Coffee With Greta: Recession Fears Pop On Q2 GDP Contraction
DJIA Futures: -70 (-0.2%) SPX Futures: -10 (-0.2%) NASDAQ Futures: -56 (-0.4%) Good morning friends! Futures are falling as recession fears pop on the release of new GDP data. Let’s get right to it! Recession Alarms Sound As Q2 GDP Contracts Recession alarms are sounding after the U.S. economy contracted for a second straight quarter. The Commerce Department reported GDP contracted 0.9% year-over-year in the second quarter. That missed expectations for 0.3% growth and was the second drop in a row after the 1.6% contraction in Q1. This is the first back-to-back declines in GDP since the financial crisis. The National Bureau of Economic Research is not expected to declare the U.S. officially in a recession at this point. But two consecutive quarters of contraction has long been considered a signal of a recession. Fed Chair Insists the U.S. Isn’t In a Recession Yet Fed Chair Jerome Powell told reporters on Wednesday, “I do not think the U.S. is currently in a recession and the reason is there are too many areas of the economy that are performing too well.” His comments came after the FOMC voted unanimously for its second straight 0.75% rate hike to tackle inflation. The Federal Funds Rate is now in a range of 2.25% to 2.5%, the highest level since December 2018. Powell highlighted the strength of the labor market as reason to believe the U.S. economy is not yet in a recession. But he admitted risks remain and a recession is still possible in the near future. Weekly Jobless Claims Fall Less Than Expected Weekly jobless claims fell last week but still came in higher than expectations. The Labor Department reported 256,000 Americans filed initial claims for unemployment benefits. That was down 5,000 from the previous week but higher than expectations for a drop to 249,000. Continuing claims fell by 20,000 to 1.36 million in the week ending July 16. Meta Tumbles On Q2 Miss, Weak Q3 Outlook Meta Platforms (META) shares are down 4.1% ahead of the open after a weaker-than-expected second quarter and weak guidance for the third quarter. The Facebook parent company reported earnings of $2.46 per share on $28.82 billion in revenue. That was lower than analysts’ expectations for EPS of $2.59 on $28.94 billion in revenue. The Reality Labs unit, which is responsible for developing the metaverse, recorded a $2.8 billion loss in Q2. Meta Platforms forecast Q3 revenue will drop further to a range between $26 billion and $28.5 billion. That sharply missed analysts’ estimates for $30.5 billion. Meta said the Q3 decline will be due to a “continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty.” The company also announced its CFO will become chief strategy officer on November 1. The current vice president of finance will take over as CFO. Ford Rallies On Strong Q2 Results Ford (F) shares are up 6.8% in premarket trade after topping Q2 expectations. The automaker reported adjusted earnings of $0.68 per share on $37.91 billion in revenue. That topped analysts’ estimates for adjusted EPS of $0.12 on $34.32 billion in revenue. Adjusted operating income more than tripled year over year, while U.S. sales jumped 1.8% annually. That gain was driven by an 8% annual increase in SUV and crossover sales. Ford maintained its full-year guidance despite inflationary pressures. Qualcomm Slips After Weak Forecast Qualcomm (QCOM) shares are down 2.4% ahead of the open after topping fiscal Q3 expectations but releasing weak guidance. The chipmaker reported adjusted earnings of $2.96 per share on $10.93 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $2.87 on $10.88 billion in revenue. Profits rose 53% year over year while sales jumped 37%. But the stock is falling after weak fiscal Q4 guidance. Qualcomm said it expects EPS between $3 and $3.30 this quarter with revenue between $11 billion and $11.8 billion. Analysts were estimating $3.23 in Q4 EPS on $11.87 billion in sales. Southwest Falls Despite Record Q2 Revenue Southwest Airlines (LUV) shares are falling 5.9% in premarket trade as the market focuses on guidance over record sales in Q2. The airline reported adjusted earnings of $1.30 per share on a record $6.7 billion in revenue. That topped analysts’ expectations for adjusted EPS of $1.17 on $6.69 billion in revenue. But the stock is dropping as costs surged. Southwest’s operating expenses jumped to $5.6 billion, up 12.7% from Q2 2019. Cost per available seat mile (CASM) rose 13.1% due to surging labor rates and airport costs. Southwest forecast inflation-related headwinds will continue in Q3. The airline expects revenue to rise 8% to 12% from Q3 2019 while while CASM is expected to be up 12% to 15%. The company maintained its previous guidance for full-year CASM to rise to rise between 12% and 16%. Spirit Terminates Frontier Merger, Agrees to JetBlue Acquisition Spirit Airlines (SAVE) shares are up 3.7% ahead of the open after announcing it will be acquired by JetBlue (JBLU) for $3.8 billion. The deal comes after Spirit terminated its planned merger with Frontier (ULCC) on Wednesday. Frontier shares are down 5.4% while JetBlue shares are up 0.8%. Spirit ditched the Frontier deal due to a lack of shareholder support for the merger. JetBlue has agreed to pay $33.50 per share in cash for Spirit. The deal must be approved by regulators, which Spirit’s board has expressed doubt about in the past. Best Buy Slashes Forecast Due to Inflation Best Buy (BBY) shares are down 2.7% ahead of the open after slashing its Q2 and full-year forecast. The electronics retailer now expects same-store sales to fall 13% in the second quarter. Best Buy also expects same-store sales to decline 11% for the full year, up from the previous forecast for a 3% to 6% decline. The company said, “in response to the current sales environment, the company will continue to actively assess further actions to manage profitability.” The CEO said, “As high inflation
Continue Reading -->Coffee With Greta: Stocks Rise Ahead of the Fed
DJIA Futures: +145 (+0.5%) SPX Futures: +35 (+0.9%) NASDAQ Futures: +179 (+1.5%) Good morning friends! Futures are higher as traders gear up for today’s Fed decision and digest big tech earnings. Let’s get right to it! Fed Decision Day The Federal Reserve wraps up its two-day policy meeting today with the FOMC rate hike decision set to be released at 2:00 p.m. ET. CME Group’s FedWatch Tool shows 73.9% of traders are still expecting a 75 basis point rate hike. That would be the second hike of that size in a row. Analysts expect Fed Chair Jerome Powell to maintain a hawkish tone on inflation during his press conference at 2:30 p.m. ET. The decision comes ahead of Q2 GDP data on Thursday and the Fed’s preferred inflation gauge on Friday. Microsoft Shakes Off Weak Earnings, Jumps On Outlook Microsoft (MSFT) shares are up 3% ahead of the open despite missing fiscal Q4 expectations on the top and bottom line. The tech giant reported adjusted earnings of $2.23 per share on $51.87 billion in revenue. That was short of analysts’ expectations for adjusted EPS of $2.29 on $52.44 billion in revenue. Revenue rose 12% year-over-year, down from 18% growth in fiscal Q3. Microsoft’s Chief Financial Officer forecast fiscal Q1 revenue between $49.25 billion and $50.25 billion vs $51.44 billion expected. But cloud revenue is expected to stay strong. The CFO projected revenue of $20.3 billion to $20.6 billion for the cloud segment vs $20.58 billion expected. She also maintained guidance for double-digit percentage growth in full-year revenue and operating margins. Alphabet Rising On Better-Than-Expected Q2 Ad Revenue Alphabet (GOOGL) shares are up 3.6% in premarket trade despite missing Q2 expectations for both profits and revenue. The Google parent company reported earnings of $1.21 per share on $69.69 billion in revenue. That missed analysts’ expectations for EPS of $1.28 on $69.9 billion in revenue. Overall ad revenue rose just 12% to $56.3 billion as companies rein in their spending due to inflation. But that still topped analysts’ estimates for $55.89 billion, which is boosting the stock. YouTube ad revenue came in short of estimates at $7.34 billion while Google Cloud revenue also missed expectations at $6.28 billion. Traffic acquisition costs were lower than expected at $12.21 billion vs estimates of $12.41 billion. CEO Sundar Pichai said, “In the second quarter our performance was driven by Search and Cloud. The investments we’ve made over the years in AI and computing are helping to make our services particularly valuable for consumers, and highly effective for businesses of all sizes. As we sharpen our focus, we’ll continue to invest responsibly in deep computer science for the long-term.” Shopify Slides On Q2 Miss, Weak Guidance Shopify (SHOP) shares are down 2.5% ahead of the open after missing Q2 expectations and forecasting weakness will continue. The company reported an adjusted loss of $0.03 per share on $1.3 billion in revenue. That missed analysts’ expectations for adjusted earnings of $0.02 per share on $1.33 billion in revenue. Gross merchandise volume, which represents the total amount of merchandise sold on the platform, came in at $46.9 billion vs $48.8 billion expected. Shopify said it expects the Q3 operating loss to “materially increase” from Q2 as rising interest rates “will pressure consumers’ wallets for purchases of goods.” The results come after Shopify announced Tuesday that it will lay off 10% of its global workforce. Those cuts will impact roughly 1,000 employees. In a memo to employees, the CEO said the company had misjudged how long the Covid boom in e-commerce would last. He said, “Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that.” Laid-off workers will receive 16 weeks of severance pay, plus one week for every year they were at the company. Spotify Rises On Strong User Growth, Outlook Spotify (SPOT) shares are rising 8.2% in premarket trade after topping Q2 user growth and revenue expectations. The music streaming giant reported a loss of €0.85 per share on €2.86 billion in revenue. Although that was a larger loss than the €0.68 per share analysts were expecting, revenue topped estimates for €2.81 billion. Spotify’s monthly active users rose to 433 million in Q2, beating analysts’ expectations for 428 million. The company forecast 450 million monthly active users in Q3, higher than 444 million expected. Spotify did confirm it will slow hiring by 25% in the second half of this year. Price Hikes Boost Chipotle’s Q2 Profits Chipotle Mexican Grill (CMG) shares are up 7.9% ahead of the open after topping Q2 profit expectations. The restaurant chain reported adjusted earnings of $9.30 per share on $2.21 billion in revenue. That beat analysts’ estimates for adjusted EPS of $9.03 but missed expectations for $2.24 billion in revenue. Chipotle said it faced higher costs for ingredients like avocados, beef, and dairy during the quarter. But menu price increases helped offset those rising costs. The company said it plans to hike prices again in August. Although the higher prices boosted Chipotle’s top line, analysts believe they’re responsible for the weaker-than-expected sales. Same-store sales rose 10.1% last quarter vs expectations for 10.9% growth. Chipotle forecast Q3 same-store sales growth in the mid-to-high single digits. Boeing Rises Despite Q2 Miss Boeing (BA) shares are up 2.5% in premarket trade despite a steeper Q2 loss than expected. The plane maker reported an adjusted loss of $0.37 per share on $16.68 billion in revenue. That was worse than analysts’ expectations for a loss of $0.14 on $17.57 billion in revenue. The company delivered 121 commercial aircraft in the quarter, up from 79 a year ago. Boeing burned through about $200 million in Q2, down from $3.6 billion in Q1 and lower than expectations for $520 million. The CEO said, “We made important progress across key programs in the second quarter and are building momentum in our turnaround.
Continue Reading -->Coffee With Greta: Inflation Squeezes Walmart
DJIA Futures: -112 (-0.4%) SPX Futures: -14 (-0.4%) NASDAQ Futures: -60 (-0.5%) Good morning friends! Futures are slipping after a profit warning from Walmart and as Q2 earnings season ramps up. Let’s get right to it! Walmart Slashes Profit Guidance Walmart (WMT) shares are tumbling 8.6% ahead of the open after the big box retailer slashed its Q2 profit guidance. The company announced the updated forecast in a press release after the close on Monday. Walmart now expects profits to fall 8% to 9% in Q2 vs its previous forecast for slight growth. Full-year earnings per share are also expected to drop 11% to 13% vs previous guidance for a 1% decline. Walmart says high inflation is causing shoppers to spend more on necessities like food and less on items like clothing and electronics. The company’s profit margins on food are smaller than margins on discretionary items. The CEO said, “The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars.” Walmart forecast same-store sales in the U.S. will rise 6% in Q2 vs the previous forecast for growth between 4% and 5%. The news is dragging down other retail stocks in premarket trade with Target (TGT) dropping 5.1% and Amazon (AMZN) falling 4.3%. GM Slips On Q2 Profit Miss General Motors (GM) shares are down 1.8% in premarket trade after missing Q2 profit expectations. The automaker reported adjusted earnings of $1.14 per share on $35.76 billion in revenue. That missed analysts’ expectations for adjusted EPS of $1.20 but topped estimates for $33.58 billion in revenue. The profit miss came as GM was unable to ship nearly 100,000 vehicles during the quarter due to parts shortages. But the automaker maintained its previous full-year guidance and said it’s confident it will be able to ramp up production. CEO Mary Barra also said the company has “binding agreements” for all of the battery-related raw materials needed for its electric vehicle plans. GE Crushes Q2 Expectations General Electric (GE) shares are jumping 4.1% ahead of the open after crushing Q2 expectations. The company reported adjusted earnings of $0.78 per share on $17.9 billion in revenue. That solidly beat analysts’ expectations for adjusted EPS of $0.37 on $17.8 billion in revenue. GE had $162 million in free cash flow during the quarter. The beat came amid a strong bounce back in air travel which boosted GE’s engine business. That unit reported a 27% annual jump in revenue. The company said full-year earnings are expected to be in the bottom end of their previously forecast range, between $2.80 to $3.50 per share. Coca-Cola Tops Q2 Expectations Coca-Cola (KO) shares are up 1% in premarket trade after reporting better-than-expected Q2 results. The beverage maker reported adjusted earnings of $0.70 on $11.3 billion in revenue. That topped analysts’ estimates for adjusted EPS of $0.67 on $10.56 billion in revenue. Revenue was up 12% year-over-year thanks to higher pricing and an increase in sales volumes. Coca-Cola forecast organic revenue growth of 12% to 13% in 2022, up from its previous forecast for 7% to 8% growth. But the company said commodity price inflation is expected to have a high-single digit impact on sales growth vs previous expectations for a mid-single digit impact. McDonald’s Reports Mixed Q2 Results McDonald’s (MCD) shares are up 0.6% ahead of the open after mixed Q2 results. The fast food chain reported adjusted earnings of $2.55 per share on $5.72 billion in revenue. That beat analysts’ expectations for adjusted EPS of $2.47 but was short of estimates for $5.81 billion in revenue. The revenue miss was partly due to the closure of McDonald’s restaurants in Russia and Ukraine. Same-store sales in the U.S. jumped 3.7% vs 2.8% expected. McDonald’s said higher prices and value items fueled that sales growth. 3M Tops Q2 Expectations, Announces Spin Off of Healthcare Business 3M (MMM) shares are up 3.9% in premarket trade after beating Q2 expectations and announcing it will spin off its healthcare business. The company reported adjusted earnings of $2.48 per share on $8.7 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $2.42 on $8.58 billion in revenue. 3M said it will now spin off its health care business into a separate publicly traded company. That business will focus on wound and oral care, healthcare IT, and biopharma filtration. It includes products like its bandages, skin adhesives, oral aligners, air purifiers, and glasses lenses. The spin off is expected to be complete by the end of the year and 3M will maintain a 19.9% stake in the new company. UPS Slips Despite Q2 Beat United Parcel Service (UPS) shares are down 2.4% ahead of the open despite beating Q2 expectations. The delivery service reported earnings of $3.25 per share on $24.8 billion in revenue. That topped analysts’ expectations for EPS of $3.15 on $24.6 billion in revenue. UPS maintained its full-year forecast for revenue of $102 billion and operating profit of $13.9 billion. Fed Meeting Kick Off The Federal Open Market Committee’s July meeting kicks off today. The market is still betting the bank will approve a 75 basis point rate hike. CME Group’s FedWatch Tool shows 75.1% of traders leaning toward that smaller movee while 24.9% are still expecting a 100 basis point hike. Oil Prices Rise on Tight Supply Concerns Oil prices are rising for the second day in a row as supply concerns take over. West Texas Intermediate crude futures are up 1.5% to over $98 bbl while Brent crude futures are rising 1.5% to nearly $107 bbl. Russia said Monday that natural gas sent through the Nord Stream 1 pipeline to Germany would drop to just 20% of capacity. That is expected to increase demand for diesel as Europe will be unable to refill its natural gas storages ahead of winter. Gas Prices Tumble U.S. gas prices fell for the 41st day in a row today.
Continue Reading -->Bearish Momentum Subsides
Sami explains the signs he is seeing for an uptrend in the market: The bullish signals he sees in QQQ and SPY Why he’s waiting to play CVBF The bullish 123 setup in KLTR Why the sell setup in HASI looks pretty The extreme weakness he sees in T
Continue Reading -->5 Big Earnings Reports You need to Watch
SPX futures are +20 because there’s some optimism around China’s launch of a $44B real estate fund to help work through the Debt crunch. In Europe, the resumption of the Nord Stream gas flows is a small positive. After a 10%ish move off the lows, some are asking if SPX 4000 was the high of this bear market bounce? SPX holding the 50 day of 3900ish will keep some active bulls optimistic that we can see 4073 or the 200 day above. Now let’s dig into this week’s big earnings names: GOOGL reports Tuesday and SNAP’s Numbers have many concerned here. It’s lagged this past month. It usually leads. $101-$106.50 is key support. Tuesday’s earnings reaction will be important. MSFT lagged and underperformed this recent bounce with some erratic action. On Friday it hit $265ish and was sold. I wouldn’t chase this up move but I’d watch it. Earnings are Tuesday. META also got hit on SNAP’s results. This stock has been in a bear trend for most of the year. The question is whether it will bounce like NFLX or get hit like SNAP. $154-$159 is a key support area. Earnings are Wednesday. It’s up 80 cents this morning. See if it holds or fades. $168.41 is Friday’s low. AMZN had a nice weekly move to see a high of $125.50 Friday into some key resistance. Earnings aren’t until Thursday. We’ll see where it is then. Expectations have been brought down but it’s 20% off the recent lows. See if early strength holds or fades. Friday’s low is $121.35. AAPL led this tape and expectations are high heading into earnings Thursday. On Friday, It hit $156+ before pulling back a little. See if early strength holds or fades today. Scott’s Positions Disclosure:
Continue Reading -->Coffee With Greta: Most Important Week of the Summer
DJIA Futures: +138 (+0.4%) SPX Futures: +14 (+0.4%) NASDAQ Futures: +29 (+0.2%) Good morning friends! Futures are gaining as traders gear up for a key week of earnings and economic data. Let’s get right to it! Traders Brace for Fed Week, Earnings, Inflation Data Traders are bracing for a big week of market-moving news. The Fed meeting kicks off Tuesday with the rate hike decision released Wednesday afternoon. This week also includes earnings results from big-tech names like Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), and more. We’ll find out if the U.S. is already in a technical recession with the release of Q2 GDP data on Thursday. And then the Fed’s favorite inflation gauge, the June Core PCE Price Index, will be released on Friday. Many analysts say this will be the “most important week of the summer”. Market Predicts 75 Basis Point Rate Hike The majority of the market is betting the Fed will stick with a 75 basis point rate hike at this week’s meeting. CME Group’s FedWatch Tool shows 77.5% of traders leaning toward that smaller move over a 100 basis point hike. The Fed has said lowering inflation is its top priority, even if it causes a recession in the meantime. Treasury Yields Rise Treasury yields are pushing higher today ahead of the Fed decision. The 2-year yield is up 2 basis points to 3.01% while the 10-year yield is up 5 basis points to 2.83%. The curve between the 2-year and 10-year yield is still inverted, which many believe is a sign of an impending recession. Treasury Secretary Janet Yellen downplayed that risk on NBC Sunday saying there are signs the U.S. economy is at risk of recession but it’s not inevitable. Oil Prices Rise Ahead of Fed Meeting Oil prices are rising as the market continues to weigh supply concerns against demand worries. West Texas Intermediate crude futures are up 1.7% to over $96 bbl while Brent crude futures are up 1.3% to $104.50 bbl. Analysts say rising fears over a global recession will likely limit short term price gains. Gas Prices Tumble U.S. gas prices fell for the 40th day in a row today. AAA shows the national average for regular gas fell more than 1 cent overnight to $4.355/gal. That’s down more than 66 cents from the record-high in June but still $1.20 higher than 1-year ago. The national average for diesel also fell 1 cent overnight to $5.412/gal. Diesel has dropped 40 cents from its record-high but is still $2.14 higher than this same time last year.
Continue Reading -->Coffee With Greta: Oh SNAP! Social Media Earnings Stink
DJIA Futures: +81 (+0.3%) SPX Futures: -4 (-0.1%) NASDAQ Futures: -40 (-0.3%) Good morning friends! Futures are mixed with tech stocks falling after disappointing Q2 earnings from two social media companies. Let’s get right to it! Snap Plummets on Disappointing Q2 Snap (SNAP) shares are plunging 31.8% in premarket trade after reporting disappointing Q2 results and announcing plans to slow hiring. The social media company reported an adjusted loss of $0.02 per share on $1.11 billion in revenue. That was worse than analysts’ expectations for an adjusted loss of $0.01 per share on $1.14 billion in revenue. Snap had 347 million global daily active users last quarter vs. expectations for 344.2 million. But the company declined to provide Q3 guidance saying, “forward-looking visibility remains incredibly challenging” and revenue so far this quarter is “approximately flat”. Snap attributed the disappointing results to slowing demand for online ads. The company said, “businesses are reassessing investment levels amid the rising cost of capital, which is further reflected in campaign budgets and the level of bids per action.” Snap said it will “substantially slow” hiring and the rate of operating expense growth. The CEO and Chief Technology Officer agreed to new employment contracts that keep them on board until at least January 2027. They will each receive an annual salary of $1 and no equity compensation. The company also announced a stock repurchasing program of up to $500 million. Twitter Slips On Weak Q2 Twitter (TWTR) shares are down 2.1% ahead of the open after missing Q2 expectations. The social media giant reported an adjusted loss of $0.08 per share on $1.18 billion in revenue. That sharply missed analysts’ expectations for earnings of $0.14 per share on $1.32 billion in revenue. Twitter said it had 237.8 million monetizable daily active users in the quarter, short of analysts’ estimates for 238.08 million. Revenue was down 1% year-over-year, which Twitter blamed on headwinds in the ad industry and “uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk.” The company did not provide Q3 guidance due to that pending acquisition. Twitter said it had $33 million in costs related to the acquisition last quarter. Coinbase Pushes Back On SEC Coinbase (COIN) is denying claims from the SEC that it offers unregistered securities. A former Coinbase product manager, and two others, were charged by the regulator on Thursday with wire fraud in connection with an insider trading scheme involving cryptocurrencies. The SEC accused them of plotting to profit from the listing of new tokens on Coinbase before they were announced publicly. The agency also accused Coinbase of hosting unregulated securities on its platform. In a separate complaint, the SEC claimed that nine of the 25 tokens allegedly part of the insider trading scheme were securities. In a blog post, Coinbase’s Chief Legal Officer said, “Coinbase does not list securities on its platform. Period.” He said, “Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange — a process that the SEC itself has reviewed.” The case opens the door to the SEC forcing Coinbase to classify some of the crypto it offers as regulated financial instruments. Oil Prices Extend Drop Oil prices are sliding again today amid lower demand in the U.S. during the peak summer driving season. West Texas Intermediate crude futures are down 0.9% to under $96 bbl while Brent crude futures are down 0.5% to under $104 bbl. The Energy Information Administration’s four-week average for gasoline demand was basically unchanged last week at 8.73 million barrels per day. That’s lower than a year ago. Excluding 2020, when the pandemic destroyed demand, it’s also lower than every year going back to 2000. Gas Prices Extend Slide U.S. gas prices fell for the 37th day in a row today as demand remains low. AAA shows the national average for regular gas fell nearly 3 cents overnight to $4.413/gal. The national average for diesel also fell more than 2 cents overnight to $5.455/gal. In Case You Missed It Rivian (RIVN) shares rallied 4.3% on Thursday as Amazon (AMZN) kicked off deliveries using the company’s electric vans. The online retailer is using the vans to deliver packages in several U.S. cities including Baltimore, Chicago, Dallas, Kansas City, Nashville, Tennessee, Phoenix, San Diego, Seattle, and St. Louis. Amazon said it expects to have “thousands” in more than 100 cities by the end of this year and 100,000 electric delivery vehicles in the U.S. by 2030.
Continue Reading -->How Kira Turner Went from Extreme Athlete to Elite Trader
Check out Inner Circle Moderator Kira Turner’s appearance on the 2 Bulls in a China Shop podcast: Kira shares: Her role in the Inner Circle community How she got into trading How she transitioned to trading from rodeo competitions and skydiving The odd reason she began trading How she finds here trades When she knows a position is too big The reason she changed her trading style in the past 2 years What’s working in the current market environment How to make money in news-based trades And more!
Continue Reading -->Coffee With Greta: TSLA Props Up Tech Stocks
DJIA Futures: +34 (+0.1%) SPX Futures: +13 (+0.3%) NASDAQ Futures: +81 (+0.7%) Good morning friends! Futures are higher as traders digest more Q2 earnings. Let’s get right to it! Tesla Reports Mixed Q2 Results Tesla (TSLA) shares are up 3% ahead of the open after reporting mixed Q2 results. The electric automaker reported adjusted earnings of $2.27 per share on $16.93 billion in revenue. That topped analysts’ expectations for adjusted EPS of $1.81 but missed estimates for $17.1 billion in revenue. Revenue rose 42% annually but automotive gross margins shrank to 27.9% from 32.9% in Q1 and 28.4% a year ago. That drop was caused by inflation and more competition for parts. Tesla maintained its guidance for “50% average annual growth in vehicle deliveries,” over a “multi-year horizon”. United Airlines Tumbles After Q2 Profit Miss United Airlines (UAL) shares are dropping 6.8% in premarket trade after missing Q2 profit expectations. The airline reported adjusted earnings of $1.43 per share on $12.11 billion in revenue. It was the company’s first profitable quarter since before the pandemic but fell short of expectations. Analysts were expecting adjusted EPS of $1.85 on $12.12 billion in revenue. The CEO said, “It’s nice to return to profitability — but we must confront three risks that could grow over the next 6-18 months. Industry-wide operational challenges that limit the system’s capacity, record fuel prices, and the increasing possibility of a global recession are each real challenges that we are already addressing.” United estimated its Q3 capacity will be 85% of Q3 2019 levels and Q4 capacity would rise to 90% of 2019 levels. The airline lowered its growth expectations for 2023, now expecting to fly no more than 8% over 2019 levels vs its earlier forecast for 20% growth. American Airlines Slips On Weaker Outlook American Airlines (AAL) shares are slipping 3.7% ahead of the open despite reporting a profit in Q2. The airline reported adjusted earnings of $0.76 per share on $13.42 billion in revenue. That was in line with analysts’ adjusted EPS expectations and beat revenue estimates for $13.4 billion. Revenue rose 12% compared to pre-pandemic even as American flew 8.5% less of its Q2 2019 schedule. The company’s unit costs surged 45% in the quarter compared to 2019 as fuel prices and other expenses soared. American forecast Q3 revenue will be 10% to 12% higher than 2019 levels but flight capacity will be 8% to 10% lower. Amazon Announces Healthcare Acquisition Amazon (AMZN) shares are up 1.2% in premarket trade after announcing it will buy primary healthcare provider One Medical. One Medical operates under 1Life Healthcare Inc (ONEM) and trading in the stock has been halted. Amazon will buy the company in cash for $18 per share, totaling $3.9 billion. The stock closed at $10.18 on Wednesday. The senior vice president of Amazon Health Services said, “We think health care is high on the list of experiences that need reinvention.” Weekly Jobless Claims Continue to Rise Weekly jobless claims rose unexpectedly, signaling layoffs are rising across the country. The Labor Department reported 251,000 Americans filed initial unemployment claims last week. That was up 7,000 from the previous week and higher than expectations for claims to fall to 240,000. Continuing claims rose by 50,000 to 1.38 million in the week ending July 9. ECB Raises Rates for First Time in 11 Years The European Central Bank approved its first rate hike in 11-years today. The ECB pushed its benchmark rates up by 50 basis points, bringing the deposit rate to 0%. Rates had been in negative territory since 2014. The ECB said, “The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting.” The decision comes after Eurozone inflation hit a record-high at 8.6% in June. Oil Prices Slump On Demand Worries Oil prices are falling today as demand worries squeeze the market. West Texas Intermediate crude futures are down 3.5% to $96.50 bbl while Brent crude futures are down 3.1% to $103.50 bbl The drop comes amid continued global recession fears after the ECB rate hike and as U.S. gas inventories rose sharply last week. The Energy Information Administration reported U.S. crude inventories fell by 400,000 barrels but gasoline stockpiles rose by 3.5 million barrels. The increase in gas inventories far exceeded expectations and comes as demand is slumping. Gas Prices Continue To Tumble U.S. gas prices fell for the 36th day in a row today as those high inventory levels outpace demand. AAA shows the national average for regular gas fell nearly 3 cents overnight to $4.440/gal. The national average for diesel also fell 2 cents overnight to $5.476/gal. In Case You Missed It The National Association of Realtors reported existing home sales tumbled 5.4% in June to a seasonally adjusted annual rate of 5.12 million units. That was lower than expectations and the slowest pace of sales since June 2020. The median price of an existing home sold last month rose to a new record-high of $416,000.
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DJIA Futures: -94, (-0.3%) SPX Futures: -11 (-0.3%) NASDAQ Futures: -22 (-0.2%) Good morning friends! Futures are lower as the market braces for more Q2 earnings. Let’s get right to it! Netflix Rallies On Smaller-Than-Expected Subscriber Loss Netflix (NFLX) shares are up 4.4% ahead of the open after reporting mixed Q2 results and a smaller subscriber loss than expected. The streaming giant reported earnings of $3.20 per share on $7.97 billion in revenue. That topped analysts’ expectations for EPS of $2.94 but missed revenue estimates for $8.035 billion. Netflix lost just 970,000 subscribers in the quarter, far below the company’s own guidance for a loss of 2 million. The “Stranger Things” producer said it expects a net addition of 1 million subscribers in Q3 vs expectations for 1.8 million. Netflix said it is aiming to unveil its new lower-cost, ad-supported tier in early 2023. Mortgage Demand Tumbles to a 22-Year Low Mortgage demand is dropping rapidly as buyers pull back due to higher mortgage rates. The Mortgage Bankers Association reported total application volume fell 6.3% last week, hitting the lowest level since 2000. Purchase applications fell 7% weekly and were 19% lower compared to the same week in 2021. Refinance applications dropped 4% weekly and plunged 80% year-over-year. The average 30-year contract rate rose to 5.82% from 5.74% the previous week. Treasury Yields Dip Treasury yields are pulling back this morning as markets attempt to gauge what the Fed will do at next week’s meeting. The 2-year yield is down 7 basis points to 3.18% while the 10-year yield is down 7 basis points to 2.95%. The yield curve is still inverted, signaling a recession is likely imminent. CME Group’s FedWatch Tool shows 66.8% of traders still expect a 0.75% hike while 33.2% expect a 1% move. Oil Prices Slip Ahead of U.S. Inventory Report Oil prices slip as the market awaits key inventory data from the U.S. West Texas Intermediate crude futures are down 1.8% at $102 bbl while Brent crude futures are down 1.9% at $105 bbl. The Energy Information Administration releases official inventory data later today. The American Petroleum Institute reported Tuesday that U.S. crude inventories rose by 1.9 million barrels last week and gasoline stockpiles rose by 1.3 million barrels. Gas Prices Continue To Tumble U.S. gas prices fell for the 35th day in a row today. AAA shows the national average for regular gas fell nearly 3 cents overnight to $4.467/gal. That’s down more than 51 cents from a month ago but still $1.30 higher than a year ago. The national average for diesel also fell nearly 2 cents overnight to $5.497/gal. Diesel prices have fallen by 32 cents in the past month but are up $2.22 compared to one year ago. Existing Home Sales Expected to Fall The National Association of Realtors reports existing home sales for June at 10:00 a.m. ET. That report is expected to show sales fell to a seasonally adjusted annual rate of 5.36 million units last month from an SAAR of 5.41 million units in May. Homebuyers have pulled back as mortgage rates rise. Freddie Mac shows the average 30-year fixed rate was 5.52% in June, up from 2.98% in June 2021. Tesla Earnings On Deck Tesla (TSLA) shares are up 0.6% in premarket trade as the electric automaker gears up to report Q2 earnings. Those results will be released after the close today. Consensus expectations are for Tesla to report earnings of $1.85 per share. The company previously reported it delivered 254,695 vehicles in the quarter. That was down 18% from Q1 as Covid restrictions in China dented production. That drop in deliveries is expected to result in lower revenue for the quarter. In Case You Missed It Twitter (TWTR) won its request for a speedy trial to force Elon Musk to go through with his $44 billion acquisition of the company. The Delaware Court of Chancery Chancellor ruled Tuesday that the five-day trial will take place in October. Twitter’s lawyer claimed a quick trial is imperative to stop the harm caused by uncertainty over the deal. But Musk’s team argued the expedited timeline will not give them ample time for discovery.
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