Coffee With Greta: Tesla Backs Away from China
DJIA Futures: +257 (+0.8%) SPX Futures: +37 (+0.9%) NASDAQ Futures: +145 (+1.2%) Good morning friends! Futures are higher as the market looks to snap a 3-week losing streak. Let’s get right to it! Tesla Wants to Build Lithium Refinery for EV Batteries in Texas Tesla (TSLA) shares are up 1.4% in premarket trade after the electric automaker revealed plans to build its own lithium refinery in Texas. In its application with the Texas Comptroller’s Office, Tesla said the plant would be focused on developing “battery-grade lithium hydroxide”. It would be the first plant of its kind in the U.S. Tesla said it would process “raw ore material into a usable state for battery production” at the facility. That lithium hydroxide would then be sent to Tesla battery factories. The move is an effort to reduce costs as the price of lithium has surged 120% this year. It would also reduce Tesla’s reliance on China for its supply of lithium. China currently controls more than half of the world’s lithium processing and refining while the U.S. controls just 1%. DocuSign Rallies on Earnings Beat DocuSign (DOCU) shares are surging 15.1% ahead of the open after better-than-expected fiscal Q2 results and strong guidance. The e-signature company reported adjusted earnings of $0.44 per share on $622 million in revenue. That beat analysts’ expectations for adjusted EPS of $0.42 on $602 million in revenue. The CEO said, “These results reflect the focus and dedication of our team on execution during this transition period, with a stronger foundation in place to deliver in the second half of the year.” The company forecast fiscal Q3 revenue between $624 million and $628 million vs analysts’ expectations for $625 million. DocuSign called for $2.47 billion to $2.482 billion in full-year revenue, in line with its previous outlook. RH Tops Earnings Expectations, Trims Outlook RH (RH) shares are up 1.3% in premarket trade after beating Q2 expectations but trimming its full-year outlook. The luxury furniture and home-goods retailer reported adjusted earnings of $8.08 per share on $992 million in revenue. That was better than analysts’ expectations for adjusted EPS of $6.71 on $969 million in revenue. But RH said it expects fiscal 2022 sales to decline between 3.5% and 5.5% as the housing market slows. The CEO said, “Our expectation is for continued softening in our business trends during the remainder of fiscal 2022 as a result of ongoing weakness in the housing market over the next several quarters and possibly longer due to the Federal Reserve’s anticipated interest-rate increases and the cycling of record COVID-driven sales levels in 2021.” Kroger Tops Q2 Expectations, Hikes Forecast Kroger (KR) shares are up 3.5% ahead of the open after topping Q2 expectations and hiking its full-year outlook. The grocery chain reported adjusted earnings of $0.90 per share on $34.64 billion in revenue. That topped analysts’ expectations for adjusted EPS of $0.82 on $34.46 billion in revenue. Kroger’s same-store sales rose 5.8% year over year vs expectations for a 4.6% increase. The company hiked its full-year adjusted EPS forecast to between $3.95 and $4.05 from the previous forecast for $3.85 to $3.95. Kroger now sees full-year same-store sales growth of 4% to 4.5% from 2.5% to 3.5% previously. Oil Prices Rise Amid Supply Threats Oil prices are higher today as supply concerns take over. West Texas Intermediate crude futures are up 1.9% to $85 bbl while Brent crude futures are up 2% to $91 bbl. Both contracts are still on track for weekly losses of more than 2%, with Brent hitting its lowest level since January. The Energy Information Administration reported a surprise increase in U.S. oil and gas stockpiles Thursday. Crude inventories rose by 8.8 million barrels last week vs expectations for a 1.88 million barrel decrease. Gasoline stockpiles increased by 400,000 barrels vs expectations for a 1.5 million barrel decline. In Case You Missed It Fed Chair Jerome Powell vowed to continue raising rates to fight inflation “until the job is done”. In a Q&A with the Cato Institute, Powell said, “I can assure you that my colleagues and I are strongly committed to this project.” He also highlighted the threat of public perception surrounding high inflation. Powell said, “The longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to raise the costs of getting inflation down.”
Continue Reading -->Coffee With Greta: Will Trump’s SPAC Deal Get Hosed?
DJIA Futures: -35 (-0.1%) SPX Futures: -10 (-0.3%) NASDAQ Futures: -53 (-0.4%) Good morning friends! Futures are slipping after Wednesday’s rebound rally as focus turns back to the Fed and interest rates. Let’s get right to it! Trump’s SPAC Deal At-Risk Digital World Acquisition Corp (DWAC) shares are down 2.4% in premarket trade as the SPAC is up against the clock to extend its deadline to merge with Trump Media and Technology Group. Today is the original deadline for that deal to go through, but the companies need more time. DWAC has reportedly spent the past week working to gain enough shareholder support for an extension of that deadline. The results of the shareholder vote will be announced at noon ET today. Reuters reported earlier this week the company did not have the votes needed. The CEO later adjourned Tuesday’s shareholder meeting to allow more time for voting. DWAC has previously warned that a failure to approve the extension could result in liquidation, which would pay shareholders out at the original price of $10 per share. GameStop Rallies on Smaller Q2 Loss Than Expected GameStop (GME) shares are up 5.2% ahead of the open after reporting a smaller Q2 loss than expected. The video game retailer reported an adjusted loss of $0.35 per share on $1.136 billion in revenue. That was better than analysts’ expectations for an adjusted loss of $0.42 per share but fell short of estimates for $1.27 billion in revenue. It was the company’s sixth consecutive quarterly loss. GameStop separately announced it has entered a partnership with crypto exchange FTX US. That partnership aims to “introduce more GameStop customers to FTX’s community and its marketplaces for digital assets.” GameStop said the companies will collaborate on “new e-commerce and online marketing initiatives,” and it will be FTX’s “preferred retail partner” in the U.S. ECB Approves 75 Basis Point Rate Hike The European Central Bank hiked interest rates by 75 basis points today and said more rate hikes are to come as inflation remains “far too high”. The bank predicted inflation is “likely to stay above target for an extended period.” The decision comes less than two weeks ahead of the Federal Reserve’s next meeting. CME Group’s FedWatch Tool shows the market pricing in an 82% chance of another 0.75% rate hike at that meeting. The market will get a better read on how the bank is feeling about inflation when Fed Chair Jerome Powell speaks at 9:10 a.m. ET today. Weekly Jobless Claims Fall to Lowest Level Since May U.S. weekly jobless claims fell to the lowest level since May last week. The Labor Department reported 222,000 Americans filed initial unemployment claims. That was down 6,000 from the previous week’s revised level and better than expectations for an increase to 235,000. Continuing claims rose by 10,000 to 1.45 million in the week ending August 27. The data shows no increase in layoffs as the Fed works to tackle inflation. Oil Prices Fall Flat as Supply Concerns Rise Oil prices are flat today as the market weighs supply concerns. West Texas Intermediate crude futures are up 0.1% at $82 bbl while Brent crude futures are down 0.1% at $88 bbl. Russian President Vladimir Putin has threatened to halt his country’s oil and gas exports if Europe imposes price caps. And the EU proposed those caps just hours later. Meanwhile, the American Petroleum Institute reported Wednesday that U.S. crude inventories rose by 3.6 million barrels last week while gasoline stockpiles fell by 800,000 barrels. The Energy Information Administration reports official supply levels later today. In Case You Missed It Apple (AAPL) hosted its fall launch event on Wednesday. The tech giant unveiled 4 new iPhones: the iPhone 14, iPhone 14 Plus, iPhone 14 Pro, and iPhone 14 Pro Max. The new phones will be available to order Friday and Apple did not increase prices. The company also revealed a new Apple Watch Ultra, Apple Watch Series 8, and a new Apple Watch SE which are available to order immediately. And the new AirPods Pro will launch on September 23.
Continue Reading -->Coffee With Greta: Stocks Are Slip Slidin’ Away
DJIA Futures: -45 (-0.1%) SPX Futures: -5 (-0.1%) NASDAQ Futures: -0.3 (-0.0%) Good morning friends! Futures are mostly lower amid continued fears over higher rates. Let’s get right to it! Fed Officials Hit the Speaking Circuit The market is still laser-focused on expectations the Fed will continue aggressive rate hikes. And traders may get some insight into the upcoming meeting as several Fed officials have speeches scheduled over the next few days. Cleveland Fed President Loretta Mester speaks at 10:00 a.m. ET today with Fed Vice Chair Lael Brainard speaking at 12:35 p.m. ET. The Fed also releases its latest Beige Book at 2:00 p.m. ET. That report is a survey of economic conditions across all 12 Fed districts. CME Group’s FedWatch Tool shows the market pricing in an 82% chance of another 0.75% rate hike later this month. Apple iPhone Event Kicks Off Today Apple (AAPL) shares are up 0.02% ahead of the open as the tech giant is set to hold a launch event today. The company is expected to unveil new iPhone models at that event. The rumored devices include 2 sizes of the iPhone 14 and 2 sizes of the iPhone 14 Pro. Apple is also expected to unveil the Apple Watch Series 8 and a new Pro model of the watch. The event will also see the public release of iOS 16 which Apple has been testing over the summer after announcing it in June. Google CEO Hints About Job Cuts Alphabet (GOOGL) shares are down 0.3% in premarket trade after the CEO said he hopes to make the company 20% more efficient. Speaking at a conference in Los Angeles, Sundar Pichai said, “The more we try to understand the macroeconomic, we feel very uncertain about it. The macroeconomic performance is correlated to ad spend, consumer spend and so on.” He also acknowledged that the company has become “slower” after a boom of hiring. But he didn’t specifically mention any plans for job cuts. Pichai said, “Sometimes there are areas to make progress [where] you have three people making decisions, understanding that and bringing it down to two or one improves efficiency by 20%.” Trade Deficit Tumbles The U.S. trade deficit tumbled 12.6% in July to $70.6 billion. That drop was slightly smaller than economists’ expectations for a decrease to $70.2 billion. The improvement came as imports fell 2.9% to $329.9 billion while exports rose 0.2% to $259.3 billion. The deficit is still up 29% year-over-year as the U.S. economy reopened quicker than our global trading partners. Mortgage Demand Drops as Rates Spike Mortgage demand fell further last week as rates spiked back to summer highs. The Mortgage Bankers Association reported purchase applications fell 1% weekly and dropped 23% year over year. Refinance applications were down 1% weekly and 83% annually. The average contract rate for 30-year fixed rate mortgages with conforming balances jumped to 5.94% from 5.8% the previous week. That jump in rates followed the surge in the 10-year Treasury yield as traders dump bonds in anticipation of more Fed rate hikes. Oil Prices Slips As Market Weighs Demand Fears Oil prices are lower again today as demand fears continue to weigh on the market. West Texas Intermediate crude futures are down 0.8% to $86 bbl while Brent crude futures are down 0.8% to $92 bbl. The American Petroleum Institute will report U.S. oil and gas inventory levels later today followed by the Energy Information Administration on Thursday. In Case You Missed It The U.S. services sector picked up in August for the second month in a row. The Institute for Supply Management Services Index rose to 56.9% from 56.7% in July. That was an unexpected increase as economists were forecasting a decline to 54.9%. The data shows the services sector maintaining strength even as the Fed works to tackle inflation with rate hikes.
Continue Reading -->Coffee With Greta: Traders Brace for Turmoil
DJIA Futures: +199 (+0.6%) SPX Futures: +25 (+0.6%) NASDAQ Futures: +68 (+0.6%) Good morning friends! Futures are higher as the market looks to break its 3-week losing streak. Let’s get right to it! Traders Brace for Turmoil Stocks are on track to open higher after the major indexes logged three straight weeks of losses. The holiday-shortened week will still be focused on interest rates as several Fed officials are set to speak. CME Group’s FedWatch Tool shows 68% of traders expecting another 0.75% rate hike at the September 21 meeting. Investor Bill Ackman told CNBC this moring, there are signs inflation is calming. Ackman said, “Our biggest fear was inflation, and that’s why I wanted the Fed to raise rates quickly and soon. They’re now doing this, I think they have to [continue].” Treasury Yields Push Higher U.S. Treasury yields are rising today as the market awaits new economic data. The 2-year yield is up 8 basis points to 3.48% while the 10-year yield is up 7 basis points to 3.27%. The Institute for Supply Management and S&P Global are both set to release their August purchase managers’ index for the services sector at 10:00 a.m. ET. The data comes amid continued concerns about an economic slowdown caused by the Fed’s actions against inflation. Bed Bath & Beyond Drops After CFO’s Death Bed Bath & Beyond (BBBY) shares are dropping 14.8% in premarket trade following the death of its CFO over the weekend. Police said Gustavo Arnal died Friday after falling from a building in Manhattan which the medical examiner’s office later ruled a suicide. Bed Bath & Beyond said in a statement that Arnal “was instrumental in guiding the organization throughout the coronavirus pandemic.” His death comes as the struggling company is attempting to turn around its business. Bed Bath announced last week it had secured more than $500 million in new financing and revealed a turnaround strategy. But analysts said that strategy was not sufficient for reviving the business. CVS to Buy Signify Health CVS Health (CVS) shares are up 1.5% ahead of the open after announcing on Monday it has reached a deal to acquire Signify Health (SGFY). CVS will pay $30.50 per share in cash for Signify, valuing the company at about $8 billion. The CVS Health President and CEO said, “This acquisition will enhance our connection to consumers in the home and enables providers to better address patient needs as we execute our vision to redefine the health care experience.” The companies expect the acquisition to close in the first half of 2023. SGFY shares are down 0.3% in premarket trade. Oil Prices Drop on Demand Fears Oil prices are lower today as demand fears take over the market once again. West Texas Intermediate crude futures are down 0.3% to $86.50 bbl while Brent crude futures are down 2.9% to under $93 bbl. The demand worries come as new Covid restrictions in China have added to concerns over rate hikes. The European Central Bank is expected to approve a sharp rate hike later this week while the Fed is expected to do the same later this month. The demand fears are overpowering worries about supply after OPEC+ approved its first supply cut since 2020 on Monday. The group voted to cut its October output target by 100,000 barrels per day.
Continue Reading -->5 Tech Stocks on My Radar
We have mixed markets around the world as we see if regions can find footing after Friday’s post-NFP bearish reversal. Some are asking if we will test the June low in the next 4-6 weeks? Can we break those lows? Or was last Thursday the low? These are all valid questions but we have to take things day-by-day within the context of what we can handle and what time frame we’re on. SPX futures are +23. If the candle from Friday wants to lead to more downside, then sellers must reject price in the 3954-3969 area. If the buyers want to push back a bit, they must reclaim that area to build a lower area to trade against. To see the lows of the year, we need to get and stay below 3903 first. So that’s the support pivot. The longer we stay below 4018, the higher the probability that happens. Now let’s dig into some important tech names: META tried to get out of the danger zone on SNAP’s news but strength got sold again into the $167 area. If it breaks and stays below $154-$155 in the days ahead, it would bring out sellers in most risk assets. It needs to bounce fast to get out of the danger zone. NFLX went from $216 to hit a high of $251+ post-earnings with lots of pivots to play for cash flow. Most sold into strength or used $241 as a stop. $233 is resistance. $218.74 is big support now. MSFT isn’t helping the tape. It broke its ascending channel on 8/19. It made a low of $254 last week. See if that tries to hold. If not, it won’t be good for tech. $264ish is resistance. NVDA was the first big name to make lower lows in a while. It hasn’t bounced much since then. Look here for some sentiment clues. The longer it stays below the $143 area, the higher the probability for lower lows. $132.70 is last week’s low. AMD broke its symmetrical triangle to the downside around $96ish. It got hit with NVDA but didn’t make new lows on the year. Watch it for sentiment. Does it catch up to the downside or diverge a bit? $78.52 is last week’s low. If that breaks this week, it will be bad for tech and sentiment. Scott Redler Positions Disclosure
Continue Reading -->Coffee With Greta: August Jobs Report Shows Hiring is Still Strong
DJIA Futures: +118 (+0.4%) SPX Futures: +17 (+0.4%) NASDAQ Futures: +45 (+0.4%) Good morning friends! Futures are up after the August jobs report came in as expected. Let’s get right to it! August Jobs Report Meets Expectations Job growth came in as expected in August as the labor market maintains strength. The Labor Department reported the U.S. added 315,000 jobs last month, just below expectations for a gain of 318,000. That was a slowdown from the revised 526,000 gain in July and the softest monthly gain since April 2021. But the data still shows hiring continuing at a strong pace, which is bad news for the Fed. The unemployment rate rose unexpectedly to 3.7% from 3.5% as more people began actively looking for jobs. The labor force participation rate rose by 0.3% to 62.4%, that’s still down a full 1% from pre-pandemic levels. Average hourly earnings rose 0.3% monthly and 5.2% annually. The Central Bank has said strong wage gains are adding to inflation pressures in the economy. The Fed is looking for an impact on both inflation and the labor market before it will slow rate hikes. CME Group’s FedWatch Tool shows 68% of traders expect another 0.75% rate hike later this month. Lululemon Rallies on Earnings Beat, Strong Outlook Lululemon Athletica (LULU) shares are rallying 9.6% ahead of the open after topping Q2 expectations and hiking its outlook. The fitness apparel retailer reported adjusted earnings of $2.20 per share on $1.87 billion in revenue. That topped analysts’ expectations for adjusted EPS of $1.87 on $1.774 billion in revenue. Lululemon’s same-store sales rose 23% year over year vs 17.6% growth expected. The CFO said, “Despite the challenges around us in the macro-environment, guest traffic in our stores and on our e-commerce sites remains robust, which speaks to the strength of our multi-dimensional operating model.” The company now expects full-year revenue between $7.695 billion and $7.940 billion. That’s up from the previous forecast for $7.610 billion and $7.710 billion. Lululemon also raised its adjusted EPS expectations for 2022 to a range of $9.75 to $9.90 vs prior guidance of $9.35 to $9.50. Starbucks Names New CEO Starbucks (SBUX) shares are up 0.8% in premarket trade after naming a new CEO Thursday evening. The coffee chain announced Laxman Narisimhan will take over in April 2023. He previously served as CEO of the English consumer goods company Reckitt. Narisimhan will join Starbucks in October and learn about the company until April. During that time, Howard Schultz will remain interim CEO. Schultz will remain on the board of directors when Narisimhan assumes the CEO role. Oil Prices Rise Oil prices are rising today as the market bets OPEC+ will discuss output cuts at next week’s meeting. West Texas Intermediate crude futures are up 3.2% to $89 bbl while Brent crude futures are up 3% to $95 bbl. OPEC+ slashed its 2022 demand outlook earlier this week. The group expects demand to lag supply by 400,000 barrels per day this year but then sees a market deficit of 300,000 bpd in 2023. Both WTI and Brent crude contracts are still on track to post their worst weekly drop in four weeks. In Case You Missed It You can learn how to invest the simple and easy way with my brand new course, Today I Learned How to Invest. Learn everything you need to start building the massive nest egg you deserve, in just 45 minutes!
Continue Reading -->Coffee With Greta: End of Summer Slide Continues
DJIA Futures: -157 (-0.5%) SPX Futures: -23 (-0.6%) NASDAQ Futures: -103 (-0.8%) Good morning friends! Futures are sliding on the first day of September as the market remains focused on rising rates. Let’s get right to it! End of Summer Slide Continues The end of summer is looking bleak on Wall Street. The major indexes are all falling this morning after logging monthly losses for August and dropping for the past 4 sessions in a row. The Dow lost 4.1% in August, while the S&P 500 lost 4.2%, and the Nasdaq fell 4.6%. The drop comes amid hawkish comments from several Fed officials in recent days. CME Group’s FedWatch Tool shows 74% of traders now expecting another 0.75% rate hike later this month. Treasury Yields Extend Rally Treasury yields are still marching higher as traders dump bonds. The 2-year yield is up 4 basis points to 3.5% while the 10-year yield is up 15 basis points to 3.26%. The 2-year yield hit a high of 3.51% earlier today, its highest level since November 2007. The spread between those two yields remains inverted. The market is closely eyeing Friday’s August jobs report for signs of an economic slowdown after Fed Chair Jerome Powell said it may be necessary to cause some economic hardship in order to tackle inflation. Weekly Jobless Claims Drop Weekly jobless claims fell unexpectedly last week as the labor market continues to show strength. The Labor Department reported 232,000 Americans filed initial unemployment claims last week. That was down 5,000 from the previous week and better than expectations for an increase to 245,000. It was the lowest level of weekly claims since June. Continuing claims rose by 30,000 to 1.44 million in the week ending August 20. Nvidia Drops as U.S. Restricts Chip Sales to China Nvidia (NVDA) shares are down 4.4% ahead of the open after announcing Wednesday it had been instructed by the U.S. government to stop selling chips in China and Russia. In an SEC filing, the chipmaker said it was told on August 26 about a new license requirement for future exports to China. The restrictions will affect its A100 and H100 graphics chips. Nvidia now expects to lose $400 million in potential sales in China this quarter. The company said it is applying for a license to continue some Chinese exports but doesn’t know if it will be granted an exemption. Oil Prices Drop on Demand Fears Amid China Lockdowns Oil prices are falling today on fresh demand worries prompted by new Covid lockdowns in China. West Texas Intermediate crude futures are down 1.2% to $88.50 bbl while Brent crude futures are down 1.5% to $94 bbl. Shenzhen tightened Covid restrictions as cases continue to rise, suspending large events and indoor entertainment for three days. The city of Chengdu also announced a lockdown of its 21.2 million residents as it launches four days of citywide testing. Meantime, U.S. oil and gas inventories are continuing to fall. The Energy Information Administration reported a 3.3 million barrel drop in crude stockpiles last week and a 1.2 million barrel declines in gasoline inventories. In Case You Missed It Snap (SNAP) shares rallied 8.7% on Wednesday after announcing a restructuring plan. The company confirmed earlier reports it plans to lay off 20% of its employees and said it will scrap some projects. The cost-cutting efforts are expected to save Snap $500 million annually. You can learn how to invest the simple and easy way with my brand new course, Today I Learned How to Invest. Learn everything you need to start building the massive nest egg you deserve, in just 45 minutes!
Continue Reading -->Coffee With Greta: Private Job Growth Misses Big In August
DJIA Futures: +90 (+0.3%) SPX Futures: +18 (+0.5%) NASDAQ Futures: +102 (+0.8%) Good morning friends! Futures are higher as the market looks to recover from three straight days of losses but traders are digesting some disappointing data. Let’s get right to it! Private Sector Job Growth Disappoints Job growth in the U.S. private sector sharply missed expectations in August. Payroll firm ADP reported the U.S. economy added just 132,000 private jobs last month vs 300,000 expected. That was down from 270,000 in July. ADP’s chief economist said the data “suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals. We could be at an inflection point, from super-charged job gains to something more normal.” The report also adds to inflation worries as wages jumped 7.6% year over year. The services sector added 110,000 jobs, leisure and hospitality gained 96,000 and trade, transportation and utilities added 54,000. But several sectors saw decreases. Financial activities lost 20,000 jobs, education and health services list 15,000, and professional and business services lost 14,000. This comes ahead of the official August jobs report on Friday which is expected to show a gain of 318,000 jobs and the unemployment rate unchanged at 3.5%. Bed Bath & Beyond Plunges After Announcing Layoffs, Store Closures Bed Bath & Beyond (BBBY) shares are cratering 31.4% ahead of the open after announcing store closures and layoffs. The retailer said today it will close about 150 “lower producing” stores and layoff 20% of its corporate and supply chain staff. The company also announced it has secured more than $500 million in new financing as it works to turnaround its business. Bed Bath said its sales have continued to slow sharply in the current fiscal quarter, with same-store sales down 26% so far in Q3. The retailer said it will overhaul its merchandise and bring back popular national brands in an effort to win back customers. The interim CEO said, “We are embracing a straight-forward, back-to-basics philosophy that focuses on better serving our customers, driving growth, and delivering business returns.” Bed Bath also announced its COO is leaving the company and it has eliminated that role and the chief stores officer role. Snap Plans Massive Layoffs Snap (SNAP) shares are tumbling 10.2% in premarket trade after reports the company is planning a massive round of layoffs. The Verge first reported on Tuesday the social media company plans to lay off 20% of its employees. The cuts are expected to begin today, impacting nearly 1,300 employees. The hardware and developer products divisions will likely see the largest impact. Snap hired aggressively during the pandemic-era tech boom but its business has taken a hit coming out of the pandemic. Oil Prices Drop on Recession Fears Oil prices are lower today as recession fears once again grip the market. West Texas Intermediate crude futures are down 2.9% to under $89 bbl while Brent crude futures are down 3.5% to under $96 bbl. The drop comes as factory activity continued to contract in China in August and amid ongoing worries about aggressive rate hikes at Central Banks around the world. Hawkish Fed Comments Continue Cleveland Fed President Loretta Mester struck a hawkish tone in a speech this morning. Mester said, “My current view is that it will be necessary to move the fed funds rate up to somewhat above 4 percent by early next year and hold it there. I do not anticipate the Fed cutting the fed funds rate target next year.” Benchmark rates are currently in a range of 2.25% to 2.5%. Mester also said she expects the rate hikes to slow economic growth and predicted higher unemployment and continued volatility in the financial market. She said the bank must remain aggressive on inflation until substantial progress is seen. “It would be a mistake to declare victory over the inflation beast too soon. Doing so would put us back in the stop-and-go monetary policy world of the 1970s, which was very costly to households and businesses,” she said. In Case You Missed It Consumer confidence rose for the first time in 4 months. The Conference Board’s consumer confidence index jumped 7.5 points in August to 103.2 vs 97.4 expected. U.S. job openings jumped to 11.2 million in July vs an expected decrease to 10.3 million. Openings were nearly double the amount of unemployed workers in the month. National U.S. home price gains slowed in June to an annual pace of 18% vs 19.9% in May. The housing market has slowed sharply as mortgage rates rise. You can learn how to invest the simple and easy way with my brand new course, Today I Learned How to Invest. Learn everything you need to start building the massive nest egg you deserve, in just 45 minutes!
Continue Reading -->Coffee With Greta: Best Buy Sales Tumble, the Stock is Still Up
DJIA Futures: +134 (+0.4%) SPX Futures: +20 (+0.5%) NASDAQ Futures: +86 (+0.7%) Good morning friends! Futures are popping after back-to-back losing sessions. Let’s get right to it! Best Buy Tops Q2 Expectations Even As Sales Tumble Best Buy (BBY) shares are up 1.6% ahead of the open after beating fiscal Q2 expectations. The electronics retailer reported adjusted earnings of $1.54 per share on $10.33 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.27 on $10.24 billion in revenue. Same-store sales dropped 12.1% year over year in the quarter as inflation forced consumers to pull back on spending. That was better than Best Buy’s forecast for a 13% drop. The CEO said Best Buy is “focused on balancing our near-term response to difficult conditions and managing well what is in our control.” The company did not give specific guidance but said it expects a larger sales decline in Q3. Big Lots Rises on Smaller Q2 Loss than Expected Big Lots (BIG) shares are up 1.4% in premarket trade after reporting a smaller-than-expected loss in the second quarter. The discount retailer reported an adjusted loss of $2.28 per share on $1.35 billion in revenue. That was better than analysts’ expectations for an adjusted loss of $2.47 per share on $1.46 billion in revenue. Same-store sales fell 9.2% vs expectations for a 9.8% decline. The CEO said, “We remain laser focused on helping our customers navigate these challenging times by delivering outstanding value across our assortment.” Big Lots forecast same-store sales will be down in the low double-digit range in the current quarter. Oil Prices Fall on Demand Concerns Oil prices are lower today as the market anticipates higher interest rates will cause an economic slowdown and soften demand. West Texas Intermediate crude futures are down 2.4% to under $95 bbl while Brent crude futures are down 2.9% to $102 bbl. The Fed is expected to continue aggressive rate hikes with the Fed Chair saying it will likely cause some economic hardship. The oil market has been in a back and forth between demand concerns and supply worries. The American Petroleum Institute releases its data on U.S. inventory levels later today. Consumer Confidence Expected to Rebound The University of Michigan releases its final August consumer confidence index at 10:00 a.m. ET. That survey is expected to show confidence rose to 97.4 this month from 95.7 in July. Consumers have been feeling better about the impact of inflation since the Fed began larger rate hikes to tackle high prices. Lower gas prices have also alleviated some of the price concerns among Americans. JOLTS on Deck The Labor Department’s July Job Openings and Labor Turnover Survey (JOLTS) will be released at 10:00 a.m. ET. That survey is expected to show the number of job openings in the U.S. economy dropped to 10.3 million last month from 10.7 million in June. That would be the second straight monthly decline but available jobs would still outnumber unemployed workers. This is the first piece of key labor market data this week. ADP releases the August private payrolls report on Wednesday followed by the official Labor Department August jobs report on Friday. In Case You Missed It You can learn how to invest the simple and easy way with my brand new course, Today I Learned How to Invest. Learn everything you need to start building the massive nest egg you deserve, in just 45 minutes!
Continue Reading -->Coffee With Greta: Jackson Hole Selloff Continues
DJIA Futures: -218 (-0.7%) SPX Futures: -29 (-0.7%) NASDAQ Futures: -111 (-0.9%) Good morning friends! Futures are lower as traders continue to dump risk assets after hawkish comments from the Fed Chair on Friday. Let’s get right to it! Jackson Hole Selloff Continues Futures are sliding as concerns about tighter monetary policy continue to weigh on the market after Fed Chair Jerome Powell’s Jackson Hole speech last week. Powell struck down market expectations the bank will pivot to a smaller rate hike at its next meeting. The major indexes all turned negative for August with Friday’s drop. CME Group’s FedWatch Tool shows 66.5% of traders expecting the Fed to enact another 0.75% rate hike at the September meeting. Powell said the central bank will lift interest rates as much as needed to tackle high inflation, even if it causes an economic slowdown. He said getting inflation under control will take “some time” and will require bringing “some pain to households and businesses”. Powell said those are the “unfortunate costs of reducing inflation”. Yields Pop on Fed Expectations Treasury yields are pushing higher following Powell’s speech on Friday. The 2-year Treasury yield is up 5 basis points to 3.45% while the 10-year yield is up 7 basis points to 3.10%. That yield curve remains inverted as the market dumps bonds in anticipation of a recession. Bitcoin Drops Below $20,000 Bitcoin dropped back below $20,000 over the weekend after Powell’s hawkish comments at Jackson Hole. The coin is trading around $19,900 this morning while Ethereum is just under $1,500. That’s the lowest level for Bitcoin since mid-July. The sharp decline comes as traders dump risk assets across the board. The drop is also dragging down shares of Coinbase (COIN) which are 2.2% lower ahead of the open. Oil Prices Rise on Prospect of OPEC+ Supply Cut Oil prices are rising today as the possibility of an OPEC+ supply cut continues to loom over the market. West Texas Intermediate crude futures are up 1.3% to over $94 bbl while Brent crude futures are up 0.9% to just under $102 bbl. Saudia Arabia’s energy minister raised the idea of reducing production last week in order to support prices. OPEC+ is set to meet on September 5 to vote on supply levels for October. In Case You Missed It You can learn how to invest the simple and easy way with my brand new course, Today I Learned How to Invest. Learn everything you need to start building the massive nest egg you deserve, in just 45 minutes!
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