Scott Redler’s Dog Bytes: FAANG Friday
SPX futures are +45. Elon Musk walked back his statements from Friday, and Lloyd Blankfein said to not be too pessimistic. Even with a lot of complicated news, the SPX digested pretty well above the 8/21 day to stay committed to this bear market rally. Now we’ll see if it builds and gives another move to 4250-4300 in the week ahead. 4176 is last week’s high. As long as we hold 4073, we can’t bet too bearish. TSLA: Elon Musk is walking back Friday’s statements about cutting the workforce. The stock isn’t special and it’s been hard to trust lately. We’ll see if early strength gets faded. The resistance area is $731-$743. AAPL: Morgan Stanley’s Katie Huberty was cautious Friday and it showed some relative weakness. Today, see if the $147-$148 area gets rejected. WWDC kicks off today at 1:00. AMZN: call spreads did great into the split. I made ~200% on the one that expired Friday. It’s up this morning. Some are long vs. $120. Others are waiting for a push and close above $125.61 that might lead to a gap fill. Watch it for sentiment. FB was volatile last week on Sheryl Sandberg leaving. But it didn’t fall apart. See if the rally holds. It’s getting tighter. Scott’s Positions Disclosure:
Continue Reading -->Coffee With Greta: Amazon Stock Split Takes Effect
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: +282 (+0.9%) SPX Futures: +47 (+1.2%) NASDAQ Futures: +196 (+1.6%) Good morning friends! Futures are higher as traders look to bounce back from a losing week. Let’s get right to it! Amazon’s Stock Split Takes Effect Amazon (AMZN) shares are up 2% ahead of the open, as the company’s first stock split in 23 years takes effect. The stock is trading around $125 after the 20-for-1 split went into effect after the close on Friday. It’s the first time the share price has been in triple-digits since October 2017. Amazon announced plans for the split in an SEC filing on March 9. A company spokesperson said, “This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company.” Oil Jumps to $120 a Barrel Oil prices are rising today after Saudi Arabia hiked its crude prices for July. West Texas Intermediate crude and Brent crude futures are both up about 0.2% and hovering right around $120 bbl. WTI hit a three-month high of $120.99 earlier this morning while Brent topped out at $121.95. Saudi Arabia hiked the official selling price for its Arab light crude to Asia to $6.50 for July, up by $2.10 from June. That’s the highest price since May. Gas Price Record The national average for a gallon of regular gas jumped sharply over the weekend. AAA shows that price rose to $4.865 today. That’s up more than 10 cents from just Friday. A week ago the national average was $4.619/gal and it was $4.279/gal a month ago. Georgia is still the state with the lowest average price at $4.292/gal. The highest state average is in California which rose more than 3 cents overnight to $6.341/gal. Inflation Week It’s a relatively light week of economic data with traders focused on inflation. The Bureau of Labor Statistics releases the May Consumer Price Index on Friday morning. The market will be eyeing that report for more evidence that inflation has already peaked. The headline CPI is expected to have risen 8.2% year over year with the Core CPI at 5.9%. Both forecasts are a slowdown from April. JetBlue Sweetens Spirit Takeover Offer Spirit Airlines (SAVE) shares are rising 6% in premarket trade after JetBlue Airways (JBLU) sweetened its offer to buy the discount airline. JBLU shares are up 1.4% ahead of the open. JetBlue is now offering $31.50 per share in cash, up from its previous offer of $30 per share. The improved offer includes $30 per share at the close of the deal and $1.50 paid as a cash dividend if shareholders vote for the JetBlue deal. JetBlue also raised the reverse break-up fee to $350 million from $200 million. That would be paid to shareholders if they approve the deal but it falls through due to regulatory reasons. Spirit previously declined JetBlue’s offer, expressing doubt it would receive regulatory approval. The company is also still in talks to merge with Frontier Group (ULCC). DiDi Surges On Report Regulators Are Ending Investigations DiDi Global (DIDI) shares are surging 66.5% ahead of the open after the Wall Street Journal reported that Chinese regulators are ending their investigations into the Chinese ride-hailing company. Authorities are also reportedly planning to lift a ban on new users and will allow the Didi mobile apps back on domestic app stores. Sources told the Wall Street Journal those changes could happen as early as this week. Solar Companies Jump On White House Tariff Plan Shares of solar equipment providers are rising in premarket trade after Reuters reported the White House is planning to announce a tariff exemption for solar panels. President Biden is expected to declare a 24-month long exemption for solar panels from Cambodia, Malaysia, Thailand, and Vietnam today. The move is meant to spur more solar panel production in the U.S. SunRun (RUN) shares are up 13.9% ahead of the open, while SunPower (SPWR) is gaining 9.4%, and SolarEdge Technologies (SEDG) is up 6.3%. Under Armour Replaced by Keurig Dr Pepper, ON Semiconductor on S&P 500 Under Armour (UAA) shares are flat after the athletic apparel company was removed from the S&P 500. The stock was replaced by Keurig Dr Pepper (KDP) and ON Semiconductor (ON). KDP shares are up 6.6% in premarket trade while ON shares are rising 6%. VICI Properties (VICI) shares are also up 6.7% ahead of the open after the real estate investment trust was also added to the S&P 500. In Case You Missed It Apple (AAPL) suffered a death cross on Friday. The stock’s 50-day moving average dropped to $159.09 while the 200-day moving average rose to $159.49. It was the first death cross for the tech giant since December 20, 2018. AAPL shares are 1.3% ahead of the open.
Continue Reading -->Coffee With Greta: Stocks Drop, Yields Spike On Strong Jobs Report
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: -213 (-0.6%) SPX Futures: -41 (-1%) NASDAQ Futures: -197 (-1.5%) Good morning friends! Futures are slipping as Treasury yields pop on a stronger-than-expected May jobs report. Let’s get right to it! Hiring Was Still Strong in May The Labor Department’s official May jobs report beat expectations. That data was just released, showing the U.S. economy added 390,000 jobs last month. That was better than expectations for a gain of 328,000. But it was still the smallest increase in 13 months and broke the 12 month streak of 400,000 or more, as the labor market nears full employment levels. The unemployment rate held steady at 3.6% vs expectations for a decrease to 3.5%. The labor force participation rate stood at 62.3% in May, still 1.1% lower compared to February 2020. Average hourly earnings rose 0.3% from April and jumped 5.2% year-over-year. Although strong, those wage gains are still lagging behind inflation. The leisure and hospitality sector continued to lead job gains in May, adding 87,000 workers. That sector is still down 1.3 million employees from pre-pandemic levels. Treasury Yields Pop After Strong Jobs Report Treasury yields are rising following the release of that strong jobs data. The 10-year yield is up about 7 basis points to over 2.97% with the 30-year yield rising 7 basis points as well to over 3.15%. The strong jobs data gives more support to the Fed’s plans to move ahead aggressively with larger rate hikes. Tesla Slides After Elon Musk Orders Hiring Freeze, Job Cuts Tesla (TSLA) shares are down 4.4% following reports he has ordered a hiring freeze at the company. Reuters reported Musk sent an email to executives on Thursday which was titled “pause all hiring worldwide”. In that message, Musk reportedly said he has a “super bad feeling” about the economy and they need to cut about 10% of jobs. Tesla’s annual SEC filing showed it had nearly 100,000 employees at the end of 2021. Coinbase Extends Hiring Pause Coinbase (COIN) shares are falling 4.1% ahead of the open after the company announced it will extend a hiring pause for the “foreseeable future”. In a blog post, the company also said it would rescind some already accepted job offers. Coinbase said it will help those impacted by that move with job placement and resume reviews. The company’s chief people officer said, “If we’re flexible and resilient, and remain focused on the long term, Coinbase will come out stronger on the other side.” Lululemon Rises On Earnings Beat Lululemon (LULU) shares are up 1.1% ahead of the open after beating fiscal Q1 expectations. The athletic apparel retailer reported earnings of $1.48 per share on $1.61 billion in revenue. That topped analysts’ expectations for EPS of $1.43 on $1.53 billion in revenue. Revenue rose 32% year-over-year and the company hiked its guidance. Lululemon expects fiscal Q2 revenue between $1.75 billion and $1.78 billion vs analysts’ expectations for $1.71 billion. The company forecast full-year revenue between $7.61 billion and $7.71 billion, up from its prior forecast for $7.49 billion to $7.62 billion. Analysts were expecting $7.54 billion in full-year sales. Apple’s Impending Death Cross Apple (AAPL) is poised to see an ominous pattern on its stock chart. The stock’s 50-day moving average is on track to drop below its 200-day moving average, in a move known as a “death cross”. Apple’s last death cross appeared on December 20, 2018. The 50-DMA has declined by an average of $0.30 over the past 20 sessions and fell to $159.573 on Thursday while the 200-DMA rose to $159.489. At that pace, the death cross is expected to happen today. AAPL shares are down 1.9% in premarket trade. Oil Prices Slip Oil prices are rising modestly amid tight supply concerns. West Texas Intermediate crude futures are up 0.3% to over $117 bbl while Brent crude futures are up 0.4% to over $118 bbl. Opec+ agreed on Thursday to increase its oil output faster. The group will increase production by 638,000 barrels per day in July and August. That’s ramped up from the 432,000 bpd increases over the past few months. The Energy Information Administration also reported a steep drop in U.S. inventories on Thursday. The EIA says crude stockpiles tumbled by 5.1 million barrels last week while gasoline inventories dropped by 700,000 barrels. Analysts were expecting a 500,000 barrel drop in oil supplies and 100,000 barrel decrease in gas stockpiles. 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 jumped to $4.761/gal today. That was an increase of nearly 5 cents from yesterday. It’s the third day in a row prices have jumped by more than 4 cents overnight. The state with the lowest average price currently is still Georgia, at $4.221/gal. The highest state average is in California which rose more than 3 cents overnight to $6.246/gal. In Case You Missed It Microsoft (MSFT) slashed its fiscal Q4 outlook Thursday citing “unfavorable” foreign exchange rates. The company lowered guidance for both sales and profit to ranges below analysts’ estimates. The stock initially fell on that news but then rallied into the close. MSFT shares are down 1.4% ahead of the open. Cloud stocks led the rally in tech stocks on Thursday. UiPath (PATH) shares surged 17% after reporting a narrower-than-expected Q1 loss and hiking its full-year guidance. Elastic (ESTC) and Datadog (DDOG) shares also jumped sharply, closing 19% and 13% higher respectively.
Continue Reading -->Derrick Oldensmith Talks Prop Trading on the “Trading Justice” Podcast
Hit the Play Button to Listen to Derrick Oldensmith’s interview on the “Trading Justice” podcast. Derrick discusses: His unique role as a professional prop trader trader, teacher, and mentor Why he started his own trading desk at T3 What makes prop trading different from retail trading The major advantages of prop trading, like access to firm capital Why leverage in prop trading is a double-edged sword The simple math behind successful trading Where people get into trouble in trading Why getting bored as a trader can lead you down a bad road The best way to expand your toolset without taking too much risk Where successful traders go wrong Why you should be a chart reader first and a tape reader second And a whole lot more!
Continue Reading -->Coffee With Greta: The Labor Market Is Almost Full
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: +119 (+0.4%) SPX Futures: +17 (+0.4%) NASDAQ Futures: +59 (+0.5%) Good morning friends! Futures are rebounding as the market digests fresh jobs data that shows the labor market nearing full employment. Let’s get right to it! Private Job Growth Tumbles In May Private payrolls increased less than expected in May, as the U.S. labor market nears full employment. Payroll firm ADP reported today that private employers added 128,000 workers last month. That was lower than economists’ expectations for a gain of 299,000. April was also revised lower to 202,000 from 247,000. May was the slowest pace of job growth since the beginning of the pandemic. Small businesses actually lost 91,000 employees in May while businesses with 500 or more employees added 122,000 and mid-size businesses added 97,000. The leisure and hospitality sector no longer led job gains last month, adding just 17,000 workers. The Labor Department releases the official May jobs report on Friday. That’s expected to show the U.S. economy added 328,000 jobs last month with the unemployment rate slipping to 3.5%. Weekly Jobless Claims Fall Weekly jobless claims fell more than expected last week. The Labor Department reported 200,000 Americans filed initial claims for unemployment benefits. That was down 11,000 from the previous week and lower than expectations for 210,000. The data indicates the labor market is in a strong position, with layoffs hovering around record lows. Continuing claims fell by 34,000 to 1.31 million in the week ending May 21. Gamestop Slips On Steep Q1 Loss Gamestop (GME) shares are down 0.2% ahead of the open after missing Q1 expectations. The video game retailer reported a loss of $2.08 per share on $1.38 billion in revenue. That was worse than analysts’ expectations for a loss of $1.45 per share but beat revenue estimates of $1.34 billion. It was also a steeper loss than $1.01 per share a year ago. GameStop said its inventories jumped to $918 million at the end of Q1, up from $571 million at the end of Q1 2021. That increased inventory is part of an effort “to meet increased customer demand and offset supply-chain headwinds.” The company ended the quarter with $1.035 billion in cash on hand. Chewy Rallies On Surprise Q1 Profit Chewy Inc (CHWY) shares are jumping 16% in premarket trade after reporting a surprise profit in the first quarter. The online pet-products retailer reported earnings of $0.04 per share on $2.43 billion in revenue. That crushed analysts’ expectations for a loss of $0.11 per share on $2.41 billion in revenue. Chewy warned, “inflationary pressures and supply-chain disruptions are expected to persist and the consumer’s post-pandemic behavior continues to evolve.” The company forecast Q2 revenue between $2.43 billion and $2.46 billion and full-year revenue between $10.2 billion and $10.4 billion. Both were in line with analysts’ expectations. Hewlett Packard Drops On Earnings Miss Hewlett Packard (HPE) shares are down 4% ahead of the open after missing fiscal Q2 expectations. The company reported adjusted earnings of $0.44 per share on $6.7 billion in revenue. That was shy of analysts’ expectations for adjusted EPS of $0.45 on $6.8 billion in revenue. Hewlett Packard’s CFO said, “We are particularly pleased with the resiliency of our gross margins (34%) despite the inflationary environment and ongoing supply-chain disruptions”. The company did incur a $126 million charge during the quarter related to suspending its business in Russia. HPE forecast adjusted fiscal Q3 earnings between $0.44 and $0.54 per share, roughly in line with expectations for $0.51. Meta COO Steps Down Meta Platforms (FB) shares are up 0.7% in premarket trade after the company’s COO announced she is stepping down. Sheryl Sandberg announced her departure in a Facebook post on Wednesday. Meta’s chief growth officer will take over as COO in the fall and Sandberg will remain on the company’s board of directors. CEO Mark Zuckerberg said the company is planning an internal reorganization with her departure. Zuckerberg said, “I don’t plan to replace Sheryl’s role in our existing structure. I’m not sure that would be possible since she’s a superstar who defined the COO role in her own unique way.” Sandberg told CNBC that stepping down from the position will allow her to focus more on her philanthropic work. Oil Prices Slip Oil prices are slipping on reports that Saudi Arabia is prepared to increase its production if Russia’s output falls significantly. West Texas Intermediate crude futures are down over 1% at $114 bbl while Brent crude futures are falling 0.9% at $115 bbl. The Financial Times reported Saudi Arabia would stepup production if the EU’s ban of Russian oil imports caused a severe shortage of supply. Sources say Saudi Arabia has not yet seen genuine oil shortages in the market but it is “not in their interests to lose control of oil prices”. OPEC+, which is led by Saudi Arabia, is holding its monthly meeting today to discuss production goals. 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 jumped to $4.715/gal today. That was an increase of more than 4 cents from yesterday. The state with the lowest average price currently is Georgia, at $4.194/gal. The highest state average is in California at $6.213/gal. U.S. Factory Orders Expected To Slow The Commerce Department reports factory orders for April at 10:00 a.m. ET. That report is expected to show orders rose just 0.6% compared to 1.8% in March, as manufacturers face pressure from rising costs. The ISM Manufacturing PMI rose unexpectedly to 56.1% in May on Wednesday. But that survey also showed manufacturers plan to slow hiring in the next six months with the employment index dropping to 49.6%. Any reading below 50 signals a slowdown. The S&P Global Manufacturing PMI, formerly the IHS Markit PMI, slipped to a 4-month low
Continue Reading -->Coffee With Greta: Will May Gray Lead To June Gloom?
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: +230 (+0.7%) SPX Futures: +22 (+0.5%) NASDAQ Futures: +62 (+0.5%) Good morning friends! Futures are higher as traders gear up for a new month of trade. Let’s get right to it! Market May See June Gloom The Dow and the S&P 500 eked out 0.1% monthly gains in May while the Nasdaq fell for the second month in a row. The tech-heavy index ended the month 2.1% lower, still deep in a bear market. “Sell in May and go away” rang true as volatility gripped the market with the Fed hiking rates and the global economy showing signs of slowing. Stocks have historically seen weaker performance between May and October. The Dow logged its first 8-week losing streak since 1932 last month while the S&P and Nasdaq dropped for 7-straight weeks. Now traders are gearing up for another month of potential gloom as June includes another Fed rate hike and the beginning of the bank’s balance sheet reduction. That drawdown of the balance sheet is set to begin today at a pace of $30 billion in Treasury securities and $17.5 billion in mortgage-backed securities. The market has become increasingly worried the U.S. economy will drop into a recession as interest rates move higher. Delta Rises on Upgraded Guidance Delta Airlines (DAL) shares are rising 2% in premarket trade after the company hiked its Q2 revenue forecast. In an SEC filing today, Delta said it expects revenue to return to 2019 levels in the current quarter. That’s up from its previous forecast for revenue to be at 93% to 97% 2019 levels this quarter. The upgraded guidance comes amid a surge in travel demand and higher fares. Salesforce Pops on Earnings Beat, Upgraded Profit Outlook Salesforce (CRM) shares are rallying 8.9% ahead of the open after beating fiscal Q1 expectations and hiking its full-year profit forecast. The software company reported adjusted earnings of $0.98 per share on $7.41 billion in revenue. That topped analysts’ expectations for adjusted EPS of $0.94 on $7.38 billion in revenue. Revenue rose 24% year-over-year while net income was down 94% annually as costs jumped. Salesforce reported $13.64 billion in unearned revenue, which comes from subscriptions. That was just shy of expectations for $13.76 billion. The company forecast adjusted fiscal Q2 earnings between $1.01 and $1.02 per share with revenue between $7.69 billion and $7.70 billion. For the full year, Salesforce sees adjusted earnings of $4.74 to $4.76 per share on revenue between $31.7 billion and $31.8 billion. That was higher than analysts’ estimates for full-year profits of $4.65 per share. HP Inc Rises On Strong Fiscal Q2 Results HP Inc (HPQ) shares are up 0.6% in premarket trade after topping fiscal Q2 expectations. The computer maker reported adjusted earnings of $1.08 per share on $16.5 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $1.05 on $16.2 billion in revenue. The results were also at the high end of the company’s target for earnings from $1.02 to $1.08 per share. Commercial PC revenue rose 18% year over year while consumer revenue fell 6%. HP bought back $1 billion worth of stock during the quarter, bringing the YTD total to $2.5 billion. The company’s CEO said it remains committed to at least $4 billion in buybacks for the full fiscal year. HP forecast fiscal Q3 non-GAAP earnings of $1.03 to $1.08 per share vs analysts’ expectations for $1.02. The company expects full-year non-GAAP profits of $4.24 to $4.38 per share, up from the previous forecast of $4.14 to $4.38 and better than analysts’ estimates for $4.25. Victoria’s Secret Beats Q1 Profit Expectations Victoria’s Secret (VSCO) shares are jumping 10.2% ahead of the open after beating Q1 profit expectations. The lingerie retailer reported adjusted earnings of $1.11 per share vs expectations for $0.84. The company’s $1.48 billion in revenue was in line with expectations. Sales were down 4.5% year-over-year. Victoria’s Secret warned business will be challenging through the second half of the year as it faces “supply chain headwinds”. The company expects adjusted fiscal Q2 earnings between $0.95 and $1.25 per share vs $1.19 expected. Chinese EV Makers Report May Deliveries Li Auto (LI), Nio (NIO), and XPeng (XPEV) are all rising in premarket trade after the Chinese electric vehicle makers reported strong May delivery numbers. Li Auto said it delivered 11,496 vehicles last month, up 166% compared to a year ago. Nio delivered 7,024 vehicles in May, up just 4.7% year-over-year. Nio’s deliveries through the first 5 months of 2022 are up 11.8% compared to the same time in 2021. Xpeng delivered 10,125 EVs in May, up 78% compared to May 2021. The company’s YTD deliveries are more than double compared to last year. Oil Prices Rise On EU’s Russian Ban, Shanghai Reopening Oil prices are rising further today following the EU’s agreement to ban Russian oil imports and as Shanghai, China lifts Covid restrictions. West Texas Intermediate crude futures are up 1.5% to over $116 bbl while Brent crude futures are up 1.6% to over $117 bbl. Supply fears are being fueled by the EU’s phased in ban of Russian imports. As Shanghai emerges from a Covid lockdown, demand from that country is also expected to rise. U.S. Gas Prices Surge to Fresh Record The national average for a gallon of regular gas surged overnight. AAA shows that price jumped to $4.671/gal today. That’s up nearly 5 cents from just yesterday when the price hit $4.622/gal. $FB To Become $META Meta Platforms (FB) announced Tuesday it will change its ticker symbol from $FB to $META next week. That change will go into effect prior to the start of trade on Thursday, June 9. The company said, “The new ticker symbol aligns with the company’s rebranding from Facebook to Meta.” The Facebook parent company officially changed its name in October 2021. Manufacturing Activity
Continue Reading -->Scott Redler’s Dog Bytes: Top Gun Trading
SPX futures -20 and I think a little digestion would be constructive. If this market is any good, it will stay above 4030. To keep momentum, it has to hold 4075-4090 in the next few days. I participated long here as SPY reclaimed $390 and cleared $395 last week. I put on a hedge on Friday that got a little painful on that strong close. I got converted short from my calls, so this down open is helping me. I already covered a bunch of SPY at $412.50ish. If this market wants to go higher in the week or so ahead, it will hold $404-$408 in the days ahead.AMC: I bought last Wednesday because I predicted Top Gun would be huge. And it was! I bought the stock around $11.88 plus some options. AMC is up another 9% and I’ll trim. $18ish is the next level to watch. $18ish is the next big level. MBIO is a long-term name, not a trade. It’s been tough but has good news and it’s building. Maybe if XBI gets better, this will also act better. CVX is a strong stock in the energy sector. I bought some last Monday and I added as it cleared $173.50. It’s at $180 this morning. I will probably sell my stock and keep my last third of calls. SLB: I bought Tuesday for a break above the $44 pivot. It hit $48.41 and I sold mine. It’s a bit extended here. Trim some if you’re long.Positions Disclosure as of 5/31/2022 at 9:06 a.m. ET
Continue Reading -->Coffee With Greta: Oil Prices Jump, Stocks Slump
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: -226 (-0.7%) SPX Futures: -28 (-0.7%) NASDAQ Futures: -51 (-0.4%) Good morning friends! Futures are falling as oil prices pop after the EU agreed to ban most Russian oil imports. Let’s get right to it! Oil Prices Soar On EU’s Russian Import Ban Oil prices are jumping today after EU leaders reached an agreement to ban 90% of Russian crude imports by the end of the year. West Texas Intermediate crude futures are up more than 3%, topping $118/bbl. Brent crude futures are up 1.5% to over $123 bbl. The European Council president said the sanctions package will immediately ban 75% of Russian oil imports. By the end of the year, 90% of current imports will be stopped. The move puts more pressure on global supply levels as more than a third of the EU’s oil imports come from Russia. Oil stocks are rising after the decision with Exxon Mobil (XOM) up 1.2% and Chevron (CVX) trading 0.9% higher ahead of the open. U.S. Gas Prices Hit Fresh Record U.S. gas prices are back on a record-breaking climb after taking a breather on Friday. The national average for a gallon of regular gas hit a new record every day over the holiday weekend and did so again today. AAA shows that price jumped to $4.622/gal overnight. That’s up from $4.598/gal a week ago and $4.178/gal one month ago. Eurozone Inflation Hits Record-High Consumer prices are soaring in Europe. New data shows inflation came in at a record-high 8.1% in May, up from 7.4% in April and higher than 7.4% expected. It’s the seventh straight month inflation pressures have hit a new record high in Europe. German inflation soared to 8.7%, while French inflation hit a record 5.8%, and inflation in Spain soared to 8.5%. The jump comes as energy prices have soared due to Russia’s war in Ukraine. Energy prices surged 39.2% year-over-year in May while prices for food, alcohol, and tobacco jumped 7.5%. Excluding food and energy prices, the Eurozone’s core inflation rate rose to 3.8% in May. President Biden, Fed Chair Meet About Inflation President Biden is set to meet with Fed Chair Jerome Powell today about inflation pressures in the U.S. economy. A White House official said Biden will also congratulate Powell on being confirmed to another term as Fed Chair. The official said they will discuss the “state of the American and global economy and discuss the president’s top economic priority: addressing inflation to transition from an historic economic recovery to stable, steady growth that works for working families.” Fed Governor Christopher Waller said in a lecture over the weekend that he is prepared to take rates past neutral to fight inflation. He also said he believes the bank can continue raising rates without causing a recession. AMC Pops As Top Gun: Maverick Breaks Box Office Record AMC Entertainment (AMC) shares are rallying 12% in premarket trade after Top Gun: Maverick set a new Memorial Day opening 4-day record. The film raked in $156 million in U.S. ticket sales between Friday and Monday. That topped the previous record of $153 million set 15-years ago by Pirates of the Caribbean: At World’s End. Many theater-goers over the weekend were in AMC Theaters. The company said more than 5 million people visited its theaters globally over the weekend. That’s nearly double the 2.6 million attendance over Memorial Day weekend 2021. Imax (IMAX) stock is up 1.2% ahead of the open after the company said the new Top Gun move was its best global four-day Memorial Day weekend opening ever. Consumer Confidence Expected To Fall The Conference Board releases its consumer confidence index for May at 10:00 a.m. ET. That survey is expected to show confidence slipped more than three points this month to 103.9. This comes after consumer sentiment tumbled to a more than 10-year low in May. U.S. consumers have been rocked by skyrocketing inflation pressures as the economy emerges out of the pandemic.
Continue Reading -->Coffee With Greta: Inflation Cools and Stocks Get 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: +88 (+0.3%) SPX Futures: +24 (+0.6%) NASDAQ Futures: +120 (+1%) Good morning friends! Futures are rising as new data shows inflation pressures are slowing. Let’s get right to it! PCE Inflation Cools The Bureau of Labor Statistics personal consumption expenditures index shows inflation pressures slowing in the U.S. economy. The headline PCE price index rose 0.2% monthly and 6.3% year-over-year. That was a slowdown from 0.9% monthly and 6.6% annually in March. The core PCE price index, which excludes food and energy, rose 0.3% monthly and 4.9% annually. That was also a slowdown from March and in line with economists’ expectations. The core PCE index is the Fed’s preferred measure of inflation. The data supports the Fed’s theory that inflation may have already peaked and is now trending downward. The PCE index also showed an increase in incomes and consumer spending last month. Personal incomes rose 0.4% monthly, slightly lower than expectations for 0.5%. Consumer spending was up 0.9%. Adjusted for inflation, disposable incomes were flat and consumer spending rose 0.7%. Gap Plunges After Slashing Guidance Gap (GPS) shares are plunging 18.8% ahead of the open after slashing its full-year guidance. The clothing retailer reported a fiscal Q1 loss of $0.44 per share on $3.48 billion in revenue. Revenue was down 13% year-over-year but slightly ahead of analysts’ expectations. Same-store sales dropped 14% year-over-year vs expectations for a 12.2% decline. Online sales were down 17% compared to a year ago and in-store sales fell 10%. Gap sales dropped 11%, Old Navy sales tumbled 22%, Athleta sales fell 7%, and Banana Republic sales rose 27%. The company forecast fiscal 2022 adjusted earnings between $0.30 and $0.60 per share, that’s down from previous guidance for4 $1.84 to $2.05. Analysts were looking for EPS guidance of $1.34. Gap’s CFO said the revised outlook accounts for “executional challenges” at Old Navy, uncertain macroeconomic conditions, and inflationary pressures. Big Lots Tumbles On Surprise Q1 Loss Big Lots (BIG) shares are falling 17.3% in premarket trade after reporting a surprise loss in the first quarter. The retailer reported a loss of $0.39 per share on $1.37 billion in revenue. That was sharply lower than analysts’ expectations for a profit of $0.91 per share on $1.46 billion in revenue. Big Lots said same-store sales slowed in April, prompting it to markdown prices. The CEO blamed that slowdown on inflationary pressures. The company’s gross margin rate shrunk to 36.7% last quarter from 40.2% a year ago. Big Lots expects comparable sales to fall year-over-year in Q2 and its gross margin rate to be in the low-30s as costs rise. Costco Sales Growth Falls Short Costco (COST) shares are down 1.6% ahead of the open after beating fiscal Q3 revenue expectations but missing growth estimates. The big-box retailer reported earnings of $3.04 per share on $52.6 billion in revenue. That was in-line with analysts’ EPS expectations and better than revenue estimates for $51.56 billion. But same-store sales growth fell short. Costco said sales at stores open for at least a year jumped 10.8% year-over-year vs expectations for 11.8% growth. Ulta Rallies On Earnings Beat, Strong Guidance Ulta (ULTA) shares are up 8.1% in premarket trade after beating Q1 expectations and raising its full-year outlook. The beauty retailer reported earnings of $6.30 per share on $2.34 billion in revenue. That was better than analysts’ expectations for EPS of $4.46 on $2.12 billion in revenue. Comparable sales jumped 18% year-over-year, with double-digit increases across all major categories. Ulta also said it has opened 10 new stores this year. The company forecast full-year revenue between $9.35 billion and $9.55 billion with comparable sales growth between 6% and 8%. That was up from the previous forecast for comparable sales growth between 3% and 4% with revenue between $9.05 billion and $9.15 billion. Ulta also expects full-year earnings between $19.20 to $20.10 per share vs the previous outlook for $18.20 to $18.70. The company still plans to open 50 new stores total in 2022. Dell Jumps On Earnings Beat Dell Technologies (DELL) shares are up 11.5% ahead of the open after crushing fiscal Q1 earnings expectations. The laptop maker reported non-GAAP earnings of $1.84 per share on $26.1 billion in revenue. That beat the company’s own forecast for EPS of $1.25 to $1.50. Analysts were expecting $25 billion in revenue. Sales in Dell’s Infrastructure Solutions Group (ISG) jumped 16% year-over-year to $9.3 billion. That was better than Wall Street’s expectations for 5% growth to $8.3 billion. The Client Solutions Group, which is Dell’s PC business, brought in $15.6 billion in revenue. That was up 17% compared to a year ago and higher than consensus estimates for $15.5 billion. Twitter Shareholders Sue Twitter and Musk Twitter (TWTR) shareholders are suing the social media company and Elon Musk over their chaotic handling of Musk’s acquisition deal. The proposed class-action suit accuses Musk of violating California’s corporate laws and engaging in market manipulation by creating doubt he would go through with the deal. It says, “Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or to re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout consideration.” The suit also claims he financially benefitted by delaying the disclosure of his stake. Shareholders allege Musk bought the stock while he knew insider information from private conversations with board members and executives, including former CEO Jack Dorsey. TWTR shares have seen volatile swings since the Tesla (TSLA) boss originally disclosed his investment in early April. The stock popped to a high of $54.57 per share on April 5, the day after Musk revealed his stake.
Continue Reading -->Do You Trust the Fed?
The Fed seems to get a bad rap all the time. It was created to stabilize the U.S. economy and banking system, but it seems like it gets blamed for every bad thing that happens in the economy. So, we asked our audience what they think of the Fed. And this is what we learned Most People Don’t Trust the Fed In our admittedly unscientific and anonymous survey, 75% of respondents said they don’t trust the Fed. Their reasons ranged from the Central Bank being political to being outright corrupt. Let’s take a look at some of the responses: “The Fed is not part of the federal government and has no reserves. All they do is print money, which is the cause of inflation.” “They manipulate the economy, need to let free markets decide.” “Powell is way behind the curve.” “Controlled by politics.” “They manipulate the economy to fit their ideal. We usually pay for it.” “I think the Fed is no longer an independent body; it has become another arm of government.” “Hidden agenda for self-interest.” Some People Do Trust the Fed Since 75% of respondents said they don’t trust the Fed, that means 25% actually do trust the Fed. They seemed to have faith that the Fed is at least trying to do its stated job, even if it seems to fail at times. Take a look at some of the responses: “Jerome Powell will do the best he can under the current environment to get unemployment numbers down and raise rates.” “They tend to be a rather stable hand, especially in comparison to the government.” “I trust they will TRY to act in the best interest of the greatest amount of people but will make mistakes along the way, some bigger than others.” “I trust they know what tools they have in their toolbox and they will use them as they have told us.” What Does the Fed Actually Do? The Central Bank’s mandate from Congress is to “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” The Fed accomplishes these goals by lowering and raising the federal funds rate and manipulating the supply of money in the banking system. But some respondents to our survey had a much different idea of what the Fed actually does: “Buy stocks” “They think of ways to screw the poor and cater to the rich and mainly themselves.” “Mess up the economy.” “Uses the American people like pawns in a game of chess depending on the political wind.” “Cause market volatility during the day – when a press release after hours would suffice.” “Create opportunities for insider trading and front running, amplifying cycles, negating economic theory.” Suggestions For the Fed Many respondents to our survey had suggestions for what the Fed should be doing instead: “They shouldn’t do anything. They need to let markets behave as markets should behave.” “Dissolve itself.” “Setting fiscal policy that does not favor one political party over another one.” “As little as possible, get the hell out of the way and let Americans lead.” “Let the market be, and do its thing. In the end, the market always wins.” “I think the Fed should be abolished.” Most People Think the Fed Will Cause a Recession 75% of respondents to our survey answered “yes” when asked if the Fed will cause a recession in 2022. 25% answered “no”. And this is a big concern for many in the market right now. Even the Fed Chair himself has admitted it is a possibility, although Powell says they’re still confident they can accomplish a “soft landing”. The reason many believe the Fed might cause a recession is that it got behind on inflation. Now the Fed is playing catchup with rates and the May meeting minutes show many officials believe they will have to push past neutral. And pushing monetary policy into a restrictive stance threatens economic growth in the U.S. Most People Don’t Think the Fed Can Control Inflation 68% of respondents to our survey answered “no” when asked if they think the Fed will reduce inflation in 2022. 32% answered “yes” to that question. But the truth is, the Fed will get inflation under control at some point. The question is, at what cost? Overall Trust In the Fed Is Falling It’s not just our audience that doesn’t trust the Fed. Morning Consult found Americans’ trust in the Central Bank tumbled at the end of 2021. Just 52% of U.S. adults said they had “a lot” or “some” trust in the Fed. That was down 12-points from the all-time high of 64% in March 2021. The drop came as inflation surged and Americans felt the Fed was taking too long to respond. So what do YOU think about the Fed? Let us know in the comments!
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