Coffee With Greta: The Post-Fed Rally Collapses
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -461 (-1.5%) SPX Futures: -68 (-1.8%) NASDAQ Futures: -231 (-2%) Good morning friends! Futures are tumbling as the market gives up Wednesday’s post-Fed rally. Let’s get right to it! Treasury Yields Jump Treasury yields are rising today as central banks around the world join the U.S. Fed in getting more aggressive on inflation. The 10-year yield is up 13 basis points at 3.42% while the 2-year yield is up just 4 basis points at 3.26%. Those yields rise as traders sell-off Treasury notes and bonds. The recent spike in yields is a signal the market does not have faith in the short-term strength of the economy and a recession is likely looming. Fed Gets Aggressive Stocks rallied on Wednesday after the Fed approved a 0.75% rate hike, its largest since 1994. The Dow closed up 1% while the Nasdaq settled 2.5% higher and the S&P 500 rose 1.5%. Fed Chair Jerome Powell signaled the Central Bank will stay aggressive on inflation moving forward. In his post-meeting press conference, Powell said the Fed determined the larger rate hike was needed after the “upward surprise” in the May CPI. He said the bank will consider either a 50 or 75 basis point hike at the July meeting and they believe “front-loading” rate hikes is appropriate. The Fed also modified its projections for rates and the economy. The bank now sees the federal funds rate rising to 3.4% by the end of this year, up 1.5% from the March forecast. The Fed is projecting PCE inflation to remain at 5.4% at the end of 2022 vs 4.3% in March. The bank also slashed its 2022 GDP forecast to 1.7% from 2.8% in March. Check out the updated projections here. Weekly Jobless Claims Fall Less Than Expected Weekly jobless claims fell less than expected last week, remaining near a 5-month high. The Labor Department reported 229,000 Americans filed initial unemployment claims. That was down 3,000 from the previous week’s revised level but higher than expectations for 220,000. Continuing jobless claims were unchanged at 1.31 million in the week ending June 4. Housing Starts, Building Permits Tumble In May Homebuilder stocks are falling ahead of the open after U.S. home construction slowed sharply in May. The Census Bureau reported housing starts plunged 14.4% last month to a seasonally adjusted annual rate of 1.55 million units. That missed economists’ expectations for a SAAR of 1.68 million units. Toll Brothers (TOLL) shares are down 2.3% while Lennar (LEN) is slipping 2.5%. That slowdown in building is expected to continue as building permits fell 7% to a SAAR of 1.7 million units vs 1.78 million expected. Starts on single-family homes fell 9.2% with permits falling 5.5%. Apartment starts plunged 26.8% and permits dropped 10%. Higher mortgage rates are slowing demand across the housing market, including for new construction. Mortgage News Daily shows the average 30-year rate slipped to 6.03% today after hitting 6.28% earlier this week. Gas Prices Fall U.S. gas prices fell further overnight. AAA shows the national average for regular gas dipped to $5.009/gal today, down from $5.014/gal on Wednesday. That price is still 52 cents higher than a month ago and $1.934 higher than a year ago. But diesel prices are still pushing to new records. The national average for diesel jumped to $5.786/gal today from $5.780 on Wednesday Oil Prices Fall After Fed Rate Hike Oil prices are falling today on economic growth concerns after the Fed rate hike on Wednesday. West Texas Intermediate crude futures are down 1.3% at under $114 bbl while Brent crude futures are down 1.2% at $117 bbl. The Energy Information Administration reported Wednesday that U.S. crude production increased by 100,000 barrels per day last week to 12 million bpd. That’s the highest level since April 2020. The EIA also reported that U.S. crude inventories rose by 2 million barrels vs expectations for 1.1 million barrel decrease. But gas stockpiles fell by 700,000 barrels vs expectations for a 100,000 barrel increase. In a letter to Exxon Mobil (XOM) and Chevron (CVX), President Biden said, “At a time of war – historically high refinery profit margins being passed directly onto American families are not acceptable.” He demanded U.S. refineries “take immediate actions to increase the supply of gasoline, diesel, and other refined product.” Revlon Files for Bankruptcy Revlon (REV) shares have been halted in the premarket session after the cosmetics giant filed for Chapter 11 bankruptcy protection. The company filed Wednesday evening, citing a large debt load and supply chain struggles. Revlon said it expects to receive $575 million in debtor-in-possession financing from its existing lenders. The filing said the company is unable to timely fill nearly 1/3 of consumer demand due to issues in the supply chain. The President and CEO said, “Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth.” She added, “Our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand.” In Case You Missed It Homebuilder sentiment tumbled to a 2-year low this month. The National Association of Homebuilders sentiment index fell 2 points to 67, in line with economists’ expectations. That was the lowest reading since June 2020. Buyer traffic tumbled 5 points to 48, falling into negative territory for the first time since June 2020.
Continue Reading -->Coffee With Greta: Stocks Bounce on Fed Decision Day
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +191 (+0.6%) SPX Futures: +31 (+0.8%) NASDAQ Futures: +115 (+1%) Good morning friends! Futures are rising as traders brace for a big Fed rate hike. Let’s get right to it! Fed Decision Day The Federal Reserve releases its rate hike decision at 2:00 p.m. ET today with Chair Jerome Powell’s press conference at 2:30 p.m. ET. CME Group’s FedWatch Tool shows the market sees a 98.6% chance the Central Bank will raise the federal funds rate by 0.75%. Traders ramped up those expectations after the May CPI and PPI both came in hot. It would be the biggest hike in 28 years, as inflation stands at a more than 40-year high. Analysts expect a steep sell-off if the Fed sticks with a 50 basis point hike instead as the bank appears to be way behind on inflation. The bank is also expected to adjust its future outlook for more aggressive hikes. Economists expect the Fed to lower its GDP forecast and raise its forecast for inflation and unemployment. Retail Sales Drop U.S. retail sales fell for the first time in five months in May as inflation squeezes consumer spending. The Commerce Department reported retail sales fell 0.3% last month to $672.9 billion. That missed economists’ expectations for a 0.1% increase. Gasoline sales surged 43.2% compared to a year ago as gas prices began their record-breaking climb in May. The monthly drop in overall retail sales was mostly due to a decline in auto purchases. Excluding autos and gasoline, so-called core retail sales rose 0.1%. But that was lower than expectations for a 0.8% increase. And when adjusted for inflation, real retail sales tumbled more than 1%. Crypto Collapse Continues The meltdown in the crypto market is continuing. Bitcoin is down 4.6% in the past 24 hours at just over $21,000 while Ethereum is 7.6% lower at $1,100. Bitcoin hit a low of around $20,200 earlier in the morning. The coin is down more than 70% from its all-time high in November. Coinbase (COIN) shares are sliding 1.9% ahead of the open. Gas Prices Slip from Record-High U.S. gas prices took a break from their record-breaking climb today. AAA shows the national average for regular gas dipped back to $5.014/gal today, down from $5.016/gal on Tuesday. That price is still 54 cents higher than a month ago and $1.938 higher than a year ago. But diesel prices did not follow suit. The national average for diesel jumped to $5.780/gal today from $5.775 on Tuesday. Oil Prices Fall Ahead of Fed Rate Hike Oil prices are slipping amid fears of an economic slowdown ahead of the Fed rate hike. West Texas Intermediate crude futures are down 0.4% at $118 bbl while Brent crude futures are falling 0.2% to $121 bbl. The American Petroleum Institute reported late Tuesday that U.S. crude inventories rose by 736,000 barrels last week while gasoline stockpiles fell by 2.2 million barrels. The Energy Information Administration reports official inventory levels today. Analysts expect the EIA to report a 1.1 million barrel decline in crude inventories and a 100,000 barrel increase in gas inventories. Mortgage Demand Rebounds, Rates Soar Mortgage demand rose slightly last week but is still down sharply compared to a year ago. The Mortgage Bankers Association reports new purchase applications rose 8% weekly but were down 16% year-over-year. Refinance applications were up 4% weekly and plunged 76% annually. Overall application volume was down 52.7% compared to a year ago. The average 30-year contract rate rose to 5.65% last week from 5.40% the week before. But that rate has since skyrocketed. Mortgage News Daily shows the average 30-year rate rose 10 basis points on Tuesday alone, to 6.28%. That jump came after a 33 basis point increase on Monday. It’s the first time mortgage rates have been above 6% since 2008. Homebuilder Sentiment Expected To Fall The National Association of Homebuilders releases its June sentiment index at 10:00 a.m. ET. That survey is expected to fall to 67 from the 2-year low of 69 in May. The index measures sentiment about current market conditions, buyer traffic, and expectations for 6-months from now. It would be the fifth straight month of declining sentiment as builders struggle with ongoing supply chain issues, a labor shortage, and now rising mortgage rates. In Case You Missed It Compass (COMP) and Redfin (RDFN) announced job cuts on Tuesday as the housing market slows. Compass is cutting 10% of its total workforce while Redfin is laying off about 8% of its employees. The job cuts come as rapidly rising mortgage rates have squeezed homebuyers.
Continue Reading -->Coffee With Greta: Bear Market Bounce Time?
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +134 (+0.4%) SPX Futures: +23 (+0.6%) NASDAQ Futures: +103 (+0.9%) Good morning friends! Futures are bouncing a day after the S&P 500 notched a new low for the year and closed in an official bear market. Let’s get right to it! Wholesale Inflation Surges Producer-side inflation pressures surged in May. The Bureau of Labor Statistics producer price index jumped 0.8% monthly and 10.8% year-over-year. The monthly gain was in-line with economists’ expectations and was a doubling of 0.4% in April. The core PPI, which excludes food, energy, and trade, rose 0.5% monthly and 6.8% annually. That was slightly lower than the 0.6% estimate but an increase from 0.5% in April. The PPI is a forward looking indicator for the CPI, as producers pass-down higher costs to consumers. Economists Expect Larger Rate Hike Economists are hiking their expectations for this week’s Fed meeting. Goldman Sachs economists said Monday they were officially altering their expectations to a 0.75% hike instead of just 0.5%. This comes after the Wall Street Journal reported on Monday the Fed is likely to consider that larger move. Before Fed officials entered their pre-meeting quiet period on June 4, they signaled plans to stick to a 0.5% hike. But they also said that depended on the evolving inflation situation. Since then both the May CPI and PPI came in hotter-than-expected. In an interview last month, Fed Chair Jerome Powell said, “What we need to see is clear and convincing evidence that inflation pressures are abating and inflation is coming down. And if we don’t see that, then we’ll have to consider moving more aggressively.” CME Group’s FedWatch Tool shows 94.8% of traders now expect a 0.75% rate hike while just 5.2% are anticipating a 0.5% hike. The Fed meeting kicks off today, the rate hike decision will be released at 2:00 p.m. ET on Wednesday, followed by Fed Chair Jerome Powell’s press conference at 2:30 p.m. ET. Bitcoin Tumbles to $22,000 Cryptocurrencies are falling further today as traders continue to dump risk assets. Bitcoin is down another 8.6% in the past 24 hours, trading just above $22,000. The coin briefly dropped below $21,000 earlier in the morning. Ethereum is down 6.4% at under $1,200. The global crypto market cap is down to $967 billion, under $1 trillion for the first time since February 2021. Coinbase Lays Off 18% of Workforce Coinbase (COIN) shares are tumbling 6.2% in premarket trade after the company announced it will layoff 18% of its workforce. The crypto exchange sent an email to employees this morning about those cuts. Coinbase has about 5,000 full-time workers, which means around 1,100 people will be let go. In the email, CEO Brian Armstrong said in the email, “We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period.” He added, “Our employee costs are too high to effectively manage this uncertain market. While we tried our best to get this just right, in this case it is now clear to me that we over-hired.” Oracle Rallies on Strong Earnings Oracle (ORCL) shares are rallying 12.9% ahead of the open after beating fiscal Q4 expectations. The company reported adjusted earnings of $1.54 per share on $11.8 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.37 on $11.61 billion in revenue. Oracle brought in $7.61 billion in cloud services and license support revenue vs analysts’ estimates of $7.83 billion. The company’s CEO said, “We experienced a major increase in demand in our infrastructure cloud business —which grew 39% in constant currency.” The company forecast fiscal Q1 earnings between $1.09 and $1.13 per share vs analysts’ expectations for $1.13. Gas Prices Continue Record-Breaking Climb U.S. gas prices are pushing further above $5 after surpassing that milestone over the weekend. AAA shows the national average for regular gas rose to $5.016/gal today. Diesel prices are also at a fresh record-high after cooling in recent weeks. The national average for diesel jumped to $5.775/gal today. Supply Concerns Boost Oil Prices Oil prices are rising today as supply concerns outweigh worries about the latest Covid outbreak in China and recession fears in the U.S. West Texas Intermediate crude futures are up 0.9% at $122 bbl while Brent crude futures are up 0.9% at over $123 bbl. Already tight supply has been worsened by a drop in exports from Libya. And other OPEC+ countries are struggling to meet their production quotas. The American Petroleum Institute releases its weekly report on U.S. inventories later today. In Case You Missed It U.S. consumers hiked their short-term inflation expectations in May. The New York Fed’s survey of consumer expectations shows Americans expect inflation to still be at 6.6% 1-year from now. That was up from the April forecast for 6.3%. 3-year inflation expectations were unchanged at 3.9%.
Continue Reading -->Watch the 2022 Lows – They Are Everything
SPX futures are -90 handles. On Thursday, the index broke 4073 which meant risk-off and time to get short. Friday gave downside follow-through with a low of 3900. We’ll see if the 2022 low of 3810 tries to hold at first kiss into the Fed Wednesday. This is Day #3 down and the oscillator will be at -60 so it’s hard to press shorts in the morning. For tactical buys, I’d use 5-15-30 minute lows with signals. I’ll focus on SPY, QQQ, AAPL, AMD, and TSLA. I’m glad we’ve prioritized cash and taken risk down this year. We’ll stay prepared and try and net money short-term. Longer-term, there will be other opportunities. TSLA lost special status months ago. Last week it did a Red Dog Reversal sell around the $749 pivot and hit a low of $683 Friday. It announced a 3 for 1 stock split. That wasn’t new news though. I kept some from buying it Friday. We’ll see if it shows some relative strength for a cash flow long vs. a 5-15-30 minute low. $655 is support. The 2022 low is $620.57 and is very important. There might be an opportunity there but chances are the stock goes lower this summer. AMZN gave many a 25% move off the lows heading into the split. Then it gave a sell signal when it broke above $125.61 and failed. Some got short as it lost the $120.63 area. I’d cover some this morning. We’ll see how it handles the $101.26 2022 low. I’ve avoided it the past few days. I will look for a signal today. AMD got us out around $102 when it showed it’s not special in a weak market. See how it handles the $89 area, or if there’s a trade vs. a 5-15-30 minute low. META broke $194 with force to get some out of leftover longs and other short. I’ve avoided it. $169 is the 2022 low of the year to watch today. Scott’s Positions Disclosure:
Continue Reading -->Coffee With Greta: S&P Slides to Bear Market Territory
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -560 (-1.8%) SPX Futures: -87 (-2.2%) NASDAQ Futures: -331 (-2.8%) Good morning friends! Futures are falling as Fed week begins and Treasury yields jump. Let’s get right to it! S&P Set To Open In Bear Market The major indexes are set to open lower, with the S&P 500 poised to open in bear market territory. The bluechip index closed 19% off from its record high on Friday and is slipping more than 2% in premarket trade. Traders are focused on the Fed and how aggressive the bank will act on inflation after the 8.6% CPI on Friday. The Central Bank kicks off its two-day policy meeting on Tuesday. Treasury Yield Curve Briefly Inverts Treasury yields are rising as the market bets on an aggressive Fed. The 2-year yield briefly jumped 0.02 basis points above the 10-year yield earlier this morning. The 2-year yield is now up about 10 basis points at 3.17% while the 10-year yield is 8 basis points higher at 3.25% The Fed is widely expected to implement another 0.5% rate hike on Wednesday. CME Group’s FedWatch Tool shows 58.8% of traders expect a 0.5% rate hike while 41.2% are now predicting a 0.75% hike. Coinbase Plummets As Crypto Collapses Coinbase (COIN) shares are plunging 17% ahead of the open after a weekend of turmoil in the crypto market. CoinGecko shows Bitcoin is down more than 12% over the past 24 hours at just over $24,000. The coin is trading at its lowest level since December 2020. Ethereum has dropped more than 15% to just $1,200. And Dogecoin is down more than 16% at $0.055. The global crypto market cap is down nearly 11% in the past 24 hours to $1.03 trillion. More than $200 billion has been wiped off the entire crypto market since Friday. Tesla Files For 3-for-1 Stock Split Tesla (TSLA) shares are slipping 4.4% in premarket trade as the electric automaker follows the broader market lower. The company proposed a 3-for-1 stock split in a proxy statement filed with the SEC on Friday. The stock initially jumped 8% in after-hours trade following the filing Friday but failed to hold those gains ahead of the open today. The split hinges on shareholder approval to increase Tesla’s total number of shares by 4,000,000,000. That is set to be voted on at the August 4 shareholder meeting. Average U.S. Gas Price Tops $5 The national average for a gallon of regular gas is officially over $5. AAA shows that price rose to a new record high at $5.014/gal today. It’s the first time in history the national average has been over $5. Georgia still has the lowest average price at $4.484/gal while the average in California is up to $6.436/gal. Oil Prices Slip On Beijing Covid Warning, Inflation Worries Oil prices are sliding amid concerns about a Covid flareup in Beijing. West Texas Intermediate crude futures are down 1.3% at $119 bbl while Brent crude prices are falling 1.2% to under $121 bbl. The most populous district in Beijing announced it will undergo three rounds of mass testing until Wednesday amid a new Covid outbreak in the city. The energy market is also worried about the possibility of a recession if the Fed gets more aggressive on inflation. NY Fed Inflation Expectations Coming Up The New York Fed releases its May survey of consumer expectations at 11:00 a.m. ET. Those results include forecasts for inflation 1-year and 3-years from now. The University of Michigan’s June consumer sentiment index last week showed consumers hiked their expectations for inflation over the next 12 months.
Continue Reading -->Coffee With Greta: Inflation Is Still Hot, Hot, Hot
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -427 (-1.3%) SPX Futures: -60 (-1.5%) NASDAQ Futures: -213 (-1.7%) Good morning friends! Futures are falling after a hotter-than-expected inflation report. Let’s get right to it! Inflation Surges Higher U.S. inflation pressures surged more than expected in May. The Bureau of Labor Statistics consumer price index jumped 1% monthly and skyrocketed 8.6% annually. That’s the highest pace of annual inflation since 1981. It was also an increase from 8.3% inflation in April and higher than analysts’ expectations for that to be unchanged. The increase was led by soaring rent, food, and gas prices. Grocery prices jumped 11.9% annually, gas prices were up 50.3%, and shelter prices rose 5.5%. The CPI also shows oil prices surged 106.7% from a year ago. The core CPI, which excludes food and energy prices, rose 0.6% monthly and 6% annually. That was also higher than analysts’ expectations but a slight cooldown from 6.2% annual inflation in April. Short-term Treasury Yields Surge After CPI Short-term Treasury yields are rallying after the release of that hot inflation data. The 2-year yield is up 12 basis points to 2.92%, the highest level since 2018. Short-term yields are more sensitive to the Fed’s rate hikes. The 10-year yield is flat at 3.06%. Stitch Fix Drops On Widening Loss, Layoff Announcement Stitch Fix (SFIX) shares are tumbling 15.8% ahead of the open after the company announced wider losses in Q3 and layoffs. The online personal styling service reported a loss of $0.72 per share on $492.9 million in revenue. That was steeper than the $0.18 per share loss on $535.6 million in revenue a year ago. Stitch Fix forecast Q4 revenue between $485 million and $495 million. That would be lower than $571.2 million last year. The disappointing quarterly results come after CEO Elizabeth Spaulding announced Stitch Fix is laying off 15% of its salaried employees in a memo on Thursday. Roughly 330 employees were notified of layoffs, representing about 4% of the company’s total workforce. Spaulding said, “We’ve taken a renewed look at our business and what is required to build our future. While this was an incredibly difficult decision, it was one needed to make to position ourselves for profitable growth.” Stitch Fix said it “expects annual cost savings of $40 million to $60 million in fiscal year 2023,” as a result of the layoffs. Rent the Runway Rallies On Q1 Sales Beat Rent the Runway (RENT) shares are rising 7.4% in premarket trade after beating its own Q1 forecast. The clothing rental service reported a Q1 loss of $0.67 per share on $67.1 million in revenue. That topped the company’s forecast for revenue between $63.5 million and $64.5 million. It was also an improvement from the $3.75 per share loss on $33.5 million in revenue a year ago. Rent the Runway forecast Q2 revenue between $72 million to $74 million. DocuSign Plummets On Q1 Miss DocuSign (DOCU) shares are plunging 25.4% ahead of the open after missing Q1 expectations. The electronic-documents company reported adjusted earnings of $0.38 per share on $588.7 million. That missed analysts’ expectations for adjusted EPS of $0.46 but beat estimates for $583 million in revenue. The CEO announced DocuSign is moderating its hiring plan “to appropriately balance growth and profitability.” The company forecast Q2 revenue between $600 million and $604 million vs analysts’ expectations for $601 million. DocuSign expects full-year revenue between $2.47 billion and $2.48 billion vs analysts’ estimates for $2.479 billion. Average U.S. Gas Price Still Approaching $5 The national average for a gallon of regular gas is still inching closer to $5. AAA shows that price rose to $4.986/gal today. That’s up more than 60 cents from a month ago and more than $1.91 from a year ago. Gas price tracking site GasBuddy.com showed the national average spiked above $5 on Thursday. Oil Prices Hover Around 3-Month Highs Oil prices are still hovering around 3-month highs as the market weighs new Covid restrictions in Shanghai and Beijing. West Texas Intermediate crude futures are up 0.7% at over $122 bbl while Brent crude futures are up 0.6% at nearly $124 bbl. WTI is on track for its seventh straight weekly gain and Brent is set to rise for the 4th week in a row. Consumer Sentiment Expected To Bounce The University of Michigan releases the preliminary reading of its June consumer sentiment index at 10:00 a.m. ET. That survey is expected to improve to 59 from 58.4 at the end of May. The index also includes consumer expectations for inflation over the next 12-months and 5-years. In Case You Missed It CNBC’s Q2 CFO Council Survey shows American CFOs are worried about inflation and a recession. 40% of respondents cited inflation as the #1 external risk to their business. 100% said they expect a recession, with 68% expecting one in the first half of 2023. 77% expect the DJIA to fall below 30,000. Freddie Mac reported Thursday its average 30-year mortgage rate rose to 5.23% last week. That was up 14 basis points from the prior week. The average 15-year rate rose 6 basis points to 4.38%. The chief economist at Freddie Mac said, “The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back.”
Continue Reading -->Coffee With Greta: Stocks Are Falling Because Yields Are Popping
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -55 (-0.2%) SPX Futures: -10 (-0.3%) NASDAQ Futures: -49 (-0.4%) Good morning friends! Futures are slipping as Treasury yields pop. Let’s get right to it! Treasury Yields Jump On ECB Rate Hike Announcement U.S. Treasury yields are rising this morning, pushing down stocks. The 10-year yield is up about 5 basis points at 3.07% while the 30-year yield is up nearly 3 basis points to over 3.2%. The gains come after the European Central Bank announced today it will officially end quantitative easing and implement the first rate hike next month. European Central Bank To Start Rate Hikes The European Central Bank plans to raise rates by 25 basis points at its July meeting. The bank said it then expects another hike at its September meeting, but the size depends on the evolving outlook. In a statement, the ECB said, “Beyond September, based on its current assessment, the Governing Council anticipates that a gradual but sustained path of further increases in interest rates will be appropriate.” Like the U.S. Federal Reserve, the ECB has a target of 2% for inflation. But Euro-zone inflation hit a record high of 8.1% in May. The ECB also downgraded its growth forecast and raised inflation projections. The bank expects the economy to expand 2.8% in 2022 and 2.1% in 2023 and 2024. That’s a sharp downgrade from the previous forecast for growth of 3.7% in 2022 and 2.8% in 2023. The ECB expects inflation to remain at 6.8% by the end of 2022, 3.5% in 2023, and 2.1% in 2024. That compares to its previous outlook for 5.1% in 2022, 2.1% in 2023, and 1.9% in 2024. Weekly Jobless Claims Rise More Than Expected Weekly jobless claims rose more than expected last week. The Labor Department reported today that 229,000 Americans filed initial claims for unemployment benefits. That was an increase of 27,000 from the previous week and higher than expectations for 210,000. That’s the highest level of weekly jobless claims since January 15. Continuing claims fell by just 3,000 to 1.31 million in the week ending May 28, higher than expectations for 1.30 million. Nio Tumbles On Shrinking Margins Nio (NIO) shares are tumbling 7.3% ahead of the open despite beating Q1 expectations. The Chinese electric vehicle maker reported an adjusted loss of $0.13 per share on $1.56 billion in revenue. That was better than analysts’ expectations for an adjusted loss of $0.14 per share on $1.49 billion in revenue. But the stock is dropping on lower margins. Nio’s Q1 profit margins declined to 14.6% compared to 19.5% a yaer ago. The company blamed that drop on a “decrease of vehicle margin and the reduction in other sales margin resulting from the expanded investment in power and service network.” The EV maker said it delivered 25,768 vehicles in the quarter, in line with expectations. Nio forecast Q2 revenue between $1.47 billion and $1.59 billion, missing expectations. The company expects to deliver 23,000 to 25,000 vehicles this quarter. U.S. Gas Prices Inch Closer To $5 The national average for a gallon of regular gas pushed closer to $5 overnight. AAA shows that price rose to $4.970/gal today. That’s up nearly 2 cents from just yesterday and more than 25 cents from a week ago. Prices have been surging after the U.S. officially entered “peak driving season” over Memorial Day weekend. The national average is on track to hit $5/gal for the first time in history this week. Oil Prices Near 3-Month High Oil prices are hovering near three-month highs after closing at the highest level since March 8 on Wednesday. West Texas Intermediate crude futures are up 0.02% at $122 bbl while Brent crude futures are up 0.1% at nearly $124 bbl. The Energy Information Administration reported Wednesday that U.S. crude inventories fell by 2 million barrels last week while gas stockpiles fell by 800,000 barrels. That was a smaller drop in oil inventories than expected but sharply missed expectations for gasoline inventories to rise. In Case You Missed It Twitter (TWTR) shares rose on Wednesday following a report that the company plans to share internal data with Elon Musk. The Washington Post first reported that Twitter is preparing to give Musk access to its so-called “firehose” API. That data set includes every single tweet posted on the platform. Top executives also told employees Wednesday that Twitter plans to hold a shareholder vote on the Musk buyout by early August. TWTR closed 0.8% higher Wednesday but is down 0.5% ahead of the open. Moderna (MRNA) shares rose 2.2% on Wednesday after the company released clinical trial results for its updated Covid booster shot. The new shot is a “bivalent” vaccine, meaning one half targets omicron variants while the other half is still based on the original Covid strain. Moderna said the 437 people treated with the new booster in its Phase 2 clinical trial had almost twice the amount of antibodies against omicron than those treated with the current booster.
Continue Reading -->Coffee With Greta: Another Profit Warning Drags Down Stocks
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -153 (-0.5%) SPX Futures: -18 (-0.4%) NASDAQ Futures: -52 (-0.4%) Good morning friends! Futures are slipping amid economic growth concerns after another big profit warning. Let’s get right to it! Credit Suisse Slips On Profit Warning Credit Suisse (CS) shares are falling 7.1% in premarket trade after the company issued a Q2 profit warning. In a new trading update, Credit Suisse said it will likely report a loss in the current quarter. The Swiss lender cited the war in Ukraine, Central Bank tightening, and the end of Covid stimulus as reasons for that downgraded forecast. Credit Suisse said 2022 as a whole will remain a year of “transition” and it will accelerate cost-cutting measures “with the aim of maximizing savings from 2023 onwards”. Fed GDP Tracker Shows Economy Inching Toward Recession The Atlanta Fed’s GDPNow tracker now shows the U.S. economy expanding just 0.9% in Q2. That’s down from expectations for 1.3% growth a week ago. The revised outlook comes after the release of weak economic data in recent weeks. Consumer spending is now expected to rise 3.7% vs the previous 4.4% estimate. And real gross private domestic investment (GPDI) is expected to shave 8.5% off overall GDP growth, higher than the previous estimate for an 8.3% hit. GPDI is a measure of how much domestic businesses are investing in the economy. The GDPNow tracker is updated in real-time based on the most recent data. The U.S. economy contracted 1.5% in Q1 as the trade deficit soared to a record-high. That gap declined by more than $20 billion in April. The trade deficit is now expected to shave off 0.13% in GDP growth this quarter down from the previous estimate of -0.25%. The official definition of a recession is two straight quarters of negative economic growth. Campbell Soup Rises On Earnings Beat Campbell Soup (CPB) shares are up 2.8% ahead of the open after beating fiscal Q3 expectations. The food company reported adjusted earnings of $0.70 per share on $2.13 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $0.61 on $2.042 billion in revenue. Campbell’s CEO said, “Our improved supply chain execution along with inflation-driven pricing began to mitigate the margin pressure we have experienced over the last 12 months.” The company expects full-year sales growth up to 1% vs its previous forecast for sales to fall up to 2%. That beat analysts’ estimates for full-year sales of $8.411 billion which would be a 0.8% decline. Roku Rallies On Rumored Netflix Acquisition Discussions Roku (ROKU) shares are rising 5.2% in premarket trade following a Business Insider report that the company’s employees are discussing the possibility of being acquired by Netflix (NFLX). Management is reportedly aware of those discussions and abruptly closed the trading window for all employees in response. That prevents employees from selling any of their vested ROKU stock. ROKU shares are down more than 70% over the past year while NFLX shares have tumbled nearly 60%. Spirit Extends Talks with Frontier, JetBlue Spirit Airlines (SAVE) shares are slipping 0.7% ahead of the open after the company postponed its shareholder meeting to continue talks with Frontier Group (ULCC) and JetBlue (JBLU). The company pushed that meeting from this Friday to June 30. Shareholders were originally set to vote on the cash-and-stock Frontier merger this week. But JetBlue sweetened its takeover offer earlier this week, offering $31.50 per share and a higher breakup fee if the deal is blocked by regulators. Mortgage Demand Tumbles To 22-Year Low Mortgage demand has tumbled to the lowest level in 22 years as rates rise and supply remains low. The Mortgage Bankers Association reported total application volume fell 6.5% last week. Purchase applications were down 7% weekly and 21% year-over-year. While refinance applications fell 6% weekly and tumbled 75% compared to a year ago. The average 30-year contract rate rose to 5.40% from 5.33%. New data from Mortgage News Daily shows those rates have moved even higher this week. Oil Prices Rise Oil prices are rising today as the market expects higher demand from China and as Norwegian oil workers prepare to strike. West Texas Intermediate crude futures are up 0.9% to over $120 bbl while Brent crude futures are rising 0.9% to over $121 bbl. Some crude output is at risk of being shutdown as Norwegian oil workers plan to strike over pay starting on June 12. The American Petroleum Institute reported Tuesday that U.S. crude inventories rose by 1.8 million barrels last week, while gas inventories also rose by 1.8 million barrels. The Energy Information Administration releases official stock levels at 10:30 a.m. ET. Goldman Sachs raised its outlook for oil prices over the next 12 to 18 months. The bank now expects Brent crude prices to rise to $140 a barrel as early as this summer. But the group says Americans will feel more pain as limited refinery capacity will push gas prices even higher than usual. U.S. Gas Prices Surge Again The national average for a gallon of regular gas jumped sharply again overnight. AAA shows that price rose to $4.955/gal today. That’s up nearly 4 cents from just yesterday and nearly 30 cents from a week ago. At the current pace of gains, the national average is on track to top $5/gal this week. Uranium Stocks Pop Uranium stocks are rising ahead of the open after rallying on Tuesday. The Global X Uranium ETF (URA) is up 1.9% in premarket trade after closing 6% higher on Tuesday. The rally comes amid news the Biden Administration is looking to reduce U.S. reliance on foreign uranium, specifically from Russia. The White House has reportedly asked Congress to fund a $4.3 billion plan to buy enriched uranium from domestic suppliers. Novavax Jumps on FDA Panel Vote For Covid Vaccine Novavax (NVAX) shares are up 8.6% in premarket
Continue Reading -->Coffee With Greta: Stocks Slide After Target’s Profit Warning
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -252 (-0.8%) SPX Futures: -37 (-0.9%) NASDAQ Futures: -156 (-1.2%) Good morning friends! Futures are falling after a profit warning from Target. Let’s get right to it! Target Slides On Profit Warning Target (TGT) shares are sliding 7.2% ahead of the open after slashing its fiscal Q2 profit margin expectations. The retailer said it will be lower prices and cancel orders in an effort to reduce excess inventory. Target said it had over $15 billion of inventory at the end of fiscal Q1, up 43% year-over-year. CEO Brian Cornell told CNBC, “We thought it was prudent for us to be decisive, act quickly, get out in front of this, address and optimize our inventory in the second quarter — take those actions necessary to remove the excess inventory and set ourselves up to continue to be guest relevant with our assortment.” Target now expects its operating margin rate this quarter to be around 2%. The retailer previously forecast its margin rate would be relatively unchanged from Q1 at 5.3%. The company said it expects profit margins to rise to around 6% in the second half of the year. Kohl’s Surges On Takeover Talks Kohl’s (KSS) shares are surging 11.9% in premarket trade after the company announced it has entered exclusive takeover talks with Franchise Group (FRG). Franchise Group has offered to buy the department store chain at $60 per share, valuing the company at $8 billion. The companies said late Monday they have entered a three-week exclusivity period to discuss that bid. The deal is subject to approval by both company boards. Trade Deficit Tumbles From Record The U.S. trade deficit fell sharply in April. The Commerce Department reported that gap shrank 19% to $87.1 billion. That was better than economists’ expectations for $89.4 billion. The drop came as exports rebounded and imports fell. Exports rose 3.5% to $252.6 billion while imports fell 3.4% to $339.7 billion. Oil Prices Stabilize Oil prices are flat today as the market weighs supply concerns against increased demand expectations from China. West Texas Intermediate crude futures are down 0.3% at $118 bbl while Brent crude futures are slipping 0.4% to $119 bbl. Analysts expect the drop in prices to be short-lived as Beijing and Shanghai, China return to normal after two months of Covid lockdowns. The market is also doubtful that OPEC’s agreement to increase production faster will actually alleviate tight supply. U.S. Gas Prices Surge To Fresh Record The national average for a gallon of regular gas jumped sharply again overnight. AAA shows that price rose to $4.919/gal today. That’s up more than 5 cents from just yesterday and nearly 30 cents from a week ago. The national average is on track to hit $5/gal for the first time ever soon. 13 states already have an average price over $5: Alaska, Arizona, California, Hawaii, Indiana, Illinois, Maine, Massachusetts, Michigan, Nevada, New Jersey, Oregon, and Washington. Peloton’s CFO Steps Down Peloton (PTON) shares are flat in premarket trade after a new SEC filing revealed the company’s CFO is leaving. Jill Woodworth will be replaced by current Amazon Web Services executive Liz Coddington, effect next week. CEO Barry McCarthy said, “Having worked at some of the strongest and most recognizable technology brands, [Liz] not only brings the expertise needed to run our finance organization, but she has a critical understanding of what it takes to drive growth and operational excellence.” Apple Unveils New Products Apple (AAPL) shares are down 1.4% ahead of the open after the tech giant hosted its annual Worldwide Developers Conference on Monday. Here’s everything Apple unveiled at the event: New iPhone software, iOS 16 New iPad software, iPadOS 16 New Mac software, macOS Ventura New Apple Watch software, watchOS 9 A new Apple M2 computer chip A new MacBook Air with the M2 chip A new 13-inch MacBook Pro with the M2 chip Check out this article from CNBC for details on all the new software and devices that were announced. In Case You Missed It Amazon (AMZN) rallied 2% on Monday after implementing a 20-for-1 stock split. The online retail giant closed at $124.79 per share after closing at a split-adjusted price of $122.35 on Friday. Amazon is hoping the split will make the stock more accessible to smaller traders and investors. AMZN shares are down 2.3% ahead of the open. Twitter (TWTR) shares dropped 1.5% on Monday as Elon Musk signaled his takeover deal is still in danger. In a letter, Musk accused Twitter of “resisting and thwarting” his right to information about fake users, calling it a “clear material breach” of the terms of the merger agreement. The letter said, “Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement”. TWTR shares are falling 1% in premarket trade.
Continue Reading -->Who Wins the Week – Bears or Bulls?
All three indices – QQQ, SPY, and IWM – had a great bullish pop on Thursday and it looked like the market would start heading up. But then TSLA and AAPL had drops on Friday that completely negated the prior day’s green bars. What sign will determine whether the bears or the bulls have won? In this video, Sami explains: – What’s happening in the biotech/healthcare stocks – The bullish signal that he loves in ASRT – How BZUN compares to last week’s move in YINN – The effect a recession has on healthcare stocks – Why he feels like he missed out on CELH
Continue Reading -->