Webinar Replay: My #1 Earnings Strategy
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Continue Reading -->Coffee With Greta: Rate Hike Hangover
DJIA Futures: +72 (+0.2%) SPX Futures: +3 (+0.1%) NASDAQ Futures: -10 (-0.1%) Good morning friends! Futures are attempting to rebound after the steep selloff following the Fed rate hike on Wednesday. Let’s get right to it! Fed Lays Out Future Plans The Federal Reserve hiked the federal funds rate by 0.75% as expected on Wednesday, putting base interest rates in a range of 3% to 3.25%. But the market’s focus was on what the Fed plans to do moving forward. The Central Bank’s projections show the FOMC planning to hike rates to 4.4% by the end of this year and peak at 4.6% in 2023. That would mean another 0.75% rate hike in November, 0.5% in December, and 0.25% at the first meeting of 2023. The Fed also sees unemployment rising to 4.4% next year as those rate hikes take hold. That’s up sharply from the current 3.7% unemployment rate, which is likely to cause a recession. Chairman Jerome Powell said, “The FOMC is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done. The Fed’s dot plot does not show any rate cuts beginning until 2024. Yield Curve Inversion Widens U.S. Treasury yields are up this morning following the Fed rate hike on Wednesday. The 2-year yield is hovering just above 4.1%, its highest level since 2007. The 10-year yield is still hovering around 3.56%. The inversion between the two has deepened in recent weeks which is seen as a warning sign of an impending recession. Bank of England Hikes Rate By 50bps The Bank of England voted to raise its base interest rate by 50 basis points today to 2.25%. That was lower than the 75bps hike most traders were expecting. The U.K. saw 9.9% headline inflation in August and 6.3% core inflation. The BOE forecast inflation will peak at just under 11% in October, down from its previous outlook for 13%. The bank said it believes the U.K. economy is already in a recession, forecasting Q3 GDP would contract by 0.1%. This is the seventh consecutive rate hike and the highest rate since 2008. Salesforce Announces New Profitability Goals Salesforce (CRM) shares are up 2.8% after hosting an investor day event Wednesday. The software maker’s CFO unveiled new long-term profitability goals at that event. The company is aiming for 25% adjusted operating margin in 2026. That’s up from the 20% operating margin goal for the 2023 fiscal year. The CFO said efforts to hit that goal will include new acquisitions and more efficient spending. Salesforce is aiming to push adjusted sales and marketing spending below 35% of revenue by 2026. Weekly Jobless Claims Rise Weekly jobless claims rose for the first time in 6 six weeks last week. The Labor Department reported 213,000 Americans filed initial claims for unemployment benefits. That was up by 5,000 from the previous week and just below economists’ expectations. Continuing claims fell by 20,000 to 1.38 million in the week ending September 10. The Fed is looking to see signs of weakness in the labor market as it hikes interest rates to tackle inflation. Oil Prices Rise on Fresh Supply Fears Oil prices are rebounding today as supply fears overtake demand concerns. West Texas Intermediate crude futures are up 1.7% to over $84 bbl while Brent crude futures are up 1.6% to over $91 bbl. The Energy Information Administration reported U.S. crude stockpiles rose by 1.1 million barrels last week vs 8.8 million expected. Gasoline inventories rose by 1.6 million barrels with production estimated at 9.5 million barrels per day. In Case You Missed It The National Association of Realtors reported existing home sales fell 0.4% in August to a seasonally adjusted annual rate of 4.8 million units. That was the 7th monthly drop in a row and sales were down 19.9% compared to a year ago. There were 1.28 million homes for sale at the end of August, representing a 3.2-month supply.
Continue Reading -->Coffee With Greta: How Much Pain Will the Fed Cause?
DJIA Futures: +153 (+0.5%) SPX Futures: +20 (+0.5%) NASDAQ Futures: +51 (+0.4%) Good morning friends! Futures are rising as focus turns to today’s Fed rate hike decision. Let’s get right to it! Fed Decision Day The Federal Reserve releases its latest rate hike decision at 2:00 p.m. ET today, followed by Chairman Jerome Powell’s press conference at 2:30 p.m. And although traders are anticipating another big move, what the Fed says about the future may be more important. CME Group’s FedWatch Tool shows the market pricing in an 82% chance of another 75 bps hike. But how much higher rates will go and how long they will stay there are of main concern now. The FOMC statement includes futures projections for the Fed funds rate, inflation, and unemployment. Powell has previously said Americans will have to experience some “economic pain” in order to lower inflation, which includes higher unemployment. Fed officials are predicting rates to stay elevated through at least the end of 2023. General Mills Beats Expectations, Hikes Forecast General Mills (GIS) shares are up 2.4% ahead of the open after beating fiscal Q1 expectations and raising its full-year outlook. Here’s how the food company’s results compared to analysts’ expectations: Adjusted EPS: $1.11 vs $1.00 expected Revenue: $4.72 billion, in line with expectations Across North America, retail sales rose 10%, foodservice sales rose 21%, and pet sales jumped 19%. That strong growth helped offset a 30% drop in international sales. General Mills now expects year-over-year adjusted earnings growth of 2% to 5%, up from flat to 3% previously. Mortgage Demand Rises for First Time in 6 Weeks Mortgage application volume increased last week for the first time in six weeks. The Mortgage Bankers Association reported purchase applications rose 1% weekly but were still down 30% year over year. Refinance application jumped 10% weekly and were down 83% annually. The increase came even as mortgage rates continued to rise. The average contract rate on a 30-year fixed mortgage rose to 6.25% from 6.01%. Oil Prices Jump As Ukraine War Intensifies Oil prices are rising today amid fresh supply concerns after Russian President Vladimir Putin announced a new military mobilization in Ukraine. West Texas Intermediate crude futures are up 1.5% to $85 bbl while Brent crude futures are up 1.5% to $92 bbl. Putin signed a decree mobilizing more troops on Wednesday. He claims he is defending Russian territories and that the West wants to destroy the country. Meanwhile, the American Petroleum Institute reported a smaller-than-expected increase in crude stockpiles last week. U.S. oil inventories rose by 1.035 million barrels vs 2.321 million expected. The Department of Energy released 6.9 million barrels from the Strategic Petroleum Reserves last week. The Energy Information Administration reports official inventory levels today. Existing Home Sales Expected to Fall The National Association of Realtors reports existing home sales for August at 10:00 a.m. ET. The report is expected to show sales declined to a seasonally adjusted rate of 4.68 million units last month from 4.81 million in July. The U.S. housing market has seen a dramatic slowdown in buyer activity as mortgage rates surge. In Case You Missed It Ford (F) suffered its worst day in more than 11 years on Tuesday, tumbling 12.3%. The drop came after the automaker warned Q3 costs will be about $1 billion more than previously forecast. The company has been struggling with inflation and continued supply chain issues. Ford projected Q3 EBITDA will be between $1.4 billion and $1.7 billion, far below analysts’ expectations of $3 billion.
Continue Reading -->Coffee With Greta: The Fed Countdown Is On
DJIA Futures: -191 (-0.6%) SPX Futures: -27 (-0.7%) NASDAQ Futures: -90 (-0.7%) Good morning friends! Futures are slipping today as the Fed is set to kick off its two-day policy meeting. Let’s get right to it! Fed Meeting Begins The Central Bank begins its policy meeting today with the rate hike decision due at 2:00 p.m. ET on Wednesday. CME Group’s FedWatch Tool shows the market sees an 84% chance of another 75bps hike and a 16% chance of a 100bps hike. CNBC’s September Fed Survey shows the market is anticipating a 0.75% rate hike and expects the fed funds rate to peak at 4.26% in March 2023. That’s up 40 basis points from the expected peak in the July survey. Respondents expect the Fed to keep rates at that peak level for nearly 11 months. But there is also continued fear the Fed will cause a recession. The survey shows a 52% probability of a recession in the U.S. over the next 12 months with a 72% probability in Europe. Treasury Yields Surge Further Treasury yields are surging again today in anticipation of that rate hike. The 2-year yield is up 6 basis points to 3.98%, a fresh 15-year high. The 10-year yield is up 7 basis points to 3.57%, its highest level since 2011. Sweden’s Central Bank approved a 100 bps rate hike today, pushing its main policy rate to 1.75%. The bank warned “inflation is too high” and said it is “undermining households’ purchasing power and making it more difficult for both companies and households to plan their finances.” Housing Starts Rebound, Building Permits Fall U.S. home construction rebounded more than expected in August. The Census Bureau reported housing starts jumped 12.2% to a seasonally adjusted annual rate of 1.575 million units vs 1.445 million expected. That unexpected surge came as July starts were revised down to a SAAR of 1.404 million units from the previous 1.446 million. Single-family starts rose 3.4% while multi-family starts surged 28.6% as demand rises for apartments with homebuyers being squeezed by high mortgage rates. But the rebound is not expected to last as building permits fell sharply. The number of permits authorized in August dropped 10% monthly to a SAAR of 1.517 million units vs 1.62 million expected. Single-family permits fell 3.5% while multi-family permits tumbled 18.5%. Ford Warns of Higher Q3 Costs Ford (F) shares are down 4.7% ahead of the open after warning investors on Monday it expects to incur an extra $1 billion in costs during the third quarter. The automaker said those costs are the result of inflation and continued supply chain issues. Parts shortages have impacted roughly 40,000 to 45,000 vehicles during the quarter, mostly trucks and SUVs, that have been unable to reach dealers. Ford said those vehicles will be delivered to dealers in Q4 and reiterated its full-year guidance. Oil Prices Rise Slightly Oil prices are up slightly today as OPEC+ countries continue to produce less than their quotas. West Texas Intermediate crude futures are up just 0.1% at $86 bbl while Brent crude futures are up 0.4% at $92 bbl. A new document from OPEC+ shows the group fell short of its output target by 3.538 million barrels per day in August. That reignited supply concerns in a market that’s been focused on demand fears in recent days. Both contracts are on track for their largest quarterly percentage drops since the beginning of the pandemic. In Case You Missed It Homebuilder sentiment tumbled for the ninth month in a row. The National Association of Homebuilders sentiment index dropped 3 points this month to 46. That’s the lowest reading since May 2014, excluding the plunge at the start of the pandemic. It was also lower than expectations for 47 with anything under 50 considered negative. Builders blamed higher mortgage rates for falling sentiment as labor and construction costs remain high. Nearly 25% of builders reported lowering the price of homes in September, up from 19% in August.
Continue Reading -->Coffee With Greta: What Will the Fed Do?
DJIA Futures: -231 (-0.7%) SPX Futures: -27 (-0.7%) NASDAQ Futures: -79 (-0.7%) Good morning friends! Futures are falling further today as a new week of trade begins focused on the Fed. Let’s get right to it! Fed Week Kicks Off Stocks are set to open lower as the market turns its focus to this week’s Fed meeting. The Central Bank begins its two-day policy meeting on Tuesday and will release the rate hike decision Wednesday at 2:00 p.m. ET. CME Group’s FedWatch Tool shows the market sees an 80% chance of another 75bps hike and a 20% chance of a 100bps hike. The increased expectations come after inflation unexpectedly picked up in August. The Fed Chair has said Americans will have to experience some “economic pain” in order to get inflation under control. Treasury Yields Surge Ahead of Fed Rate Hike Treasury yields are rallying today in anticipation of another large rate hike from the Fed this week. The 2-year yield is up 6 basis points at 3.93% while the 10-year yield is up 4 basis points at 3.5%. The 10-year hit a high of 3.508% earlier this morning, its highest level since 2011, and the 2-year jumped to its highest since 2007 at 3.94%. Yields move inversely to prices, surging higher as traders sell off bonds. Oil Prices Fall as Demand Fears Jump Oil prices are falling today as demand fears take over. West Texas Intermediate crude futures are down 3.4% to $82 bbl while Brent crude futures are down 3% to under $89 bbl. Prices have been under pressure ahead of the Fed’s meeting this week as continued rate hikes are expected to put more pressure on the economy. But the market still has supply concerns hanging over its head with the EU’s sanctions on Russian oil approaching in early December. Housing Market In Focus This will be a big week of data for the U.S. housing market which has slowed dramatically as mortgage rates rise. The National Association of Homebuilders releases its September sentiment index at 10:00 a.m. ET today. Economists expect the index to fall 2 points to 47 after confidence slipped into negative territory for the first time since May 2020 in August. Builders already squeezed by high material costs and supply shortages are now struggling with slower buyer demand due to higher rates. The Census Bureau reports August housing starts and building permits Tuesday morning and the National Association of Realtors existing home sales report will be out on Wednesday. In Case You Missed It The University of Michigan consumer sentiment index rose to 59.5 in September from 58.2 in August. That was lower than economists’ expectations for 60 and down sharply from 72.8 a year ago. The survey showed Americans expect inflation to still be at 4.6% one year from now and 2.8% five years from now. FedEx (FDX) suffered its largest one-day decline on record Friday, plunging 21.4%. The drop came after the shipping giant missed expectations in the latest quarter and withdrew its full-year guidance. FedEx cited weaker global shipping demand for the move with the CEO predicting a “worldwide recession”.
Continue Reading -->Coffee With Greta: FedEx Craters After Ditching Forecast
DJIA Futures: -313 (-1.0%) SPX Futures: -42 (-1.1%) NASDAQ Futures: -136 (-1.1%) Good morning friends! Futures are tumbling as the market heads for big weekly losses. Let’s get right to it! FedEx Tanks After Withdrawing Guidance FedEx (FDX) shares are plummeting 20.3% ahead of the open after missing fiscal Q1 expectations and withdrawing its full-year guidance. Here’s how the shipping giant’s results compared to analysts’ expectations: Adjusted EPS: $3.44 vs $5.14 expected Revenue: $23.2 billion vs $23.59 billion expected FedEx withdrew its full-year forecast as global shipping volumes dropped. The CEO said “Global volumes declined as macroeconomic trends significantly worsened later in the quarter… While this performance is disappointing, we are aggressively accelerating cost reduction efforts.” The company also announced new cost-cutting initiatives which include closing 90 office locations and five corporate office facilities. FedEx will also defer hiring efforts, reduce flights, and cancel some projects. The guidance cut is also weighing on FedEx’s competitors with UPS (UPS) shares down 6.5% and XPO Logistics (XPO) shares falling 5.9% ahead of the open. Uber Gets Hacked Uber (UBER) is investigating a cybersecurity incident after a hacker gained control over the company’s internal systems. In a statement on Twitter, Uber said, “We are currently responding to a cybersecurity incident. We are in touch with law enforcement and will post additional updates here as they become available.” A New York Times report claims the hacker gained access after compromising an employee’s Slack account. The Times says it spoke with the hacker directly. Uber shares are down 4.3% in premarket trade. Oil Prices Steady Oil prices have stabilized this morning but are still on track for weekly losses. West Texas Intermediate crude futures are up 0.3% to $85.30 bbl while Brent crude futures are up 0.7% to $91.50 bbl. The market has been in a back and forth all week between demand fears and supply concerns. This will be the third consecutive weekly loss for both contracts. Both WTI and Brent are down by 20% so far in Q3, the worst quarterly percentage declines since the start of the pandemic. Consumer Sentiment Expected to Improve The University of Michigan reports consumer sentiment for September at 10:00 a.m. ET. That index is expected to rise to 60 from 58.2 in August. But the main focus is on consumers’ 5-year inflation expectations, which stood at 2.9% in August. That outlook is of extra importance ahead of next week’s Fed meeting. Fed Chair Jerome Powell said that surprisingly higher inflation expectations ahead of the June meeting were part of what swayed the bank to approve another 0.75% rate hike instead of pivoting back to 0.5%. CME Group’s FedWatch Tool shows 80% of traders anticipating another 75 bps rate hike while 20% are predicting a 100 bps move. In Case You Missed It Adobe (ADBE) logged its worst day since 2010 on Thursday as the stock plunged 16.8%. The drop came after the company announced a $20 billion cash and stock deal to acquire design software firm Figma. Figma was valued at just $10 billion in its last funding round in 2021. Adobe also announced mixed fiscal Q3 results Thursday morning and issued mixed guidance for fiscal Q4.
Continue Reading -->Coffee With Greta: Are We Buying More or Just Spending More?
DJIA Futures: +36 (+0.1%) SPX Futures: -4 (-0.1%) NASDAQ Futures: -36 (-0.3%) Good morning friends! Futures are flat following the release of strong consumer data. Let’s get right to it! Retail Sales Rise More Than Expected U.S. retail sales rose more than expected in August as Americans spent more on new cars and ate out more. The Census Bureau reported retail sales rose 0.3% in August to $683.3 billion, up 9.1% year over year. That was better than economists’ expectations for sales to be unchanged. Sales rose 2.8% monthly and 6.7% annually at car dealers. Restaurants and bars saw a 1.1% monthly and 10.9% annual increase in spending. Although lower gas prices caused a 4.2% monthly drop in spending at gasoline stations, those sales were still up 29.3% year over year. Excluding autos and gasoline, core retail sales also rose 0.3% monthly and 7.6% annually. The jump largely reflects higher prices and not increased purchases. When adjusted for inflation, spending is basically flat over the past year. But it still shows consumers maintaining strength in the face of soaring inflation. Weekly Jobless Claims Fall for Fifth Straight Week Weekly jobless claims fell unexpectedly last week for the fifth week in a row. The Labor Department reported 213,000 Americans filed initial unemployment claims. That was down 5,000 from the previous week and better than expectations for an increase to 225,000. The data shows no increase in layoffs as the Fed hikes rates. Continuing jobless claims were unchanged at 1.4 million in the week ending September 3. Rail Stocks Rally on Labor Deal to Avoid Strike Rail stocks are up ahead of the open after railroads and labor unions reached a tentative agreement overnight to avoid a massive rail strike. The Association of American Railroads said in a press release that tentative agreements have been reached with the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters, the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division, and the Brotherhood of Railroad Signalmen. Union Pacific (UNP) shares are up 3.1% ahead of the open, while CSX (CSX) shares are up 1.7%, and Norfolk Southern (NSC) shares are up 3.1%. Under the new contracts, rail workers will receive a 24% wage increase by 2024, including $11,000 in immediate average payouts. The unions also negotiated an extra paid day off for workers. The deal avoids a nationwide rail strike that threatened to worsen an already struggling supply chain across the U.S. The tentative agreement must now be ratified by union members, which could take at least a week. Adobe Falls on Weak Outlook, New Acquisition Announcement Adobe (ADBE) shares are down 9.8% in premarket trade after reporting mixed fiscal Q3 results and a weak outlook for Q4. The software company reported adjusted earnings of $3.40 per share on $4.43 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $3.35 but sales fell short of estimates for $4.44 billion. For fiscal Q4, Adobe forecast revenue of $4.52 billion vs analysts’ expectations for $4.6 billio. The company said that outlook reflects macroeconomic conditions, foreign-exchange pressures, and the usual “year-end seasonal strength in demand for our offerings.” Adobe sees adjusted earnings of $3.50 per share in fiscal Q4, better than analysts expectations for $3.47. The company also announced it will acquire design software firm Figma in a cash and stock deal worth $20 billion. Adobe’s chairman and CEO said, “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.” The company expects that deal to close in 2023. Oil Prices Dip on Demand Fears Oil prices are falling today as demand concerns take over. West Texas Intermediate crude futures are down 1.8% to just under $87 bbl while Brent crude futures are down 1.8% to $92 bbl. The International Energy Agency forecast this week that oil demand growth would fall sharply in Q4. That outlook comes as analysts expect the Fed’s tightening policy to weaken the economy. Meanwhile, the Energy Information Administration reported U.S. crude inventories rose by 2.4 million barrels last week vs expectations for a 1 million barrel increase. Gasoline stockpiles fell by 1.8 million barrels vs analysts’ expectations for a 600,000 barrel drop. In Case You Missed It A Bloomberg report on Wednesday claimed the Biden Administration is looking at plans to start buying more oil soon in an effort to support prices. Sources say those purchases may begin if crude prices fall below $80 a barrel. The purchases would be used to refill the Strategic Petroleum Reserve after the President ordered a historic release from reserves this year. Officials are reportedly looking to reassure oil producers the U.S. won’t let prices collapse as demand slows in the winter.
Continue Reading -->Coffee With Greta: Wholesale Inflation Cools Again
DJIA Futures: +24 (+0.1%) SPX Futures: +7 (+0.2%) NASDAQ Futures: +32 (+0.2%) Good morning friends! Futures are up slightly after the worst day in more than two years on Tuesday. Let’s get right to it! Wholesale Inflation Cools Again Wholesale inflation pressures cooled as expected in August, dropping for the second month in a row. The Bureau of Labor Statistics producer price index fell 0.1% monthly and was up 8.7% year over year. That was in line with economists’ expectations as energy prices dropped 6% month over month. The core PPI – which excludes food, energy, and trade services – rose 0.2% monthly and 5.6% annually. That was a smaller monthly gain than economists had forecast. This data is a leading indicator for consumer prices as producers pass down higher costs. A continued slowdown in wholesale inflation should eventually result in lower prices for consumer goods and services. Treasury Yields Continue March Higher Treasury yields are still pushing higher today as the market gears up for more aggressive Fed rate hikes. The 2-year yield is up 4 basis points to 3.78% while the 10-year yield is up 3 basis points to 3.45%. The 2-year hit a high of 3.805% earlier today, its highest level since November 2007. The hot CPI reading on Tuesday pushed the market to hike its expectations for next week’s Fed meeting. CME Group’s FedWatch Tool shows 66% of traders still anticipating a 75 basis point hike while 34% are predicting a 100 basis point hike. The central bank has not done a full 1% hike since early 1989. Mortgage Demand Continues to Collapse Mortgage demand is collapsing as rates surge past 6% for the first time in 14 years. The Mortgage Bankers Association reported overall demand fell 1.2% last week. Purchase applications rose 0.2% weekly but dropped 29% annually. Refinance applications fell 4% weekly and were down 83% year over year. The average contract rate for 30-year fixed mortgages increased to 6.01% from 5.94% the week before. That’s the first time rates have topped 6% since 2008. Rates have since pushed even higher this week after the release of hot inflation data for August. Mortgage rates track alongside the 10-year Treasury yield. Oil Prices Stabilize Oil prices are flat today after tumbling on demand fears Tuesday. West Texas Intermediate crude futures are just over $87 bbl while Brent crude futures are just above $93 bbl. Prices stabilized after some signs of bullish demand in an International Energy Agency report. Meanwhile, the American Petroleum Institute reported late Tuesday that U.S. crude inventories rose by 6 million barrels last week vs expectations for a 200,000 barrel decrease. Gasoline stockpiles fell by 3.23 million barrels. The Energy Information Administration reports official inventory levels at 10:30 a.m. ET today. In Case You Missed It Twitter (TWTR) shareholders voted in favor of Elon Musk’s takeover bid on Tuesday. A preliminary count showed 98.6% of votes were in favor of the deal. In a statement, Twitter said, “Twitter stands ready and willing to complete the merger with affiliates of Mr. Musk immediately, and in any event, no later than on September 15, 2022, the second business day following the satisfaction of all conditions precedent, which is the timeline required by the merger agreement.” But Musk is still fighting to get out of the deal and the two sides are scheduled to go to trial on October 17. The market got crushed on Tuesday with all 3 major indexes suffering their largest drops since June 2020. The Dow Jones sank 3.94%, while the S&P 500 slid 4.32%, and the Nasdaq dropped 5.16%. The broad-based sell-off came after the release of surprisingly hot inflation data in August.
Continue Reading -->Coffee With Greta: Red Hot Inflation Cools Stock Rally
DJIA Futures: -464 (-1.4%) SPX Futures: -78 (-1.9%) NASDAQ Futures: -307 (-2.4%) Good morning friends! Futures are plunging after the release of unexpectedly hot inflation data. Let’s get right to it! Inflation is Stubbornly High Inflation is still running hot in the U.S. economy. The Bureau of Labor Statistics consumer price index shows headline inflation rose 0.1% in August and 8.3% year over year. Economists were expecting prices to fall 0.1% monthly and be up 8% annually. The increase came despite a 5.9% monthly drop in oil prices and 10.6% monthly drop in gas prices. Other energy prices rose with electricity prices up 1.5% monthly and 15.8% year over year while utility gas prices jumped 3.5% monthly and 33% annually. Grocery prices also rose 0.7% monthly and 13.5% year over year. Shelter prices were up 0.7% monthly and 6.2% annually. The core CPI, which excludes food and energy prices, also accelerated more than expected. Core prices rose 0.6% monthly and 6.3% annually vs economists’ expectations for 0.3% monthly and 6% year over year. Treasury Yields Surge After Hot CPI Treasury yields jumped higher as traders dump bonds after the release of that hot inflation data. The 2-year yield is up 16 basis points to 3.73% while the 10-year yield is up 11 basis points to 3.43%. This was the final release of inflation data before the Fed’s rate hike decision next week. CME Group’s FedWatch Tool shows 82% of traders expecting another 75 basis point hike while 18% are now expecting a full 1% hike. Starbucks Hosts Investor Day Starbucks (SBUX) shares are down 1.6% ahead of the open, following the broader market lower, ahead of the company’s investor day. The coffee giant is expected to unveil a “reinvention” strategy at today’s event. That plan was developed by interim CEO Howard Schultz who will stick around to help the incoming CEO implement it. Schultz previously said the goal is to increase efficiency in U.S. locations as consumer behavior shifts post-pandemic. Starbucks shares are down 24% year-to-date. Twitter Shareholders to Vote on Musk Takeover Twitter (TWTR) shareholders will vote today on whether to approve or reject Tesla (TSLA) CEO Elon Musk’s takeover bid. Musk proposed the $44 billion acquisition in April but has been attempting to get out of the deal since July. TWTR shares are down 1.5% in premarket trade, turning lower after the CPI release. Twitter blew off his latest attempt to terminate the deal over a payment made to a whistleblower. The social media giant said it has not breached any of its obligations and plans to move forward with the acquisition. Even if shareholders approve the deal, the two sides will still go to trial on October 17. Twitter is seeking to force Musk to go through with the purchase while Musk is attempting to prove Twitter has violated the terms of the agreement. More Executive Shakeups At Peloton Peloton (PTON) shares are down 5.4% ahead of the open after announcing two of its co-founders are leaving the company. John Foley, who previously served as CEO, resigned from his position as executive chairman of the board effective immediately on Monday. Former Restoration Hardware president Karen Boone will take over Foley’s position. Hisao Kushi will step down from his role as chief legal officer on October 3. He will be replaced by Uber’s chief deputy general counsel. Peloton’s chief commercial officer Kevin Cornils will leave on September 23 and will be replaced by the current chief strategy officer under a new title of chief emerging business officer. In a letter to employees, CEO Barry McCarthy said, “There wouldn’t be a Peloton without John Foley or Hisao Kushi. Without John’s unwavering commitment to his dream, there wouldn’t be a passionate and devoted community of nearly 7 million Peloton Members. I want to thank John for paving the way.” Oracle Reports Strong Fiscal Q1 Sales Growth Oracle (ORCL) shares are down 0.4% in premarket trade after reporting mixed fiscal Q1 results. Shares were initially higher this morning but dropped with the broader market after the August CPI report. The software company reported adjusted earnings of $1.03 per share on $11.45 billion in revenue. That was shy of analysts’ expectations for adjusted EPS of $1.07 but met revenue estimates. Sales surged 18% year over year, up sharply from 5% growth in the prior quarter. Part of that growth was thanks to Oracle’s recent acquisition of software maker Cerner, which contributed $1.4 billion in sales. Oil Prices Drop After Hot CPI Oil prices have turned lower as demand concerns take over supply worries. West Texas Intermediate crude futures are down 0.6% to $87 bbl while Brent crude futures are down 0.5% to $93.50 bbl. The hot CPI reading has the market predicting a more aggressive Fed to continue slowing consumer demand. Meanwhile, new data from the Department of Energy showed the U.S. Strategic Petroleum Reserve levels fell by 8.4 million barrels last week to 434.1 million barrels. That’s the lowest level since October 1984 as President Biden’s planned release from the SPR continues. The American Petroleum Institute will issue its weekly inventory report at 4:30 p.m. ET today. In Case You Missed It The New York Fed’s latest Survey of Consumer Expectations showed a slowdown in inflation predictions. Respondents to the survey in August said they see inflation at 5.7% a year from now, down from July’s forecast for 6.2%. Median inflation expectations over the next three years fell to 2.8% from 3.2%. The improvement came as predicted price growth for gas, groceries, and rent moderated. Expected home price growth also fell by 1.4 points to 2.1%, the lowest read since June 2020.
Continue Reading -->Coffee With Greta: Inflation on the Brain
DJIA Futures: +63 (+0.2%) SPX Futures: +15 (+0.4%) NASDAQ Futures: +38 (+0.3%) Good morning friends! Futures are up as the market looks ahead to key inflation data this week. Let’s get right to it! Has Inflation Peaked? That’s the big question on traders’ minds this week and they’ll get their answer soon. The August CPI will be out tomorrow morning with the PPI on Wednesday morning. Annual headline inflation pressures are expected to have cooled again to 8% from 8.5% in July as gas prices continued to fall. Economists expect the core CPI to tick up to 6% from 5.9%. This is the final piece of inflation data that will be released before the Fed meeting September 20-21. CME Groups FedWatch Tool shows the market pricing in an 88% chance of another 0.75% rate hike. Crypto Rallies Ahead of Inflation Data Cryptocurrencies are following stocks higher ahead of this week’s inflation data. CoinGecko shows the global crypto market cap is up 1.1% over the past 24 hours to $1.12 trillion. Bitcoin is up 3.2% to over $22,300 and has rallied about 17% after falling to its lowest level since June last Wednesday. But Ethereum is dipping ahead of a major upgrade to its network, called The Merge, this week. The network upgrade will move Ethereum from a proof-of-work to a proof-of-stake model. The change will significantly reduce the amount of energy the network uses. Twitter Dismisses Musk’s Latest Attempt to Ditch Deal Twitter (TWTR) dismissed Elon Musk’s latest effort to show the company has breached the acquisition agreement. In an SEC filing, the social media giant said payments to a whistleblower did not breach any of its obligations under the deal. Musk sent a third letter last week trying to call off the deal. That letter alleged a $7.75 million severance payment to a whistleblower was a breach of the takeover agreement. Twitter said it still intends to enforce the agreement and close the deal. Shareholders will vote on Tuesday whether to approve or reject the takeover. Oil Prices Rise As Supply Worries Mount Oil prices are higher today as uncertainty over supply rises. West Texas Intermediate crude futures are up 1.7% to over $88 bbl while Brent crude futures are up 1.9$ to $94.50 bbl. There’s new uncertainty about the revival of the Iran nuclear deal, which had previously caused hope Iran could fill gaps caused by Russian oil losses. But France, Britain, and Germany said over the weekend they had “serious doubts” about Iran’s intentions to revive the deal. The EU embargo on Russian oil takes effect on December 5.
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