since 2019. Apple CEO Tim Cook blamed the weak results on the strong dollar, production issues in China for the iPhone 14 Pro and Pro Max, and the overall macroeconomic environment. The company did not provide fiscal Q2 guidance. Amazon Falls On Light Guidance Amazon (AMZN) shares are dropping 5.8% in premarket trade as light guidance overshadows a Q4 revenue beat. Here’s how the tech giant’s results compared to analysts’ expectations: EPS: $0.03, not comparable to estimates because of a $2.3 billion pre-tax non-cash loss on the value of the company’s stake in Rivian Revenue: $149.2 billion vs $145.42 billion expected Amazon Web Services Revenue: $21.4 billion vs $21.87 billion expected Advertising Revenue: $11.56 billion vs $11.38 billion expected Amazon’s Q4 sales were higher than its own prior guidance while its $2.7 billion in operating income was in line with estimates. The company’s full-year 202 sales totaled $514 billion, up 9% year over year. Amazon lost $2.7 billion last year, including a $12.7 billion loss from its position in Rivian (RIVN). The company expects Q1 revenue to range between $121 billion and $126 billion, sharply missing analysts’ estimates of $139.2 billion. CEO Andy Jassy said, “In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon.” Alphabet Misses Q4 Expectations Alphabet (GOOGL) shares are 4% lower ahead of the open after missing Q4 expectations on the top and bottom line. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $1.05 vs $1.18 expected Revenue $76.05 billion vs $76.53 billion YouTube ad revenue was the biggest drag on overall sales, coming in at $7.96 billion vs $8.25 billion expected and down from $8.63 billion the year before. Alphabet said it will incur a charge of between $1.9 billion and $2.3 billion, mostly in the current quarter, related to the layoffs it announced in January. Ford Misses Q4 Profit Expectations, Reports Full-Year Loss Ford (F) shares falling 7.6% in premarket trade after missing Q4 profit expectations and reporting a net loss for the full-year. Here’s how the automaker’s results compared to analysts’ expectations: Adjusted EPS: $0.51 vs $0.62 expected Automotive revenue: $41.8 billion vs $40.37 billion expected Ford’s profits were $11 billion lower than Q4 2021. For the full year, the company lost $2 billion. CEO Jim Farley said, “We should have done much better last year. We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.” CFO John Lawler said the disappointing earnings were mainly due to execution and supply chain management issues. He said, “Our cost structure is not competitive. Our quality is not where it needs to be. And we will take the actions and be more aggressive about making sure that we’re making progress on both of those key areas for us in 2023.” Ford said it expects to earn between $9 billion and $10 billion in adjusted ebitda this year. Starbucks Drops After Fiscal Q1 Miss Starbucks (SBUX) shares are down 2.2% ahead of the open after missing fiscal Q1 expectations. Here’s how the coffee giant’s results compared to analysts’ estimates: Adjusted EPS: $0.75 vs $0.77 expected Revenue: $8.71 billion vs $8.78 billion expected The miss was mainly due to lower sales in China, the company’s second-largest market. Same-store sales in China plunged 28% last quarter while same-store sales in the U.S. rose 10%. Starbucks expects 10% to 12% revenue growth this year and adjusted EPS growth of 15% to 20%. In Case You Missed It Coinbase (COIN) shares surged 24% on Thursday after a federal securities suit was dismissed. A federal judge dismissed the class-action suit against the company Wednesday. The complaint claimed that Coinbase had engaged in the unregistered sale and offering of securities and failed to register as a New York state broker-dealer. The suit was dismissed with prejudice which means the plaintiffs cannot refile the same case.
Continue Reading -->Coffee With Greta: Meta Bets Big On Its Future
DJIA Futures: -27 (-0.1%) SPX Futures: +30 (+0.7%) NASDAQ Futures: +213 (+1.7%) Good morning friends! Futures are mixed with tech stocks rallying after a big stock buyback announcement from Meta. Let’s get right to it! Meta Surges Meta Platforms (META) shares are surging 19.5% ahead of the open after beating Q4 revenue expectations. Here’s how the social media giant’s results compared to analysts’ expectations: EPS: $1.76 vs $2.26 expected Revenue: $32.17 billion vs $31.53 billion expected Daily Active Users (DAUs): 2 billion vs 1.99 billion expected Monthly Active Users (MAUs): 2.96 billion vs 2.98 billion expected Average Revenue per User (ARPU): $10.86 vs $10.63 expected The market shook off the profit miss after the company also announced a $40 billion stock buyback. That was a signal the company is feeling good about its future. Meta forecast Q1 revenue between $26 billion and $28.5 billion, in line with analysts’ estimates of $27.1 billion. CEO Mark Zuckerberg said, “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.” The company expects its total expenses in 2023 to range between $89 billion and $95 billion, lower than the previous outlook of $94 billion to $100 billion. Meta’s bet on the metaverse continued to cost it money though. The company’s Reality Labs unit lost $4.28 billion in Q4 and $13.72 billion in all of 2022. Meta said, “Reality Labs operating losses in 2023 will grow significantly year-over-year.” FedEx Laying Off Officers, Directors FedEx (FDX) shares are up 3.1% in premarket trade after announcing it will lay off 10% of its officers and directors. The corporate job cuts are part of efforts to cut costs as consumer demand falls. The CEO said, “this was a necessary action to become a more efficient, agile organization.” The cuts come on top of FedEx’s previously announced plan to slash $1 billion in costs by parking planes and shutting down some offices. The company is aiming to cut about $3.7 billion total this fiscal year. Tesla Expected To Increase Shanghai Output Tesla (TSLA) shares are rising 2.6% ahead of the open following a Reuters report the automaker is planning to raise output at its Shanghai factory. The EV maker has reportedly seen increased demand following price cuts it announced in early January. A memo seen by Reuters said Tesla plans to produce a weekly average of nearly 20,000 units at the Shanghai location in February and March. The move to increase production comes after the company cut output in December by about a third from November as it faced lower demand. Weekly Jobless Claims Fall Weekly jobless claims fell unexpectedly at the end of January. The Labor Department reported 183,000 Americans filed initial claims for unemployment benefits last week. That was down by 3,000 from the week before and lower than 195,000 expected. It was the lowest level of claims since April 2022. Continuing claims also fell by 10,000 to 1.66 million in the week ending January 21. ECB Hikes Rates By 50bp The European Central Bank voted in favor of another 50 basis point rate hike today. In a statement, the bank vowed to “stay the course in raising interest rates significantly at a steady pace.” The ECB said it plans to hike by another 50bp in March and then future decisions will be data-dependent. Today’s hike put the eurozone’s key rate at 2.5%. Although eurozone inflation fell for the third straight month in January, headline inflation remains at 8.5% as high energy prices squeeze consumers. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Apple (AAPL) Amazon (AMZN) Alphabet (GOOGL) Ford (F) In Case You Missed It The Fed hiked rates as expected by 25bp on Wednesday. The FOMC voted unanimously for that hike and said more hikes are still appropriate. But stocks rallied after the Fed chair struck a more dovish tone during his press conference. Jerome Powell told reporters, “we can now say for the first time that the disinflationary process has started.” The market is betting on 2 rate cuts at the end of this year but Powell said, “Given our outlook, I don’t see us cutting rates this year, if our outlook comes true.”
Continue Reading -->Trading Tips from ChatGPT: Are They Awful?
Do you know how long it took big tech and social media companies to reach 1 million users? Netflix: 3.5 years Airbnb: 2.5 years Twitter: 2 years Facebook: 10 months Spotify: 5 months Instagram: 2.5 months But do you know how long it took OpenAI’s ChatGPT app to get its first 1 millon users? 5 days! Artificial Intelligence is on everyone’s minds. People are using AI for things like high school assignments, college papers, virtual receptionists, and customer service. Buzzfeed is even replacing journalists with AI. As traders, we must ask ourselves can we trade with ChatGPT? So we asked ChatGPT a query about trading:: “Give me 7 tips for stock trading that I can’t find in mainstream books, articles, or videos. Tell me what the best pros do and be very specific.” Now let’s rate ChatGPT’s answers! ChatGPT Trading Tip #1: Develop a solid risk management strategy. This includes setting stop-losses, diversifying your portfolio, and having a plan for both short-term and long-term investments. My Score: 6/10 Solid risk management is one of the most important elements of trading. ChatGPT Trading Tip #2: Utilize fundamental analysis in addition to technical analysis. While technical analysis looks at charts and past price movements to predict future trends, fundamental analysis examines a company’s financial and economic fundamentals to assess its true value. My Score: 1/10 The best way to go out of business as a day trader is to worry about fundamentals and technicals. This is one of the worst tips I’ve ever gotten from a robot. As a day trader, I am looking at technical signals and price action to determine my buy and sell decisions. A stock may be attractive on fundamentals but ugly on technicals. So if I listen to my fundamental bias, I might lose my shrt. ChatGPT Trading Tip #3: Keep an eye on global events and their potential impact on the markets. This could include political elections, natural disasters, or economic policy changes. My Score: 6/10: Tape bombs hit the market almost every day. It is very important to understand the potential effect. What ChatGPT misses is that a good trader understands the relationship between different possible events and macroeconomic indicators, and how those can possibly affect the equity markets. ChatGPT Trading Tip #4: Take advantage of options trading. Options trading can provide a way to hedge against potential losses in your portfolio, as well as offer additional income through selling options. My Score: 6/10 A really fast way to lose a lot of money is to be a beginner trader. An even faster way to lose a lot of money is to be a beginner options trader. Options trading can be a very helpful vehicle in terms of hedging trades and portfolios, and the selling of options or options right can be a profitable source of income. It is also something that requires education, skill, and proper risk management. So I’ll give it a six out of ten. ChatGPT Trading Tip #5: Consider the use of algorithmic trading. Algorithmic trading uses computer programs to make trades based on a set of rules and conditions, which can help remove emotional biases from the trading process. My Score: 2/10 Oh boy. I feel a rant coming. I’ve worked with a lot of algorithmic traders. Do you know who loses most to algorithmic traders? It’s other algorithmic traders. So if you think you’re gonna write an algo and go toe-to-toe with Citadel, I have a bridge in Brooklyn to sell you. Algorithmic trading can be very helpful if you have the resources, the bandwidth, and the computing power to do it properly. Then there’s whole idea of removing emotional biases from trading. To some extent, you should remove biases from trading. This idea that traders can just write a program that will trade their idea without their emotions is nonsense. You’re always going to be emotional. You’re always going to have emotions. You have to get over that. You have to embrace the fact that you are an emotional being. ChatGPT Trading Tip #6: Don’t be afraid to ask for help. Many successful traders have mentors or belong to trading groups where they can share ideas and insights. My Score: 10/10 “I can succeed at trading without any help,” said no successful trader ever. The idea that you can be a lone wolf and never get any help is is preposterous. It’s about as easy as launching yourself to the moon. It’s just not going to happen. This is ChatGPT’s best tip by far. You need help. You need mentorship. You need an accountability partner. You need someone to help you figure out a strategy that works. You must understand risk management, technical analysis, and the craft of trading. It takes a team. I almost said “it takes a village” but I stopped just short of that! ChatGPT Trading Tip #7: Continuously educate yourself. The market and economy are constantly changing, so it’s important to stay up-to-date on new developments and strategies in the trading world. My Score: 8/10 This is a good one. It’s funny. There’s an interesting duality here. The fundamentals of markets never change. They were the same 100 years ago when the fathers of technical analysis were writing their books. But every day you wake up and the market has a different personality The dynamics of the market are constantly changing. Price action is constantly changing. So, it is one of those paradoxes where the fundamentals of technical analysis never change and you never see anything new. On the other hand, everything constantly changes, as far as how they move. The most important thing I would tell a beginner trader is to stay up-to-date with developing strategies in the trading world. Understand what’s moving certain markets. Understand the personality of the market you’re trading. That would be the first thing. And a big part of your continuing education is to practice the virtues that got you there to begin with. That would be
Continue Reading -->Coffee With Greta: Traders Wait For The Fed
DJIA Futures: -136 (-0.4%) SPX Futures: -9 (-0.2%) NASDAQ Futures: -7 (-0.1%) Good morning friends! Futures are lower as traders wait for the Fed. Let’s get right to it! Private Job Growth Slows Sharply Private sector job growth slowed more than expected at the beginning of 2023. Payroll firm ADP reported U.S. private employers added 106,000 jobs in January. That was lower than economists’ expectations for 190,000 and down from 253,000 in December. The hospitality industry continued to see the largest gains, adding 95,000 workers. Financial activities sector added 30,000, manufacturing added 23,000, and education and health services added 12,000. But the trade, transportation, and utilities sector lost 41,000 jobs, construction lost 24,000, and natural resources and mining fell by 3,000. Pay rose 7.3% year over year, relatively unchanged from December. But ADP’s chief economist said severe weather impacted the numbers and job growth may not have been as weak as this report indicates. The Fed has been looking for the labor market to weaken as it hikes interest rates to slow inflation. Today’s data comes ahead of the official January jobs report on Friday which is expected to show the U.S. economy added 187,000 jobs and the unemployment rate ticked higher to 3.6%. AMD Tops Q4 Estimates Advanced Micro Devices (AMD) shares are up 3.2% ahead of the open after beating Q4 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $0.69 vs $0.67 expected Revenue: $5.6 billion vs $5.5 billion expected The company continued to see slowing sales of its PC chips and graphics processors. But data center sales jumped 42% year over year while its embedded segment saw sales skyrocket 1,868% due to its purchase of chip manufacturer Xilinx. AMD forecast $5.3 billion in Q1 sales, which would be a 10% decline year over year and missed analysts’ estimate of $5.47 billion. Snap Tumbles On Revenue Miss Snap (SNAP) shares are falling 13% in premarket trade after its Q4 sales came up short. Here’s how the social media giant’s results compared to analysts’ expectations: Adjusted EPS: $0.14 vs $0.11 expected Revenue: $1.30 billion vs $1.31 billion expected Global daily active users: 375 million vs 375.3 million expected Average revenue per user: $3.47 vs $3.49 expected In a letter to investors, Snap called 2022 a “challenging year” marked by “macroeconomic headwinds, platform policy changes, and increased competition.” Sales rose 12% for the full year to $4.6 billion but the company declined to provide guidance for Q1. Snap said, “On the monetization side, we anticipate that the operating environment will remain challenging, as we expect the headwinds we have faced over the past year to persist throughout Q1.” Peloton Rises On Strong Fiscal Q2 Revenue, Narrowing Loss Peloton (PTON) shares are up 6.1% ahead of the open after reporting better-than-expected fiscal Q2 revenue. Here’s how the fitness equipment maker’s results compared to analysts’ expectations: Loss per share: $0.98 vs $0.64 expected Revenue: $792.7 million vs $710 million expected Although that loss was steeper than estimates, it was down from a loss of $1.39 per share a year earlier. It was the eighth quarterly loss in a row for the company. Peloton’s CEO called the results a possible “turning point” for the business as he focuses on an aggressive turnaround strategy. The company’s subscription revenue was higher than sales of its equipment for the third quarter in a row. Peloton’s connected fitness product sales dropped 52% year over year while subscription revenue jumped 22%. The company forecast sales will fall in the current quarter to a range of $690 million to $715 million. That was in line with analysts’ estimates for $692.1 million. Mortgage Demand Pulls Back Mortgage demand fell last week despite rates continuing to fall. The Mortgage Bankers Association reported total application volume fell 9% weekly. Purchase applications fell 10% weekly and were 41% lower year over year. Refinance applications dropped 7% weekly and 80% annually. The drop came despite the average 30-year fixed contract rate falling to 6.19% from 6.2%. MBA’s chief economist said buyers are still struggling with tight supply but activity is expected to increase soon. He said, “Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth.” Coming Up: JOLTS and Fed Decision The Labor Department releases its December job openings and labor turnover survey (JOLTS) at 10:00 a.m. ET. That survey is expected to show the number of vacant jobs fell to 10.3 million at the end of 2022 from 10.5 million in November. The Fed then releases its first rate decision of the year at 2:00 p.m. ET followed by Chairman Jerome Powell’s press conference at 2:30. CME Group’s FedWatch Tool shows over 99% of traders expect the bank to raise the federal funds rate by 25 basis points. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Meta Platforms (META) In Case You Missed It Consumer confidence fell unexpectedly at the beginning of the year as Americans grew wearier of an impending recession. The Conference Board’s consumer confidence index fell to 107.1 in January from a revised 109 in December. That missed economists’ expectations for an increase to 109.5. The drop was mainly due to a decline in the expectations index which fell to 77.8 from 83.4. Any reading below 80 typically signals a recession within the next year. PayPal (PYPL) announced plans to lay off 2,000 employees on Tuesday. Those cuts represent about 7% of the company’s workforce. PayPal’s president and CEO said the company is working to address the “challenging macroeconomic environment.”
Continue Reading -->Coffee With Greta: Earnings Ramp Up
DJIA Futures: +75 (+0.2%) SPX Futures: +11 (+0.3%) NASDAQ Futures: +31 (+0.3%) Good morning friends! Futures are rising as traders digest the latest batch of Q4 earnings and the Fed meeting is set to begin today. Let’s get right to it! General Motors Rallies After Smashing Q4 Expectations General Motors (GM) are jumping 4.7% ahead of the open after sharply beating Q4 expectations. Here’s how the automaker’s results compared to analysts’ expectations: Adjusted EPS: $2.12 vs $1.69 expected Revenue: $43.11 billion vs $40.65 billion expected GM’s full-year revenue came in at $156.7 billion with adjusted earnings before interest and tax hitting a record $14.5 billion. But profit margins are shrinking, the company’s adjusted profit margin fell to 9.2% in 2022, down 2.1% from the previous year. GM forecast 2023 adjusted EPS will be between $6 and $7. Although that would be lower than 2022, the outlook was above analysts’ expectations for adjusted EPS of $5.73 this year. Exxon Slips On Weak Q4 Revenue Exxon Mobil (XOM) shares are slipping 0.8% in premarket trade after reporting mixed Q4 results. Here’s how the oil giant’s results compared to analysts’ expectations: Adjusted EPS: $3.40 vs $3.29 expected Revenue: $95.43 billion vs $97.3 billion expected The company raked in a record $56 billion profit for all of 2022. But analysts expect Exxon’s profit may have already peaked, forecasting EPS will not be higher than $3 in any quarter this year or next. Pfizer Falls On Downbeat Guidance Pfizer (PFE) shares are falling 2.8% ahead of the open as weak guidance overshadows a Q4 earnings beat. Here’s how the pharmaceutical giant’s results compared to analysts’ expectations: Adjusted EPS: $1.14 vs $1.05 expected Revenue: $24.3 billion vs $24.28 billion expected The company brought in a record $100.3 billion profit in 2022, driven by more than $50 billion in Covid vaccine and antiviral sales. But Pfizer expects sales to fall sharply this year. The company forecast revenue will decline up to 33% year over year as Covid vaccine sales slow. Pfizer forecast 2023 EPS of $3.25 to $3.45, down by as much as 50% from the record $6.58 last year. McDonald’s Drops Despite Q4 Earnings Beat McDonald’s (MCD) shares are falling 1.8% in premarket trade despite beating Q4 expectations on the top and bottom line. Here’s how the fast food giant’s results compared to analysts’ expectations: EPS: $2.59 vs $2.45 expected Revenue: $5.93 billion vs $5.68 billion expected McDonald’s same-store sales in the U.S. jumped 10.3% beating estimates of 8.1%, as demand jumped and customers paid higher prices. But the CEO warned the company is expecting short-term inflation pressures to continue in 2023. The company expects to open 1,900 new restaurants globally this year, including more than 400 in the U.S. UPS Jumps On Q4 Earnings Beat UPS (UPS) shares are rising 1.9% ahead of the open after beating Q4 profit expectations. Here’s how the shipping giant’s results compared to analysts’ expectations: Adjusted EPS: $3.62 vs $3.59 expected Revenue: $27.03 billion vs $28.09 billion expected Even as shipping volumes have decreased and costs rise, UPS has benefited from elevated prices. The company raised shipping rates by 6.9% at the end of 2022. But UPS offered full-year 2023 guidance that was below analysts’ estimates. The company expects between $97 billion and $99.4 billion in revenue this year vs analysts’ expectations of $99.98 billion. Consumer Confidence Expected To Rise The Conference Board releases its January consumer confidence index at 10:00 a.m. ET. That survey is expected to rise to 109.5 from 108.4 in December. Last month’s figure was the highest since April 2022 as inflation has started to cool. But consumers are still expecting a recession to hit the U.S. economy in the months ahead. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Advanced Micro Devices (AMD) Snap (SNAP)
Continue Reading -->Coffee With Greta: Traders Brace For Big Week
DJIA Futures: -145 (-0.4%) SPX Futures: -33 (-0.8%) NASDAQ Futures: -138 (-1.1%) Good morning friends! Futures are lower as traders gear up for a big week of earnings, the Fed decision, and new jobs data. Let’s get right to it! Big Week For Traders Wall Street may be in for a wild ride this week as earnings season picks up and the Fed meets. The Fed meeting kicks off on Tuesday with the rate hike decision set to be released Wednesday. CME Group’s FedWatch Tool shows 98.1% of traders expect a 25 basis point hike. That survey shows the market pricing in one more 25 basis point move at the next meeting and then traders are split on if the central bank will pause rate hikes after that. This week also includes key jobs data, something the Fed has been watching closely. The official January jobs report comes out Friday morning, with ADP’s private employment report on Wednesday morning. And it will be the busiest week of earnings yet starting with results from Exxon Mobil (XOM), Pfizer (PFE), UPS (UPS), McDonald’s (MCD), Caterpillar (CAT), and General Motors (GM) Tuesday morning. Yields Rise Ahead Of Fed Meeting Treasury yields are rising today as traders sell off bonds ahead of the Fed meeting. The 2-year yield is up 5 basis points to 4.25% while the 10-year yield is up 3 basis points to 3.55%. The market is anticipating the smallest rate hike from the Fed since it began the current tightening cycle last May. But concern is rising on Wall Street that the bank will over-tighten and plunge the economy into a recession. The latest inflation data has shown the Fed’s rate hikes having an impact on prices. But Fed officials have maintained the bank’s stance that rates still need to rise further before pausing. Ford Cuts Mustang Mach-E Prices Ford (F) shares are slipping 2.4% ahead of the open after announcing it will increase production and cut prices of its electric Mustang Mach-E. The automaker said this morning that the price cuts will range from $600 to $5,000 depending on the model. The Mach-E starting price will now range from $46,000 to $64,000. The move follows Tesla’s (TSLA) decision to cut prices on its Model Y earlier this month. The chief customer officer of Ford’s EV business said, “We are responding to changes in the marketplace. As we look and want to stay competitive in the marketplace, we’re having to respond.” But the cuts mean some models of the Mach-E will not be profitable on a per-unit basis. The company will also increase production to 130,000 units annually from 78,000 currently. Philips Cuts 6,000 Jobs Philips (PHG) shares are rallying 5.7% in premarket trade after announcing job cuts. The Dutch health technology company said today it will lay off 6,000 employees. The move is meant to lower costs and restore its profitability after a recall of respiratory devices knocked 70% off of its market value. Half of those cuts will be made this year with the other half by 2025. The company’s new CEO said the cuts are a “necessary intervention to help us to become competitive and lean in the way we go forward in the market.” The latest move comes on top of Philips’ announcement to cut 4,000 jobs last October. In Case You Missed It Lucid Group (LCID) shares skyrocketed 43% on Friday amid takeover rumors. The stock was halted several times throughout the session as trading volume jumped to nearly eight times the average. A stock research blog speculated that Saudi Arabia Public Investment Fund would acquire the electric automaker. LCID shares are up 0.9% ahead of the open today.
Continue Reading -->Lucid Doubled – Now I’m doing This
We have mostly red arrows around the world after a big start to 2023. Spain’s Hot CPI is putting some pressure on Europe, and most of China is lower after their holiday week. SPX futures are -36 after hitting a high of 4094 Friday. We’ll see if the 4039 area can hold this morning with 4015 a bigger spot. The FOMC is Wednesday, with many big earnings reports in the mix — AMD, XOM, META, AAPL, GOOGL, and AMZN. SPY gave us a very tradable move as it hit a high of $408.62 before fading a bit Friday. This morning we’ll see how it handles $402ish. $400 is a bigger spot. If you are thinking there can be one more move higher this week, $408 or $410 lotto calls for Wednesday or Friday may be worth a look. Now let’s look at some individual names. LCID was a great grab Friday as our eyes were on it with the TSLA strength. It doubled intraday to take some off. I also took some home. I trimmed most of my position above $14.50 pre-market. See how it holds up. NIO hit $13.20 last week. I’m still long. If TSLA continues, this should have more room. It needs to hold $11.90. TSLA changed January 6 and became my #1 P&L driver for 2023. Many did well with call spreads into earnings or buying it vs. $154.76 the day. It hit $180.76 Friday. We’ll see how it reacts for active cash flow today. It just had a big move, so let it do some price discovery. RBLX is tight. Some are long vs. the $34 area. Others are waiting for a high-volume move above $38ish. AMD ignited above $65 a few weeks ago and cleared $72.60 Monday to see $77+ last week. It went red to green after INTC. Earnings are on Tuesday. See if can hold hold $73ish for now. Scott Redler’s positions disclosure as of 2023-01-30 at 7.23.09 AM
Continue Reading -->Coffee With Greta: PCE Inflation Cools
DJIA Futures: -24 (-0.1%) SPX Futures: -16 (-0.4%) NASDAQ Futures: -69 (-0.6%) Good morning friends! Futures are slipping despite new data showing inflation pressures continued to cool at the end of 2022 as disappointing earnings weigh on the market. Let’s get right to it! PCE Inflation Cools The Fed’s favorite inflation gauge continued to cool in December. The Bureau of Economic Analysis’ personal consumption expenditures price index rose 0.1% monthly and 5% year over year. That was down from the 5.5% annual gain in November. The core PCE price index, which excludes food, energy, and trade services, rose 0.3% monthly and 4.4% year over year. That was also down from the 4.7% annual gain in November and in line with economists’ expectations. Intel Tumbles After Earnings Miss, Weak Guidance Intel (INTC) shares are tumbling 9.8% ahead of the open after missing Q4 expectations and issuing weak guidance. Here’s how the chipmaker’s results compared to analysts’ expectations: Adjusted EPS: $0.10 vs $0.21 expected Revenue: $14.04 billion vs $14.49 billion expected Intel missed its own prior forecast of EPS of $0.20 on $14 billion to $15 billion in revenue. The tech company forecast an adjusted loss of $0.15 per share on revenue of about $10.5 billion to $11.5 billion in Q1. Intel also expects gross margins of just 34.1% in the current quarter, far off from the 51% to 53% goal the company set last year and down from 55.1% in Q1 2022. The company blamed an inventory glut for the expected struggles this quarter as customers work through an oversupply of chips. The CEO told investors, “While we know this dynamic will reverse, predicting when is difficult.” Chevron Slips As Earnings Come Up Short Chevron (CVX) shares are down 1.4% in premarket trade after missing Q4 profit expectations. Here’s how the oil giant’s results compared to analysts’ expectations: Adjusted EPS: $4.09 vs $4.33 expected Revenue: $56.47 billion vs $52.68 billion expected For the full year, Chevron earned a record $36.5 billion in profit. That was about $10 billion higher than its previous record set in 2011. The CEO said, “We delivered record earnings and cash flow in 2022, while increasing investments and growing U.S. production to a company record.” Bed Bath & Beyond Defaults On Credit Line Bed Bath & Beyond (BBBY) shares are up 1.5% ahead of the open as potential bankruptcy hopes rise after the retailer defaulted on its credit line with JPMorgan. In an SEC filing, Bed Bath said it “does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.” The company’s debt load includes a $550 million asset-backed loan with JPMorgan, $375 million with lender Sixth Street, and nearly $1.2 billion in unsecured Treasury notes. In a separate filing today, Bed Bath said its Board has named restructuring expert Carol Flaton as an independent director. Key Earnings Next Week Earnings season continues to pick up steam next week. Here’s some of the major companies set to report: SoFi (SOFI) Exxon Mobil (XOM) Pfizer (PFE) McDonald’s (MCD) UPS (UPS) Caterpillar (CAT) Advanced Micro Devices (AMD) General Motors (GM) Spotify (SPOT) Snap (SNAP) Meta Platforms (META) Apple (AAPL) Alphabet (GOOGL) Amazon (AMZN) Ford (F)
Continue Reading -->Meet Pro Trader JR Romero, Leader of the Momentum Express VTF®
Today we’re speaking with JR Romero, the Leader of T3 Live’s Momentum Express VTF®. You’ll hear about JR’s adventure from Argentina to Brazil to New York to Idaho. And you’ll learn how this Columbia University graduate went from coding to working for a major hedge fund to trading his own money. You’ll even hear about the time the roof collapsed on JR during a trade. Editor’s Note: this transcript has been edited for length and clarity. Greta Wall: I want to start from the very beginning here. Tell me about your childhood. JR Romero: Thank you for having me. It’s a pleasure to be with you today. I was born in Argentina in the late seventies during the military junta. My parents were political exiles. I grew up in Brazil and moved to the United States in the late nineties. GW: What it was like growing up in Brazil, and then emigrating to the US? JR: I had a pretty free-range childhood. If I was indoors, I was eating, sleeping, or injured. I had a wonderful childhood with lots of friends, and not a lot of schoolwork. But it was a really remarkable time. GW: What was your family like? JR: We have a long history of entrepreneurship in my family. My grandparents and great-grandparents were all business owners. My father was an economist and a business owner. He was also a very active investor, especially in the forex markets. And my mother was a dance therapist and educator. I have one sister who lives in Uruguay with two children. GW: So you didn’t spend a lot of time inside as a kid. What were your hobbies? JR: I was a pugilist from a very early age. I was very much into karate and judo. And then in my teens, I got pretty heavily into boxing. And I’ve been getting punched in the head ever since! GW: Do you still box? JR: The mileage caught up to me. I’m in my late forties, so I only hit things that don’t hit back. I do the heavy bag and light sparring, and I enjoy coaching my children. Both my sons are avid enthusiasts of boxing and kickboxing. So I’m trying to pass the torch on. GW: Did you come to US with your parents from Brazil or on your own? JR: I left the house at 17. I was a snowboarder and traveled around for a couple of years. I couch-surfed quite a bit. And my girlfriend at the time had a college application to Columbia University. I stole it from her (with permission), applied, and got in. So I came here at 19. GW: You said your dad was an investor. Did he introduce you to trading and the markets? JR: No, not at all. I was a computer engineering major at Columbia University, and then I worked for a hedge fund on the technology side. And through my interactions as a contractor, I was hired by a very important hedge fund. There I became really enthralled with the traders and how they saw the world, how they constantly analyzed probabilities about everything. They would take bets on what time the pizza guy would get there, down to the second. They built algorithms to figure out which restaurant would deliver faster, so I was instantly hooked. And I had a couple of people that took me under their wing within that organization. That’s how I was initially introduced to trading. GW: Tell me more about that transition from the IT side into the trading side. JR: I was immediately paired with the quants because of my computer science background. But I was sort of bored by it. I understood what they were doing. I was more fascinated by technical analysis, charting, and economic catalysts. It was fascinating to watch how trading decisions were made. And I asked to be trained and I was given a shot to participate in that. Eventually, I started trading on my own. It was a real struggle at first, going from institutional to private trading. You don’t have risk managers looking over your head. You don’t have team meetings. You don’t have that kind of support. When you go from trading institutional money to your own money, it’s a very different feeling that’s very hard for some traders to adjust to. GW: When you look back on your early days of trading for yourself, what would you say was the biggest mistake that you made? I was an acute sufferer of the Dunning-Kruger effect from my early days. (Editor’s Note: The Dunning-Kruger effect is a psychological phenomena which occurswhen a person’s lack of knowledge leads them to overestimate their abilities) I had a strong foundation in math and science and a keen understanding of technical analysis. After a couple of years, I thought I was really a good technician. But I found out there is a vast difference between being proficient at reading charts, and actually being a trader. That transition was very difficult and very painful. And it led me down some rabbit holes that took some time to untangle. But, eventually, I figured out a trading style that fit me, and a methodology that worked for my personality, And it’s been a great ride ever since. GW: On the flip side, what was the best thing you did in your early days of training? JR: Asking for help was the best thing I ever did. And the second best thing I ever did was to realize early on that as a trader, you are truly on your own. No one else possesses your same personality profile, your same characteristics, and your same view of the market. And I realized that to be successful, I needed to develop my own sensibility, my own strategy, and my own approach to markets. GW: So you mentioned earlier that had mentors at the institutional firm you were working for. Tell me about those mentors and how they
Continue Reading -->Coffee With Greta: Stocks Rise As GDP Beats
DJIA Futures: +87 (+0.3%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +116 (+1.0%) Good morning friends! Futures are higher as traders digest strong Q4 GDP data and an earnings beat from Tesla. Let’s get right to it! U.S. Economy Expands More Than Expected The U.S. economy grew more than expected at the end of 2022. The Commerce Department’s first estimate shows GDP rose at a 2.9% annualized pace in Q4. That was better than economists’ expectations for 2.8% but still down from 3.2% growth in Q3. The data showed consumer spending remained strong at the end of the year, up 2.1% on a quarterly basis. Inflation pressures also cooled with the personal consumption expenditures price index increasing 3.2%, down from 4.8% in Q3. The slowdown in GDP growth from Q3 to Q4 was largely driven by lower residential fixed investment which plunged 26.7% as the housing market slowed. Exports also declined 1.3% in the quarter. Tesla Beats Q4 Expectations Tesla (TSLA) shares are rallying 8.8% ahead of the open after reporting record revenue in Q4 and beating earnings expectations. Here’s how the electric automaker’s results compared to analysts’ estimates: Adjusted EPS: $1.19 vs $1.13 expected Revenue: $24.32 billion vs $24.16 billion expected Automotive revenue jumped 33% year over year but gross margins came in at 25.9%, the lowest figure in five years. Tesla blamed those smaller margins on lower sales prices, saying average sales prices have “generally been on a downward trajectory for many years”. The company most recently cut prices on its cars in the U.S. and China in late 2022. IBM Sales Top Estimates IBM (IBM) shares are slipping 2.2% in premarket trade despite reporting better-than-expected sales in the fourth quarter. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $3.60 as expected Revenue: $16.69 billion vs $16.4 billion expected IBM’s total revenue was flat year over year, beating expectations for the first decline in two years. For the full year, the company’s revenue jumped 6% to $60.5 billion. IBM reiterated its previous forecast for 2023 revenue growth in the mid-single digits, suggesting a total of about $63.5 billion vs $60.8 billion expected. The company is projecting $10.5 billion in free cash flow this year vs $11.1 billion expected. American Airlines Beats Earnings Estimates American Airlines (AAL) shares are up 1.9% ahead of the open after beating Q4 earnings estimates. Here’s how the airline’s results compared to analysts’ expectations: Adjusted EPS: $1.17 vs $1.14 expected Revenue: $13.19 billion vs $13.20 billion expected Revenue jumped 16.6% compared to the same quarter in 2019 as travelers paid higher fare prices. That revenue total was a new record for the company despite operating 6.1% less capacity than Q4 2019. American brought in $127 million in net income for all of 2022, its first full-year profit since 2019. The carrier forecast Q1 capacity will be 8% to 10% higher year over year. Southwest Reports Worse-Than-Expected Q4 Loss Southwest Airlines (LUV) shares are dropping 2.6% in premarket trade after reporting a steeper Q4 loss than expected. Here’s how the carrier’s results compared to analysts’ estimates: Adjusted loss per share: $0.38 vs $0.12 expected Revenue: $6.17 billion vs $6.16 billion expected That loss was driven by the mass cancellation of about 16,700 Southwest flights between December 21 and December 31. The company said it expects that meltdown to continue weighing on its bottom line in Q1. Southwest said it expects to post another loss in Q1, sharply missing analysts’ expectations for a profit of $0.19 per share. The airline reported a $529 million profit for the full-year 2022, down 45% from a year earlier. Key Earnings After The Close Here’s a look at the companies set to report earnings after the close today: Intel (INTC) Visa (V)
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