4th of July: A by-the-numbers look at the American holiday

On the Fourth of July, a federal holiday, Americans spend money on food, fireworks, travel and patriotic decorations. Here are 10 quick facts on leading industries......»»

Category: topSource: foxnewsJul 1st, 2022

July Was "Far More Positive" Than Expected For Malls

July Was "Far More Positive" Than Expected For Malls By Marianne Wilson of Chain Store Given all the challenges, July was a fairly good month for the nation’s shopping centers. Visits to malls (includes indoor malls, open-air lifestyle centers and outlet malls) were down year-over-year, but given inflation, gas prices, and the iffy condition of the economy, the numbers were “far more positive than expected,” according to a report by foot traffic analytics firm The Mall Indexes - July 2022 Update revealed that July experienced a big increase in visits month-over-month compared to June. Visits were up 7.5% at indoor malls, 7.2% at open-air centers and 23.4% at outlet malls. Compared to 2021, visits were down year-over-year at all three mall types. But they were only down 1% at open-air lifestyle centers, and 2.7% at indoor malls, which was roughly even with 2021’s numbers. Visits at outlet malls, however, were down 8.5%. Compared to July 2019, visits are still down — but not nearly as much as you’d expect, noted Visits in July were down 3.5% at indoor malls, 2.7% at open-air lifestyle centers and 7% at outlet malls compared to July 2019 — a significant improvement over June’s numbers, and considering inflation and gas prices, “surprising,” the report said. “Looking at the relatively minor declines in July compared to 2019 indicates that the rebound that many top-tier malls have been enjoying could continue and even pick up the pace heading into the holiday retail season,” said Ethan Chernofsky, VP marketing, “If this holds true, the lack of a true brick-and-mortar retail holiday season in 2021 combined with the more holistic experiences that these centers are built to provide could create a major draw even amid lingering economic concerns.” Tyler Durden Tue, 08/09/2022 - 10:50.....»»

Category: personnelSource: nytAug 9th, 2022

Futures Slide On Tech Weakness As Meme Stocks Fade, CPI Looms

Futures Slide On Tech Weakness As Meme Stocks Fade, CPI Looms After a Monday which started off with a powerful rally only to fizzle and close in the red, overnight market action has seen a continuation of the muted drift lower, and S&P 500 futures have turned lower this morning, falling 0.2% to 4,132, near session lows after trading 0.2% higher earlier. Nasdaq futures dropped 0.5%, indicating that the index will extend its losses for a third session, and semiconductor companies like Nvidia and AMD slipped in premarket trading after Micron forecast adjusted revenue for the fourth quarter at or below the low end of its June 30 guidance. The fading of some meme stock euphoria that defined the past 3 days has not helped bullish sentiment. Treasuries dipped, with the 10-year benchmark yield rising three basis points to 2.79% as traders await Wednesday’s CPI report to gauge the path of Federal Reserve tightening. In premarket trading, US semiconductor companies like Nvidia and AMD slipped after Micron followed Nvidia and forecast adjusted revenue for the fourth quarter at or below the low end of its June 30 guidance. At the same time, bank stocks were mostly higher in premarket trading Tuesday as the US 10-year Treasury yield holds steady around the 2.79% level. In corporate news, growing tensions within the Carlyle Group reached breaking point last week with the board deciding it had lost confidence in CEO Kewsong Lee. Here are some other notable premarket movers: Novavax (NVAX US) tumbles 33% in premarket trading as analysts see the quarterly revenue miss and guidance cut as disappointing, while remaining positive on the vaccine-maker’s longer term outlook. GoodRx (GDRX US) shares soar by 50% in premarket trading, poised for their biggest jump since September 2020. The telemedicine firm’s 2Q results were good but more important for the company is the resolution of a dispute between its pharmacy benefit management customers and grocer Kroger, as this will “dramatically” improve visibility, analysts say. Upstart (UPST US) shares slump 12% in premarket trading, as Barclays says investors should brace themselves for a “lengthier period of macro-driven instability” after the consumer finance company forecast revenue for the third quarter below analyst expectations and withdrew its full-year guidance. Lemonade (LMND US) shares rally 16% in premarket trading after the insurance company posted a smaller-than-expected quarterly loss and issued a full-year revenue forecast that includes Metromile. Jefferies says the beat was largely driven by reduced growth spend. Palantir Technologies (PLTR US) falls 1.2% in premarket trading after being cut to sell from hold at Deutsche Bank, which says that 2Q results leave “little to hang our hat on.” Tandem DiabetesCare (TNDM US) drops 1.8% on low volume after the firm was double-downgraded to underweight from overweight at Wells Fargo, with the broker saying consensus estimates for the insulin pumps-maker are too high. Bed Bath & Beyond (BBBY US) rallied 14% in premarket trading, rising along with fellow meme stocks, as the home-goods retailer is set to extend its rising streak for a tenth session - longest since 2007. Avaya Holdings (AVYA US) shares sank 17% in premarket trading, after the company said there is substantial doubt about its ability to continue as a going concern. Third-quarter loss was wider than the average analyst estimate, while adjusted Ebitda and gross margin missed Focus now turns to the question of whether US inflation may have peaked in June as economists project the biggest drop in more than two years for July's CPI print due tomorrow. A blowout reading for nonfarm payrolls has eased worries about a recession, while corporate performance remains stellar. "Until inflation abates and the Federal Reserve rebalances its priorities away from inflation and toward growth, tempting rallies are likely to remain unsustainable," Seema Shah, chief strategist at Principal Global Investors, wrote in a note to clients. European stocks also fell, the Stoxx 600 declining 0.3%, with almost every sector in the red outside of banks, insurers and energy producers. Travel, tech and chemicals are the worst performing sectors. FTSE 100 is flat, but outperforms regional indexes. Here are some of the biggest movers in Europe today: European semiconductor stocks slip after US memory-chip maker Micron reduced its 4Q sales forecast, citing challenging market conditions. IWG shares drop as much as 18%, the most intraday since March 2020, with RBC saying the flexible office firm’s 1H results look “light.” Zur Rose was cut to equal-weight from overweight at Barclays, which cited balance sheet concerns and “less conviction” on near-term growth acceleration. Shares drop as much as 12%. RPS shares jump 75% to 205p after the environmental consultant received a takeover offer from Canada’s WSP at a price of 206p/share, or enterprise value of around GBP625m. Abrdn shares slump as much as 10%, the most since April 2020, after the investment firm reported revenue that missed analyst estimates and delayed ambitions for sales growth. Dufry gains as much as 4.4% after the Swiss duty-free store operator reported what RBC called a higher-than-expected set of 1H results with continued top-line recovery in July. Kindred shares drop as much as 6.6%, the most intraday since June, after Bank of America initiated coverage of the Swedish online gambling firm at underperform with a SEK88 PT, saying its recovery could prove tougher than expected. PostNL shares fall as much as 7.3% after Jefferies downgraded the stock to hold from buy citing “slower parcel volume growth, and rising fuel and labor costs.” CEZ jumped as much as 3.4% after the Czech utility increased its profit guidance for the second time this year, citing surging electricity prices. Earlier in the session, Asian stocks slid after Hong Kong damped speculation about looser stamp duty rules and China ordered a probe of the $3 trillion trust industry; meanwhile investors awaited this week’s US inflation report for cues on the pace of monetary tightening, while assessing the ongoing corporate earnings season. The MSCI Asia Pacific Index fell as much as 0.6%, as technology shares followed US peers lower after a weak revenue forecast from Nvidia. Japanese stocks underperformed the rest of the region, weighed down by Tokyo Electron on disappointing earnings. Asian equities have been struggling for direction as investors remain wary over the prospect of faster US rate increases to curb inflation as well as rising geopolitical tensions. Fresh Covid lockdowns in China also added to the cautious sentiment. Asian emerging markets “remain too close to ground zero when it comes to the negative impacts of the trifecta of higher US interest rates, a slowing global economy and a deteriorating US-China relationship,” said Olivier d’Assier, head of APAC applied research at Qontigo. “These pressures are likely to keep investors in those markets on the defensive for the time being.” Hong Kong stocks dropped for a second day, erasing earlier gains as the government said it had no plans to relax the stamp duty on home purchases. Markets in Singapore and India were closed for a holiday on Tuesday. Japan stocks dropped as investors reacted to the discouraging earnings from major US tech companies while also weighing the domestic results.  The Topix Index fell 0.7% to 1,937.02 as of market close in Tokyo, while the Nikkei declined 0.9% to 27,999.96. Tokyo Electron Ltd. contributed the most to the Topix’s decline with its 8.2% tumble, as the maker of electronics short of operating income estimates and investors reacted to Nvidia’s quarterly results. Out of 2,170 shares in the index, 1,408 fell, 667 rose while 95 were unchanged. “Stocks linked to earnings are affecting the move today,” said Makoto Furukawa, chief portfolio strategist at Mitsubishi UFJ MS Securities. “Long-term investors will not be taking much of an action as they will be waiting for the CPI data, though there may be some mid-to-long term investors that could be paying close attention to the financial earnings announcements, but not much of an major trend overall.” Australia's S&P/ASX 200 index rose 0.1% to close at 7,029.80, boosted by strength across consumer discretionary and real estate shares. The financials sub-gauge declined, dragged by shares of National Australia Bank after the lender updated its cost outlook for the full year.  Meanwhile, Australia’s consumer sentiment tumbled as surging inflation, interest-rate increases, and falling home prices weighed on the outlook for households.  In New Zealand, the S&P/NZX 50 index rose 0.4% to 11,753.48 In FX, the dollar retreated for a second day, with Group-of-10 currencies broadly in a holding pattern ahead of US CPI data on Wednesday.  Norwegian and Danish currencies outperform peers, while the Australian dollar underperformed peers, weighed by lingering fears on the outlook for global growth. The Bloomberg Dollar Spot Index fell 0.2% after declining 0.2% on Monday: “Even if inflation turned out lower than expected in July, we think the body of evidence justifies staying the course of swift monetary tightening,” wrote Danske Bank analysts in a note to clients on Tuesday. “If short-term inflation expectations do not moderate over the coming months, the Federal Reserve will likely need to hike more and extend the hiking cycle into next year.” That should support the dollar, while US LNG exporters are poised to benefit as heating season approaches, they wrote. Expect EUR/USD to drop to 0.95 in 12 months EUR/USD gains 0.3% to 1.0228. Large expiries in the pair include 1.0185 (EU1.41b), 1.0300 (EU1.27b) GBP/USD rises 0.2% to 1.2108: Bank of England Deputy Governor Dave Ramsden told Reuters that the BOE would continue to sell gilts accumulated under its bond-buying programs even if officials eventually cut rates AUDUSD fell as much as 0.3% after data show growing pessimism among Australian households despite business conditions and sentiment remaining strong. The pace of the currency’s decline has softened as there’s “some acceptance now of the tightening cycle,” says Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong. “The Aussie looks to be trading more of its own accord, less of a global high beta at the moment” USD/JPY little changed at 134.93 In rates, Treasuries were cheaper across the curve ahead as US auctions resume with 3-year note sale, to be followed in next two days by 10-year note and 30-year bond offerings. US stock index futures near day’s low with focus on earnings. Yields were cheaper by more than 4bp across belly of the curve, elevating 2s5s30s fly by around 3bp on the session; 10-year yields at 2.795% trade broadly in line with bund performance over European session and slightly underperform gilts. $42BN 3-year note sale at 1pm ET is first coupon auction of the August-October quarter; $35b 10-year and $21b 30-year follow Wednesday and Thursday. WI 3-year yield around 3.165% is above auction stops since 2007 and ~7bp cheaper than last month’s, which stopped 0.5bp through. The UK long-end shrugs off comments by BOE’s Ramsden that the central bank would sell gilts even if interest rates are reduced. In commodities, WTI crude futures trade around $90 a barrel; gold slightly firmer around $1,790. Base metals are mixed: LME aluminum outperforms while tin lags. Bitcoin is underpressure after yesterday's strong performance, action that has pushed the crypto back below USD 23.5k. To the day ahead now, and data releases from the US include Q2’s preliminary nonfarm productivity and the NFIB’s small business optimism index for July. Otherwise, earnings releases include Coinbase. Market Snapshot S&P 500 futures down 0.3% to 4,128.00 STOXX Europe 600 down 0.3% to 437.82 MXAP down 0.3% to 160.23 MXAPJ little changed at 524.51 Nikkei down 0.9% to 27,999.96 Topix down 0.7% to 1,937.02 Hang Seng Index down 0.2% to 20,003.44 Shanghai Composite up 0.3% to 3,247.43 Sensex up 0.8% to 58,853.07 Australia S&P/ASX 200 up 0.1% to 7,029.83 Kospi up 0.4% to 2,503.46 German 10Y yield little changed at 0.91% Euro up 0.3% to $1.0232 Brent Futures down 1.3% to $95.38/bbl Brent Futures up 1.3% to $97.38/bbl Gold spot up 0.2% to $1,792.75 U.S. Dollar Index down 0.31% to 106.11 Top Overnight News from Bloomberg FBI Raid Focused on Material Trump Brought From White House China Drills Show Preparation for Possible Invasion, Taiwan Says China Seizes on Pelosi Visit to Set ‘New Normal’ for Taiwan China Orders Surprise Audit of $3 Trillion Trust Industry China Corruption Probes Stem From Anger Over Failed Chip Plans Goldman Analyst Calls Out ‘Deeply Disappointing’ Energy Bets Alibaba Reduced Workforce by Nearly 10,000 in Three Months SoftBank Pledges Sweeping Cost Cuts After $23.4 Billion Loss Micron Technology to Invest $40b in US Through End of Decade Carlyle’s Billionaire Founders Reached a Breaking Point With CEO ConEd Asks Brooklyn, Queens to Reduce Power Amid High Heat Google Search Outage Affects Tens of Thousands of Users Franklin Templeton Appoints Nomura Veteran as Head of China What-If DC War Game Maps Huge Toll of US-China Clash Over Taiwan Boeing to Restart 787 Deliveries Within Days on FAA Approval Top China Analyst Sees Stocks in Limbo as GDP Growth Slows to 2% Trump Turns to Lawyer on Bannon’s Losing Case for DOJ Talks A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks eventually traded mostly higher but with gains capped as the region focused on key earnings releases and initially followed suit to the indecisive performance in the US. ASX 200 was just about kept afloat by strength in tech and miners although gains were limited by weakness in financials including NAB despite posting earnings growth as it also flagged higher costs. Nikkei 225 was the laggard with the worst performing stocks pressured by earnings releases including SoftBank which suffered a record quarterly loss and warned of a potentially dramatic reduction in its headcount. Hang Seng and Shanghai Comp were indecisive in early trade with participants tentative amid lingering geopolitical concerns and  after a Chinese press report suggested that interest rate and RRR cuts are unlikely. The Hang Seng Index later strengthened with property names underpinned after reports that Hong Kong is considering waiving double stamp duty for mainland Chinese homebuyers. However, these reports were later refuted by the government. Top Asian News Recession Watch Spreads as Global Curves Follow Treasuries Trend Felixstowe Dockers Offered £500 Bonus in Bid to Stop Strike China’s Small Caps Defy Market Slump to Trounce Blue-Chip Stocks Hong Kong Has No Plan to Cut Stamp Duty After Ip Floats Idea Treasuries Hold Rebound, Australian Bonds Eke Out Advance Tokyo Taxi Fares Set for Rare Hike as Inflation Pressures Mount European bourses are under modest pressure, Euro Stoxx 50 -0.5%, but remain relatively rangebound and lack conviction with catalysts thin. Stateside, futures are similarly rangebound though are posting incrementally more mixed/flat performance, ES -0.1%. Pressure has been seen following a downbeat Q4 guidance update from Micron (-5% pre-mkt), pressuring the NQ -0.4% and European tech performance. Micron (MU) sees Q4 revenue at or below the low end of June 30th guidance; expects challenging market environment in Q4 2022 and Q1 2023. Additionally, has announced USD 40bln investments in leading-edge US memory manufacturing; Micron expects to begin production in the second half of the decade, ramping overall supply in line with industry demand trends. Top European News Barclaycard said UK consumer spending rose 7.7% Y/Y in July which was boosted by clothing, beauty and staycations, while it added that UK consumers are starting to cut back on overseas travel, eating out and drinking to offset higher outgoings. Poland’s Kaczynski (de-facto leader) has pledged they will not undertake any further steps in adhering to the EU Commission’s rule of law demands regarding unlocking grants/loans, saying “..shown maximum goodwill, but concessions have yielded nothing”. Will, if necessary, veto EU initiatives and seek to remove President von der Leyen. (Politico) Recession Watch Spreads as Global Curves Follow Treasuries Trend Continental Sees Better Second Half on Rising Auto Output Ukraine Latest: Zelenskiy Lauds Biden Over ‘Unprecedented’ Aid UK Airfares Up 30% as Bumper Demand Runs Up Against Flight Caps Searing Temperatures Across Europe Trigger Weather Warnings FX DXY briefly dipped under 106.00 from a 106.40 peak despite a lack of news flow. Sterling saw some downside on commentary from BoE Deputy Governor Ramsden, EUR/USD eyes several notable OpEx ahead of the NY cut. Non-US Dollars are firmer to varying degrees with the aid of the softer Dollar. USD/JPY found some resistance by its 50 DMA (135.14) early in the session and trades just under 135 awaiting the next catalyst Fixed Income Sonia/Gilts supported on BoE's Ramsden before reverting to a 'hawkish' bias amid broader EGB/UST pressure. Catalysts are thin with the initial upside fizzling out in short order though seemingly unaffected by strong/poor UK and German supply respectively. US yields are incrementally stepper though the broader inversion remains while BTP-Bund spread holds around 210bp. Commodities Crude oil futures have drifted off best levels; however, pronounced upside seen most recently on Russia reportedly suspending oil exports via southern-section of the Druzhba pipeline. Spot gold eyes USD 1,800/oz to the upside amid the softer Dollar. Base metals are mixed with the breadth of the market also narrow, but LME copper reclaimed a footing above USD 8,000/t. Norway has drawn up plans to ration electricity exports in a move which could stoke fears of energy shortages in Europe and the UK this winter, according to The Telegraph. China's NDRC is to lower retail prices of gasoline and diesel by CNY 130/tonne and CNY 125/tonnes respectively as of August 10th; 4th consecutive decline in prices. Russia suspends oil exports via southern-leg of the Druzhba pipeline amid transit payment issues, via Reuters citing sources. US Event Calendar 06:00: July SMALL BUSINESS OPTIMISM 59.9, est. 89.5, prior 89.5 08:30: 2Q Unit Labor Costs, est. 9.5%, prior 12.6% 08:30: 2Q Nonfarm Productivity, est. -4.7%, prior -7.3% DB's Jim Reid concludes the overnight wrap Yesterday was the quietest day of the month after last week’s drama in Taiwan and the stronger than expected US data that put a more aggressive Fed back in play and created a lot of bond volatility and much flatter curves. There were still some big swings but it didn't feel as frantic or busy. This temporary calm could clearly all change tomorrow with the latest US CPI so maybe the next 30 hours will be the calm before the storm or perhaps herald in the real start of the dog days of summer. I'm going on holiday to Cornwall next week and after around 2 months where there's been no rain here in the UK, the first drops of rain for some time seem to be dropping on Cornwall for the first day of our holiday and then carrying on through the week. Typical. At the age of 48, I bought my first ever wetsuit yesterday for paddle boarding and the like. If you don't vote for me in next year's II survey I'll send you a picture! Anyway, having said that it was calmer yesterday, that's still relative as the NASDAQ and S&P 500, having been up around 1.5% and 1% respectively early in the session, ended up closing -0.12% and -0.1% respectively. The former was up +20% from its June lows at one point but Nvidia's preliminary results and outlook led to the stock falling -6.3% and slowly taking the market down with it. Basically a good old fashion profit warning for the biggest chipmaker. As I type, US stock futures are edging back up with contracts on the S&P 500 (+0.23%) and NASDAQ 100 (+0.25%) slightly higher. In Europe, the market closed while the S&P 500 was still up just over half a percent so the STOXX 600 (+0.74%), the DAX (+0.84%) and the CAC 40 (+0.80%) were all still able to post solid gains of their own. This morning though DAX futures are -0.17% lower. There was good news yesterday though. One of the main stories was the New York Fed’s latest Survey of Consumer expectations for July, which found that inflation expectations were declining at the 1-year, 3-year and 5 year-horizons. That’ll be music to the Fed’s ears, since if that trend continues then it means that the Fed may not have to be so aggressive in hiking rates, since one of their big fears is that higher inflation expectations will lead to a self-fulfilling prophecy of higher actual inflation as firms adjust prices and workers bargain for wages accordingly. Indeed, the numbers were pretty good across the board, with 3-year expectations down to 3.2% (from 3.6%), which is the lowest reading for that measure since April 2021. That said, when it comes to the Fed’s next meeting in just over 6 weeks, the decline in expectations didn’t seem to move the dial for investors, and futures are still pricing in a 75bps move as more likely than not following Friday’s very strong jobs report, with the hike priced in for next time priced at around 68.5bps down a basis point. Sovereign bonds rallied steadily all day further out the curve so it was hard to say there was a definite trigger even if the inflation expectations story fitted the narrative. Yields on 10yr Treasuries fell c.-7bps to 2.746%, but with 2s10s flattening a further -6bps to -46bps, which is the most inverted it’s been since 2000. It was much the same story in Europe too, since the German 2s10s curve flattened by -3.2bps to close at its flattest level so far in 2022. And whilst yields fell back there as well, with those on 10yr bunds (-5.7bps), OATs (-5.0bps) and gilts (-9.7bps) all moving lower, that went alongside a fresh widening in peripheral spreads after a good run over the last week, with the gap between 10yr Italian yields over bunds up by +7.6bps to 213ps. Elsewhere we got some further concerning news on the energy side yesterday, with Norway’s energy minister saying that they would be prepared to limit power exports if required, with refilling reservoirs to be prioritised over power production. This is a potentially significant development, since Norway is a key exporter of electricity to Europe, and this comes on top of the existing energy disruption thanks to Russia’s invasion of Ukraine, as well as the current European heatwave that has further bolstered demand. In fact, French power prices for 2023 hit a record €543 per megawatt-hour yesterday, and their German counterpart also surged to €406 per megawatt-hour. For context, exactly a year ago today those prices closed at €81.70 and €79.14 respectively, so we’re talking about increases of more than five-fold over the last 12 months. And that also came amidst a fresh rise in oil prices, with Brent crude back up by +1.82% to $96.65/bbl, while WTI rose +1.97% to $90.76/bbl. Another negative story of late have been the growing tensions between the US and China over Taiwan, with China continuing military exercises beyond their original conclusion on Sunday into yesterday. US President Biden said that he didn’t think China was “going to do anything more” but did say “I’m concerned that they’re moving as much as they are”. However, there was some more positive news for Biden domestically, as with less than 3 months to go until the mid-term elections now, FiveThirtyEight’s models are giving the Democrats their best chances of retaining the House and the Senate in recent months. For the Senate, they give the Democrats a 59% chance of retaining control (up from 47% a month earlier), and for the House they put that at 20% (up from 13% a month earlier). That comes amidst a fresh legislative win for Biden over the weekend, with the Senate passing the Inflation Reduction Act, which the House is expected to take up later in the week. Asian equity markets are struggling to gain traction on a quiet morning. The Nikkei (-0.85%) is lagging in early trade but the Hang Seng (+0.77%) has pared initial losses on news that double stamp duty on the Island may be waived for Chinese homebuyers. Over in Mainland China, stocks are rebounding as the Shanghai Composite (+0.31%) and the CSI (+0.17%) moved back into positive territory whilst the Kospi (-0.03%) is oscillating between gains and losses as I type. Elsewhere, early morning data showed that Australia’s NAB Business Confidence rose 5 points to +7 in July from the previous month, while business conditions advanced 6 points to +20 points in the same period, despite rising interest rates and high inflation. These were above expectations. To the day ahead now, and data releases from the US include Q2’s preliminary nonfarm productivity and the NFIB’s small business optimism index for July. Otherwise, earnings releases include Coinbase. Tyler Durden Tue, 08/09/2022 - 08:01.....»»

Category: worldSource: nytAug 9th, 2022

"Very Crooked Numbers": Biden Admin Accused Of Fabricating Low Gas Demand Data To Hammer Price Of Oil

"Very Crooked Numbers": Biden Admin Accused Of Fabricating Low Gas Demand Data To Hammer Price Of Oil Something very odd is taking place in the oil market: on one hand, when it comes to physical, buyers can't seem to get enough: as we noted earlier Saudi prices for Asian buyers just hit a new record high, a clear indicator of relentless demand for physical oil no matter the price... ... and yet at the same time, oil prices have tumbled today amid continued fears that demand for oil, and especially gasoline, will collapse when the US, Europe and the UK slumps into a recession... or already has. As our friends at ForexLive point out, the trigger behind today's plunge in oil prices is gasoline demand, which as we noted yesterday, showed that for July, gasoline demand (on a trailing 4 week basis) slumped below 2020 levels. Intuitively, ForexLive cautions, "that doesn't make sense. Yes, gasoline prices are much higher than 2020 but the world was in the midst of a pandemic and far more people were working from home in the summer of 2020." But the data is what it is and yesterday's numbers were soft once again at 8540k. That was the main reason for the drop in oil yesterday and the decline through $90 today for the first time since the start of the Ukraine war. Next, ForexLive's Adam Button runs through a quick list of factors laying out the arguments for both sides: Why it might be true: 1) Elasticity: Gasoline is traditionally one of the least-elastic commodities -- people need to drive. However there's a limit and we may have it it in early July as gasoline cracks below out and US prices hit record highs. Around the July 4th weekend there were clear signs of demand destruction. Perhaps we hit a breaking point and drivers are cutting discretionary miles whereever possible. 2) Efficiency: There's no doubt that cars are getting more efficient and people are switching to EVs and hybrids. That's a secular trend that will weigh on gasoline demand in the long term. But compared to a year ago? The auto cycle is a long one and it will chip away at demand, but at a slow pace. 3) Flying more: The idea is that people and families are flying more this summer and driving less. Intuitively it makes sense. People were stuck driving to nearby locations for vaction for two years and now are branching out further. We've all see the nightmares at airports and flying is as busy as ever. Is that killing driving demand? Possibly but given that so much of driving is commuting and errands, it's hardly believable that it could account for a 10% decline in demand. 4) Running on empty: According to GasBuddy, US retail gasoline prices have now fallen for 49 straight days. Following the gasoline price shock in late June, we could be seeing a behaviour shift in drivers where they are waiting longer to fill up gas tanks. That has been the right move for the past seven weeks and the drawdown in collective gas tanks could temporarily be masking demand. 5) Commercial pumps: The EIA data measures commercial gasoline demand -- so from gasoline stations rather than consumers -- so similar to the above, we could be seeing gasoline stations running with less inventory. That makes sense because right now the value of inventory is falling daily. Again, this would only be masking demand. 6) A sign of recession: All the talk of recession may have people cutting back on driving and spending. We've heard from Visa lately that's not the case but weekly gasoline demand is some of the most up-to-date data out there. But if gasoline demand is falling this rapidly, what does it say about the rest of the economy? 7) Price is falling: Both crude and gasoline prices are falling and today oil is at the lowest since February. Could implied gasoline demand data really be fooling the market? There are reports on physical tightness and paper crude could be liquidating but I have a hard time believing that US demand figures are a major reason for oil weakness. Why it might not be true: 1) EIA data is subject to major revisions: The EIA does its best to get out petroleum data weekly but it's a tough job and subject to all kinds of assumptions. HFI Reserach notes that the data is subject to big revisions when the month numbers are finally released. So traders may be simply looking at bad data that will be adjusted. 2) US gasoline storage remains at a five year low: Given cracks and pressure on to boost gasoline output, refiners have been working hard this summer. Combined with supposed lower demand, inventories should be moving up rapidly. Despite some progress, inventories are basically flat in the last month and still at five-year lows. This is another HFI chart and their explanation is well-worth reading. 3) Refiners aren't seeing a slowdown: US refining giant Valero was asked about falling gasoline demand last week and Gary Simmons, Chief Commercial Officer, had this to say: "I can tell you, through our wholesale channel there is really no indication of any demand destruction... In June, we actually set sales records. We read a lot about demand destruction and mobility data showing in that range of 3% to 5% demand destruction. Again, we're not seeing it in our system." 4) Alternate data doesn't line up: GasBuddy tracks retail gasoline demand at the pumps in the US and they showed a 2% rise in gasoline demand last week while the EIA showed a 7.6% drop. Morevoer, last week was the strongest demand of the year from GasBuddy. Another data point shows vehicle miles traveled from the US Federal Highway Administration. While it's only though May, it shows vehicle miles traveled up materially year-over-year through May. We'll get the June data in the middle of this month. Conspiracy: Some are have gone so far as to accuse the Biden administration of explicitly "cooking the numbers" to depress the price of oil. As a reminder, in late-June the EIA shut down reporting for several weeks, supposedly due to a server malfunction; however since they have returned, the gasoline demand data has been consistently bad. "Maybe there's an issue with reporting or maybe it's a conspiracy", according to ForexLive. But it's not just same anonymous twitter randos screaming foul: last week Bank of America energy strategist Doug Legate published a note (available to pro subs in the usual place) titled the "fall of gasoline demand appears grossly exaggerated" in which he noted that last week we finally got the post July 4th rebound he suggested could follow the 4th of July holiday. "For the week ending July 22nd, implied gasoline demand rebounded to 9.2 million b/d - a 1 million b/d increase vs the last two week average, and the second highest level of 2022." Curiously, right after that, however, we got a steep drop. So steep, in fact, that Piper Sandler global energy strategist at Piper Sandler, yesterday called the data "crooked": "What is more bearish to the market is this notion that gasoline demand is falling away; we think that's a very mistaken notion based on very crooked numbers from the [DOE] weekly data set... The way that the numbers are computed leaves significant room for error. We are supposed to believe that in July, in the middle of driving season we are only using 8.6 million barrels per day. That would be down half a million barrels a day from May of this year; that would be below the Covid low of 2020. So we ask all the refiners, we ask all the retailers, we ask everybody that reported earnings this season. Every single one of them tells you that their sales are not down materially from even pre-covid days. Some report record high sales." If there is indeed "crooked" data, it comes at a strategic time: just as Brent tumbled below the 200DMA, in the process triggering systematic sell orders which push the notoriously momentum-chasing also community short the commodity. Alas, as Adam Button concludes, "at the end of the day traders have to trade what's in front of them. Right now it's a crude chart that's breaking support after a major period of consolidation -- that's not good. The calls for a recession are growing louder crude demand has a long history of following global growth. There are supply factors that will eventually be bullish -- like the SPR releases ending in October -- but that's months away and OPEC is still adding some barrels." Finally, for those wondering to what lengths the Biden admin would be willing to go to hammer the price of oil, and gas at the pump, sharply lower ahead of the midterms, we remind you what is going on with the US strategic midterm petroleum reserve which has been drained by 110 million barrels since the start of the Ukraine war (with much of it going to China) to levels last seen in May 1985. One better hope the US doesn't encounter a real emergency in the next few weeks, beyond more than just Biden's approval rating hitting an all time low. Tyler Durden Thu, 08/04/2022 - 14:03.....»»

Category: smallbizSource: nytAug 4th, 2022

Blain: Apple"s Bond Was A Critical Moment - Sell Euro, Buy Dollars!

Blain: Apple's Bond Was A Critical Moment - Sell Euro, Buy Dollars! Authored by Bill Blain via, “Yesterday the bird of night did sit, even at noon-day, upon the market place – hooting and shrieking.” In bonds there is truth: Apple’s Jumbo $5.5 bln corporate bond deal hints of a firmer market to come. A clear divide between US Recovery and European Slowdown is increasingly apparent – a weaker Euro will further add to European problems. Of all the signs and portents that drive the machinations of markets, perhaps the most significant yesterday was Apple tapping the corporate bond market for a 4 tranche $5.5 bln raise of AAA Bonds. In bonds there is truth…. It was a moment of tactical genius from the bookrunners, persuading Apple the time was ripe for a jumbo bond deal likely to set the whole market tone. The order book was over 4 times oversubscribed – hinting a large part of the bond market has a distinctly positive bull view on the US$ bonds and interest rates. Yesterday I was commenting on how markets traditionally snooze through the summer and reopen in early September with a post-summer bond issue deluge – but that’s apparently moved forward! Apple was not the only name in the market. There is a growing US corporate bond calendar – Bloomberg say $30 bln set to issue this week! That will a great relief to US corporate treasurers who were beginning to panic over how they would refinance debt if the corporate debt market was closed due to rising interest rates. The Apple deal shows the corporate bond market is very much open, and that’s a massively positive signal for the whole US economic outlook. (Remember it was a seizure in corporate short-term money markets and bonds that effectively triggered the liquidity crisis of 2007 that led to the GFC the following year!) Apple has been quite open about using the proceeds to finance its stock buyback programme and dividends, which is basically what corporates will do when interest rates are so low its more effective to retire equity with debt and leverage up while not building new plant or hiring more workers. Many less sound, non-investment grade junk borrowers will be figuring out how to borrow more to push their stock price higher! (I hate stock buybacks! They distort the workings of capitalism.) In early July – just before my summer break – I was warning about the risks of a poorer than expected US earnings season further denting business and market sentiment. Didn’t happen. Earnings came in better than expected. I also warned how markets could turn from bear to bull very swiftly if the right set of circumstances concurred: a stronger than expected US economy, stronger earnings and a diminishing inflation threat. Sure enough, after the Fed hiked by 75 bp, the market took it as buy signal, reinforced by Jay Powell on the wires saying we were close to the natural interest rate… for which he took considerable stick. What we now have is a very much decorrelated global economic outlook: a potentially resurgent US market and economy, more reasons to binge on the dollar versus an increasingly dismal European outlook. It will become a negative feedback loop for energy-strapped Europe – power will get progressively more expensive as the Euro continues to weaken, and further unwinds Europe’s incomplete union. Markets are all about the narrative – and you can’t beat down a good story. In the second half of July, a US market recovery started to come together – the story selling itself as stocks staged their best month in years! The equity-punditry came out in force calling a new bull market and new highs before year end. Classic quote from a repressed bull: “When bad news is good news, and good news is rampant, time to buy”. Over the last few days we’ve seen the US Bull narrative successively reinforced by: Economic numbers – from employment, manufacturing, to consumer spending – all come in stronger than expected, diminishing the likelihood the US is slipping into a real recession. (Technically 2 quarters of declining GDP means a recession is underway – but why look back! Officially it takes the National Bureau of Economic Research to say a recession is underway – and the market is too politically charged to accept that.) 10-year bond yields have fallen from 3.10 to 2.50%, on signs the inflation shock has been absorbed in manufacturing prices (the ISM report showed declining prices) and Fed comments hinting rate rises will be more constrained. An increasingly strong narrative that inflation resulting from short-term exogenous factors (energy, supply chains, etc), rather than economic fundamentals, should not be addressed solely by interest rate rises. The risks of higher interest rates trigger recession are too great. Off course, and you knew there was a but coming… nothing is ever so simple. The bears point to thin summer markets reflected in low volumes and wild price swings. They say there are still risks still to be unwound from over-frothed markets, and a natural rate of interest is still be found after the years of ultra-low rate distortions. The situation in Europe is far more… frightening.. The US faces the usual series of intangible market fears, wobbles and uncertainties. Normal stuff for any market watcher….. In contrast, there is nothing uncertain about the very real economic crisis facing Europe. The economic GDP numbers in Europe have been more positive – but largely on the back of seasonal factors, and the fact Europeans know the Euro doesn’t go so far when they go abroad, thus it’s been a bumper holiday season in Spain, Italy and France. Consumer confidence is lower than during the worst of the Covid Crisis – when at least there was the illusion the European Union was united to find a solution. Now… not so much certainty Europe will still coalesce round a common solution. When US manufacturing ISM prices are falling, hinting lower inflation, European PMIs (purchasing manager orders, a sign of anticipated demand) have crashed to peak pandemic levels hinting massive slowdown to come. The very real issue is energy prices. As the Russian turn down supply – gas prices have spiked. Germany could tumble off a cliff. Energy security is in tatters. Energy cost hikes are scything through the whole economy. The economy has no idea how to cope with massive swinging cuts in power expected later this year. German retail sales have fallen nearly 9% y-o-y. Germans demand the heads of Central Bankers when inflation is low single digits – now its 8.5%! Meanwhile… Italy is Italy. France is France. And S&P say: “Eurozone manufacturing is sinking into an increasingly steep slowdown, adding to the recession risk.” Simple call… Sell Europe, Buy US. Oh.. you already did. Tyler Durden Tue, 08/02/2022 - 12:45.....»»

Category: worldSource: nytAug 2nd, 2022

Consumers Change Shopping Habits as Inflation Worsens

(Tuesday Market Open) Walmart (NYSE: WMT) expressed worries over inflation last night, causing it to tumble in premarket action and pull equity index futures lower. Potential Market Movers Walmart surprised investors by slashing its Q2 and full-year earnings guidance due to rising inflation, and its stock plunged more than 9% in today’s premarket trading. As a component of the Dow Jones Industrial Average ($DJI), the Walmart news pulled Dow futures down 116 points, or -0.36%, ahead of the opening bell. The Walmart news also dragged fellow retailer Target (NYSE: TGT) 5.22% lower in premarket action. The news harkens back to last quarter when Walmart and Target warned about high inventories, they needed to unload at lower margins to be ready for the all-important back-to-school and holiday shopping seasons. The latest indicators also reflect changing consumer behavior as they focus on lower-cost items. Despite the inflation talk, earnings news was mostly positive this morning. Coca-Cola (NYSE: KO) rose 1.06% in premarket trading after reporting better-than-expected earnings and revenue despite rising costs. McDonald’s (NYSE: MCD) beat earnings estimates but missed on revenues as the company is still writing off losses related to ending its operations in Russia. The stock increased 0.52% in premarket action. United Parcel Service (NYSE: UPS) beat on top- and bottom-line numbers but fell 2.25% in premarket trading as shipping volumes have decreased. 3M (NYSE: MMM) topped estimates for revenues and earnings. It reported that its earplug business was going into Chapter 11 and that it plans to spin off its health care business. MMM was up 4% premarket. General Motors (NYSE: GM) missed on earnings despite better-than-expected revenues as the company still struggles to get computer chips to its assembly lines. Raytheon (NYSE: RTX) beat on the bottom line but missed on the top as its defense unit performed shy of expectations. The company hopes to bounce back as itrestocks weapons after shipments to Ukraine. RTX was down 1.70% before the opening bell. At the start of an intensive week of earnings announcements, three major companies reported after Monday’s close and were positioned to move in premarket trading this morning: NXP Semiconductors (NASDAQ: NXPI) reported lower-than-expected earnings despite revenues coming in above consensus. It also raised its forward guidance and gained 1.85% after the market close. F5 (NASDAQ: FFIV) beat on top- and bottom-line numbers prompting the cloud security company to rally 6.85% in afterhours trading. Whirlpool (NYSE: WHR) was able to beat on earnings estimates despite missing on revenues. The stock rallied 1.57% in extended ...Full story available on»»

Category: earningsSource: benzingaJul 26th, 2022

What the Crash of the Euro Means for American Tourists

A handful of American consumers–especially tourists visiting Europe–stand to benefit from the U.S. dollar’s recent strengthening against the euro, but the wider impact on the U.S. economy may not be as positive. The euro, the single currency of much of the European Union, has been tumbling over the last year-and-a-half. Following a 20% decline in… A handful of American consumers–especially tourists visiting Europe–stand to benefit from the U.S. dollar’s recent strengthening against the euro, but the wider impact on the U.S. economy may not be as positive. The euro, the single currency of much of the European Union, has been tumbling over the last year-and-a-half. Following a 20% decline in the European currency against the greenback since the beginning of last year, one dollar buys roughly one euro for the first time in two decades. [time-brightcove not-tgx=”true”] The drop in the euro’s value results from recent global economic challenges–a war in Ukraine, supply-chain shocks, inflation and pandemic inspired stagnation, all of which are hitting Europe much harder than the U.S. Even so, the implications of the currency move will reverberate across America and the E.U. for years, experts say. Here’s what you need to know. Good News For American Tourists Europe and the U.S. are big trading partners, meaning that what happens in one economy will have a knock-on effect on the other. The dollar’s strength means imports from the eurozone will be cheaper for Americans, and those savings could add up to a significant amount. In 2019 U.S. imports of goods and services from the E.U. totaled $598 billion, according to U.S. government data. The bulk of that came from the more prosperous economies such as Germany, France, and Italy, with the top imports being pharmaceuticals, machinery, vehicles, medical devices, as well as food and alcohol such as wine and beer. Given American consumers’ propensity to spend, one might expect imports from Europe to surge. America’s consumers will feel some relief in their pocket books as well. At the same time, a weaker Europe could hit American exports, and in turn, that may hurt American jobs. Again, the numbers are big. The U.S exported $468 billion of goods and services to the E.U. in 2019, according to the Office of the U.S. Trade Representative. The big categories included airplanes, energy, machinery, and medical devices. A drop in exports of those items might lead to layoffs in the U.S. in those industries and related ones. Americans visiting Europe this summer—those who can get past the travel chaos—will get more for their money, which may benefit European stores, hotels, bars and restaurants. For those who have quite a bit more money to spend, the weak euro could mean the possibility of purchasing a dream holiday home in Tuscany. European travelers to the U.S., of course, will have less spending power. There is an opportunity for some bargains for Wall Street. “I am suggesting to U.S. private equity funds and corporations to look at Europe for assets, including real estate,” says Marc Chandler, chief market strategist at Bannockburn Global Forex. In simple terms, Europe is where you can now get a lot more for your money. There’s more good news: There is little chance of the weakness reversing anytime soon. Chandler sees little chance of the ECB intervening to halt the euro’s drop. “I think there are two chances: slim and none, and slim just left town,” he says. A Tale of Two Central Banks The euro’s decline is partly down to the different approaches central banks on opposite sides of the Atlantic have taken, and how investors have responded. Investors can get far better interest on their risk-free U.S. dollar deposits than on euro-denominated deposits, says Steve Blitz, chief U.S. economist at macroeconomic research firm TS Lombard. Investors in three-month Treasury Bills get an annualized interest rate of 2.3%, which Blitz expects will shortly jump to 4%. That compares to less than zero interest for the equivalent investment in German euro-denominated deposits. “You can make a lot more money with no risk by holding dollars,” he says. The higher rates in the U.S. have come as the result of the Federal Reserve waging an aggressive war on surging inflation, which recently hit 9.1%. Even though the Fed has been criticized for moving too slowly, it has moved far more aggressively and faster than its E.U. counterpart, the European Central Bank (ECB). The Fed learned its lesson in the 1970s, during a period of persistent inflation, says Steve Clayton, head of equity funds at U.K.-based brokerage Hargreaves Lansdown. “History tends to show that moving quickly and decisively on monetary matters is the best approach,” he says. But the ECB wasn’t around in the ‘70s, and there has been no similar period of inflation since the euro was launched a little over two decades ago. In addition, the ECB is generally hesitant to make policy moves that might weaken Europe’s financial sector, Clayton says. That’s why its efforts to raise rates massively lag the Fed’s despite European inflation rates being similar to the U.S. rate. Rumors of Recession In any event, a European recession could solve the ECB’s inflation problem, as a shrinking economy also tends to reduce inflation. And some experts see that coming soon because Europe’s economy is far weaker than the U.S. Europe’s been hit much harder with the energy crisis following Russia’s invasion of Ukraine in late February. “We’ve been forecasting a recession in Europe since March,” says Robin Brooks, chief economist at the Institute of International Finance. At least part of the issue is that Germany, the powerhouse behind the E.U.’s economic system, has had its own economy upended. For decades Germany has relied heavily on importing cheap materials and energy from Russia to make manufactured items, then exporting them to the rest of the world, Brooks says. “That business model is really challenged now,” he says. Lately, European natural gas, the key cost input in electricity generation, has cost around 10 times more than it does in the U.S. Germany is also still heavily reliant on Russia for crude oil imports. The falling euro could also exacerbate already record high inflation in the eurozone. Many raw materials required for producing goods are priced in dollars, making them more expensive for European companies. These prices will likely be passed on to consumers down the line. While inflation at more than 9% worries most central bankers, Brooks doesn’t see the ECB raising rates aggressively raising the cost of borrowing money if the economy weakens much more. “If there is a recession, there’s no way the ECB is going to hike rates,” he says. The result will be that the euro remains at or below parity with the dollar, Brooks says. “My bias is that we are headed for a multiyear period of year sub-parity,” he says......»»

Category: topSource: timeJul 19th, 2022

Container Shipping Spot Rates Still Falling: What Will Be The New Normal?

Container Shipping Spot Rates Still Falling: What Will Be The New Normal? By Greg Miller of FreightWaves Which of these two is happier? Someone who wins $3 million in the lottery then blows $2 million in Vegas, or someone who wins $1 million in the lottery and puts it in the bank? Containerized cargo shippers face the reverse emotional scenario. Who’s less upset if spot rates quintuple? A shipper who’s used to paying $1,500 per forty-foot equivalent unit and suddenly sees rates jump to $7,500? Or one who pays $1,500 per FEU for years, gets slammed with crippling rates of $20,000 per FEU including premium charges, then gets “relief” as rates slide all the way back down to $7,500? No one believed $20,000-per-FEU spot rates in fall 2021 were sustainable. If rates stayed that stratospheric for too long, it would destroy transport demand and compel competition regulators to step in. As Hapag-Lloyd CEO Rolf Habben Jansen said during a conference call in November, “It would be better for everybody if we saw more normalization.” That process is now underway. But what will be the new normal? The best-case scenario for shipping lines is for the COVID rate surge to have emotionally and financially acclimated customers to higher freight costs, and for rates to stabilize at levels high enough to generate strong and sustainable profits for ocean carriers, but not so high that competition authorities intervene. For shippers, this new normal for rates would be much higher than pre-COVID levels but might seem like a bargain compared to all-time peaks. Drewry spot rate indexes Drewry’s weekly assessment for Shanghai-to-Los Angeles spot rates came in at $7,480 per FEU on Thursday. That’s down 23% year on year and down 1% week on week. This assessment is now 40% below its peak of $12,424 per FEU in late November 2021, yet still 5.3 times higher than rates at this time of year in 2019. Drewry’s weekly spot assessment for Shanghai-to-New York was at $10,164 per FEU, flat week on week, down 14% year on year, down 37% from the peak of $16,183 per FEU in mid-September — but still quadruple 2019 levels. On one hand, a sharp drop in rates over the past nine months is reducing costs for shippers (at least, compared to last fall) and is showing that the market is functioning: Ocean carriers are competing on price to fill slots. On the other hand, rates are still very profitable to ocean carriers and transport costs for shippers are still dramatically higher than they were pre-COVID. Freightos spot rate indexes Different indexes show different numbers but the same trends. The Freightos Baltic Daily Index (FBX) China/East Asia-to-North America West Coast assessment was at $7,264 per FEU on Thursday, down 65% from the all-time high of $20,586 per FEU in September but still five times more than rates at this time of year in 2019. The FBX China/East Asia-to-North America East Coast rate was $10,020 on Thursday, less than half its all-time high of $22,234 per FEU in September but more than triple pre-COVID levels. The drop from the peak is much steeper for the Freightos trans-Pacific indexes than for Drewry and other index providers because Freightos began including premium charges in its assessment methodology starting July 28, 2021. Space has now opened up and shippers are generally no longer paying premiums. Dafna Farkas, corporate marketing associate at Freightos, told American Shipper: “In the peak of the COVID surge, we ensured that the all-in rates were reflected by including premiums. We continue to ensure that all-in rates are reflected in the index and in that [regard], have not changed the methodology. On a price-point level, since premiums have largely been eradicated due to industry normalization, they aren’t really reflected in the industry price.” Market in ‘wait-and-see mode’ S&P Global Commodities (formerly Platts) assessed North Asia-to-North America West Coast Freight All Kinds (FAK) rates at $7,100 per day on Thursday. That’s down 25% from the peak but still 4.3 times 2019 levels. S&P Global put North Asia-to-North America East Coast FAK rates at $9,700 per day, down 19% from the all-time high albeit 3.5 times mid-July 2019 levels.   The container shipping team at S&P Global has been reporting lower-than-expected Asia-U.S. demand ever since the end of the Chinese New Year holiday in February. Downward spot-rate pressure continues, S&P Global said this week, given ample space availability out of China and smaller carriers with chartered tonnage undercutting freight pricing of larger mainline carriers (in other words: competition). Some North Asia-to-West Coast spot offers were below $7,000 per FEU, it reported. George Griffiths, managing editor of global container freight at S&P Global Commodity Insights, told American Shipper: “The market is just in wait-and-see mode at the moment. There are rumors of more lockdowns in Shanghai coming up, and some concerns that delays across the U.S. East Coast will begin to spread to the West Coast once more, but nothing concrete. “High inventory levels and the rising cost of living are keeping a natural lid on demand at this point. So, the atmosphere is rather bearish, only being helped by the void [canceled] sailings that carriers are bringing in to try and protect rates.” Tyler Durden Sun, 07/17/2022 - 13:30.....»»

Category: blogSource: zerohedgeJul 17th, 2022

Here"s Why You Should Hold Carter"s (CRI) Stock Right Now

Despite supply-chain woes, Carter's (CRI) seems poised for further growth on the back of online strength and improved price realization. Its upbeat 2022 view raises optimism. Carter’s Inc. CRI has been gaining from a solid online show, improved price realization and gains from share repurchases. Robust demand in its wholesale and international businesses, as well as improved inventory, bodes well.Driven by the above-mentioned factors, the company delivered an earnings and sales beat in first-quarter 2022.As a result, shares of CRI have lost 14.5% in the past three months but came ahead of the industry’s decline of 16.6%. Image Source: Zacks Investment Research An uptrend in the Zacks Consensus Estimate echoes the same sentiment. The Zacks Consensus Estimate for Carter’s 2022 sales and EPS suggests growth of 2.7% and 11.9%, respectively, from the year-ago period’s reported numbers.The company remains focused on strengthening its e-commerce capabilities through investments to speed up deliveries. Its e-commerce business has been performing well, driven by expanded omnichannel facilities, including curbside pickup, same-day pickup, buy online and pickup at store, and ship from store, along with easy access to a broad array of online products when shopping in stores. Carter’s mobile app is also performing well.The company repurchased shares worth $74.5 million in the first quarter. As of Apr 28, 2022, it had $945 million remaining under its existing share repurchase plan. Management also approved a quarterly dividend of 75 cents, payable Jun 10, of shareholders’ record as of May 31.Management issued an encouraging view for 2022. The company anticipates sales growth of 2-3%, with improvements across all segments. Adjusted earnings are likely to rise 12-14% year over year, while adjusted operating income is expected to grow 4-6%.However, earnings and revenues declined year over year in first-quarter 2022. Drab retail sales and adverse impacts of store closures during the Easter holiday hurt quarterly growth. Also, higher ocean freight and transportation costs dented the quarterly margins, which, in turn, hurt the bottom line.Management noted that higher freight charges and supply-chain issues would likely remain deterrents in 2022. For second-quarter 2022, Carter’s envisions adjusted earnings of $1.60-$1.80, suggesting a decline from $1.67 reported in the prior-year quarter. Adjusted operating income is expected to increase $95-$100 million, whereas it reported $107.6 million in the prior-year quarter. The view includes the impacts of supply-chain headwinds, rising labor costs, marketing investments, and distribution and freight costs.Wrapping UpRobust demand, solid online show and improved price realization are likely to aid this Zacks Rank #3 (Hold) stock in the near term despite supply-chain headwinds and rising freight costs. Also, a long-term earnings growth rate of 6.5% reflects its inherent strength.Stocks to ConsiderSome better-ranked stocks from the same industry are Delta Apparel DLA, Oxford Industries OXM and GIII Apparel Group GIII.Oxford Industries is an apparel company, which designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands. It currently flaunts a Zacks Rank #1 (Strong Buy). OXM has a trailing four-quarter earnings surprise of 99.7%, on average.You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 10.9% and 7.1%, respectively, from the year-ago period's reported numbers.Delta Apparel, the manufacturer of knitwear products, currently sports a Zacks Rank #1. DLA has a trailing four-quarter earnings surprise of 95.5%, on average.The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.GIII Apparel, the manufacturer, designer and distributor of apparel and accessories, presently has a Zacks Rank #2 (Buy). GII has a trailing four-quarter earnings surprise of 160.6%, on average.The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales and earnings suggests growth of 8.7% and 5.2% from the year-ago period’s reported numbers, respectively. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GIII Apparel Group, LTD. (GIII): Free Stock Analysis Report Oxford Industries, Inc. (OXM): Free Stock Analysis Report Carter's, Inc. (CRI): Free Stock Analysis Report Delta Apparel, Inc. (DLA): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 15th, 2022

Mattel CEO Ynon Kreiz On The Current Economic Conditions

The following is the unofficial transcript of a CNBC interview with Mattel Inc (NASDAQ:MAT) CEO Ynon Kreiz from the CNBC Evolve Global Summit, which took place today, Wednesday, July 13th. Video from the interview will be available at Interview With Mattel CEO Ynon Kreiz JULIA BOORSTIN: Tyler, thank you so much. And Ynon, thank you […] The following is the unofficial transcript of a CNBC interview with Mattel Inc (NASDAQ:MAT) CEO Ynon Kreiz from the CNBC Evolve Global Summit, which took place today, Wednesday, July 13th. Video from the interview will be available at Interview With Mattel CEO Ynon Kreiz JULIA BOORSTIN: Tyler, thank you so much. And Ynon, thank you so much for joining us today for this interview from your phenomenal offices that are just jam-packed with toys.  We really appreciate you helping us here. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more YNON KREIZ: Thank you, Julia.  It's great to finally have you here. JULIA BOORSTIN: Yes, great to be here in person. Now, I want to talk about the evolution that you have led of Mattel just in the past several years and this new path that the company is on. First, I just want to talk about some of the macro issues that so many different leaders are focused on right now across industries.  We just got these new inflation numbers this morning.  I know there's a big question about whether the country is going to be going into a recession and the impact on consumer spending. I know you have your earnings next Thursday, so you're in a quiet period.  But speaking broadly, what are you seeing right now? YNON KREIZ: Well, like all companies, we are following closely developments at the macroeconomic level.  As a company, we have been working through inflation for several quarters now, and we're factoring into our planning.  The company is flexible, and we designed an organization that is able to face challenging economic conditions. JULIA BOORSTIN: Now, of course, in addition to consumer spending, another issue you have to reckon with is supply chain constraints, which you managed last year, but I'm just curious, as you think about shipping all of these objects all around the world and getting them into consumers' hands, how optimistic are you this year that the key holiday season is going to be better in terms of some of those supply chain issues? YNON KREIZ: Well, as we said before, supply chain is now one of our core strengths, it's a competitive advantage for Mattel, and we've been able to navigate through supply chain issues for two years now.  It's not that we have not been impacted, but we've been able to work through these issues and achieve a record growth year for Mattel in 2021.  And supply chain was a key factor of that success. JULIA BOORSTIN: Well, I'm sure we'll be hearing a lot more in your earnings next week, but just to return to the evolution that you have led of Mattel, you became CEO in 2018 and, since then, you led a full turnaround of the company, which you said you completed in 2021, and now you're in this next phase. Just to take a step back, when you started the company, you were the fourth CEO in four years; there had been a huge amount of turnover.  What was the opportunity you saw as someone who came from the entertainment industry -- Maker Studios, Endemol -- what was the opportunity you saw in taking on the role?  First you accepted the role of chairman, then the role of CEO of this company. YNON KREIZ: Well, I always admired Mattel from afar, as the owner of one of the strongest portfolios of children and family entertainment franchises in the world, and I was attracted by the quality of the assets that the company owns.  But the capabilities, yes, it went through a period of decline, but I believe we can turn it around.  And the thesis was, fix the core toy business, knowing that if we can do that well, there's tremendous opportunity to grow on the toy side. And on top of it, if we're able to capture the full value of our intellectual properties, that can be transformative. JULIA BOORSTIN: So, walk us through how you approached that restructuring process that began in 2018 and ended in 2021.  I mean, you wanted to streamline it, focus on the toys, but what did you have to do to get the company there? YNON KREIZ: Well, the fundamental change was to change the company from being a manufacturing company that was making items into an IP company that manages franchises.  And that's been a pretty comprehensive change, operationally, culturally, how we think about our product and how we engage and connect with consumers. And in the course of those four years, we took our EBITDA from 126 to over a billion dollars.  And, with that, we reached -- and we took also our leverage ratio down from 25 times debt-to-EBITDA to 2.6 times in Q4 of last year; and in the first quarter of 2022, it was down to 2.4.  So we dramatically improved and strengthened our balance sheet and positioned the company for growth that we now believe we are entering an exciting phase of. JULIA BOORSTIN: Before we get to this growth phase now, I'm really curious about how you approached this idea of streamlining the business.  You cut your workforce.  You also reduced the number of items you produced.  How did you figure out where it made sense to cut back on those SKUs, as they're called? YNON KREIZ: Yeah, we made significant changes in the way we operate.  We reduced our workforce by more than a third globally.  Not on the manufacturing side.  On the manufacturing side, we exited five factories and focused on the productive items we were making.  About 35 percent of the items we were making were not productive, and we cut that long tail and focused on the more productive, profitable items that we manufactured.  And, with that, we improved our profits dramatically. JULIA BOORSTIN: So, is that, effectively, about reducing the number of items in each category so you have fewer Barbies or fewer Hot Wheels, or is it about eliminating categories entirely? YNON KREIZ: It was mostly a broad horizontal optimization of the items we were making.  So we did cut across all categories, and we're focusing on items that were more profitable, more in demand, that have a higher growth potential.  And that focus was fundamental in how we simplified the world we operate, so you focus on the items that are actually productive and profit-generating. JULIA BOORSTIN: So, it seems like you must have had to use a lot of very precise data to understand exactly what was working and what wasn't.  Tell us about what you call the "Mattel playbook," to really strip out some of the distractions and focus on the key brands. YNON KREIZ: Yeah, the Mattel playbook speaks to how we manage our franchises.  It's about cultural relevance, design-led innovation, execution and excellence, and a very clear brand purpose that we infuse in each and every one of our products. And that was really important to connect with consumers, whereby each of our product -- each of our brands and franchises has a reason to be.  Beyond being a toy -- of course, we're now making play systems -- but when people, parents, families, consumers, engage with our product, there is a purpose, a clear purpose that elevates the play system and gives people an exciting reason to engage with that product. JULIA BOORSTIN: So, give us an example of that.  What do you mean by a "play system"?  I mean, many of us may have these toys in our homes, but what do you mean by a "play system," and how did you figure out how to give a brand purpose or what purpose might be appropriate for each brand? YNON KREIZ: Take Barbie as one example, obviously, a headline franchise for Mattel.  Barbie's purpose is to inspire the limitless potential in every girl.  The Barbie play system is not just the doll; it's also the Barbie Dreamhouse, it's the camper.  It's an entire experience, a holistic experience of how we reach and engage with consumers.  Toys are not just a form of play.  Toys are things that consumers hug, they touch, they go to bed with them, and the emotional connection with the consumer is very high. If you're successful in establishing that relationship, then you can grow the brand and extend it into other verticals, which is exactly the journey we're on. As a company, we also define a very clear mission, which is to create innovative products and experiences that inspire, entertain and develop children through play.  And if we do that well and make sure that each of our products does that, we're ahead of the game, and this is what really established Mattel and put it on such a growth trajectory. JULIA BOORSTIN: I want to talk to you a little bit about the focus on the entertainment industry.  Obviously, there's been a huge amount of attention on the Barbie movie that's in production. But just revert back to what you were saying about the brand itself and the way you've been involving the Barbie brand.  For many years, people said the Barbie brand was not good for little girls because it gave little girls who played with the toys a false image of what they should aspire to.  And you've really worked to change that by taking so many inspirational characters and also adding to the diversity of the dolls themselves. Tell me about how you've been approaching that process which seems to be a priority, at least walking around here, you see a lot of examples of that. YNON KREIZ: Of course.  As a company, our goal is to contribute to a more diverse, equitable, inclusive and sustainable future, and this is what we infuse in all of our brands.  Barbie is ahead of the curve, really the flag carrier for diversity and inclusivity, and the approach is to really represent the world in the way children see it. When we talk about cultural relevance, it's about being current, being timely as much as Barbie is timeless.  And that combination and how you create and embody that, represent that, those values into the product, is really a combination of art and science, but it's something that is a core competence for Mattel. If you look at how we bring culture into our brands, whether it's Barbie, also Hot Wheels or Uno, it's all around.  Everything we do is making our product, brands and play systems current and relevant to today's consumers.  And this is really about taking brands that have been around for, in the case of Barbie, 63 years; Hot Wheels has been around for 52 years; Thomas has been around for more than 75 years. JULIA BOORSTIN: Thomas the Tank Engine.  You're on a first-name basis with Thomas the Tank Engine. YNON KREIZ: Thomas the Tank Engine. So, it's how do you take these heritage brands that have such a strong connection with consumers, a built-in fan base, in some cases going back two and even three generations, and make it relevant to today's consumers? And our ability to do that so well has been a key part of our success. JULIA BOORSTIN: Yes, and I see Barbies all around your offices here.  Very diverse range of dolls, then also dolls that are the doll version of a lot of inspirational women, in particular, which I know has been a big part of that strategy. So, as you focus on building out these brands, talk to us about the importance of entertainment.  We can start out the conversation talking about IP.  Your background is in entertainment, and now you are investing so much in film, television, games. Explain to us the overall strategy, and I want to dig in more to the movie business. YNON KREIZ: Yeah.  As the owner of one of the strongest portfolios of children and family entertainment franchises in the world, we have a tremendous opportunity to capture significant value outside of the toy aisle.  This is not instead of what we're doing on the toy side of the business, this is in addition to all of our success on the toy side of the company. When you talk about capturing value from our IP, think about content, licensing and merchandise, including consumer product, as well as digital games and digital experiences. On the content side, it's about films, television; and there alone, these are big verticals that, in success, can be very transformative. The opportunity is not to create content in order to sell more toys.  This will happen.  But the opportunity is really to participate in these verticals and build accretive businesses in these areas that in some cases are actually bigger than the toy industry. In today's world, everyone is looking for big franchises, big IP that rises above the noise level, and it's about a built-in relationship with consumers, high awareness and clear brand representation that defines a story. We have never done it as a company.  We've never released a major movie.  Theatrically, when we did television shows, it was more with the orientation of marketing and promotion of our toys. Today, our movies, our television content is about building accretive verticals, and the approach is to make great quality content that people want to watch. This is our mandate to our creative teams and a mandate to -- and the relationship that we develop with creative talent around the world. JULIA BOORSTIN: What I think is so interesting, though, is you're talking about making the content, you're not talking about licensing these brands.  There are plenty of big iconic brands that license -- in the same way that Jurassic World licenses its toy rights to you, you could license your rights and just sell the rights to a film studio. Why is it so important for you to be and your company to be so closely involved in the actual production of this content? YNON KREIZ: Well, it's a hybrid approach.  We do partner with creative talent -- in fact, the best, we believe, creative talent in some cases; in most cases, these are the leaders of the industry -- to collaborate with us and imagine our brands and transpose it to the big screen or television screens. In the case of Barbie, which is currently in production and about to finish principal photography, we partnered with Warner Bros., but obviously brought in top creative talent Greta Gerwig to write, together with Noah Baumbach, and for Greta to direct the movie. Greta is one of the most prolific filmmakers of our time, and it's very exciting to have her on board and really put together how she envisages Barbie and translate it or communicate with the next generation with her vision. And, of course, Margot Robbie, who is a co-producer or producer on this movie, and our partner, and Ryan Gosling, Will Ferrell, Simu Liu, America Ferrera, such top talent, we could not be more excited about the way the movie is coming together. JULIA BOORSTIN: Right now we've been showing some stills from the movie that have set off a firestorm of interest, this new concept of Barbiecore fashion, as people have been so excited to get a peek at this movie that's coming out next summer. What I think is so interesting about the choices you made with this Barbie movie is that you're clearly not making a movie that is just for the little girls who play with the toys. Yes, you have collectors of the toys, but this idea of you're not making this movie for a very young child audience.  You have sophisticated filmmakers who make movies for adults, and it seems, based at least on the costumes and the approach, like you're going to have fun with this.  You're going to allow Barbie to laugh and have a sense of humor about some of that iconography. So, I'm curious how that plays into the whole vision.  If you were just making a movie to sell toys, maybe you would just be marketing a movie to 4- and 5-year-old girls; but, instead, you're really thinking about this as reaching a very different kind of audience, including adults. YNON KREIZ: Well, Barbie is very much more than a toy and more than a doll.  Barbie is a cultural icon, a pop icon.  And this movie is really shaping up to be what we believe will become a societal moment.  It's going to be a cultural event.  And the way Greta is creating this work of art, with this incredible talent and the approach that is very different, very unique, not something that you've seen before, is going to be very exciting. JULIA BOORSTIN: But what is interesting is you're going to try to recreate this with many other properties.  I mean, I believe you have 19 films in production; is that right? YNON KREIZ: Well, we currently have -- we've announced 14 movies in development, including the Barbie movie. And yes, we do collaborate and partner with innovators, with creative filmmakers.  And much like I said earlier, the request, the partnership, the basis of this relationship is about please make great quality content that people want to watch. JULIA BOORSTIN: Yeah. YNON KREIZ: This is the relationship.  Don't try to sell toys. We know that in success, if people watch a movie and there's high engagement, good things will happen.  We know how to sell toys.  But the opportunity is really about quality entertainment, based on our IP. JULIA BOORSTIN: So, another piece of the quality entertainment strategy here is games.  You have mobile games, which you're making through your own division, and then you have the licensing of traditional -- to console games, and then you also have Roblox, where you have two Mattel worlds within Roblox.  Lay out how the strategy here sort of establishes the groundwork for more expansion into that space. YNON KREIZ: The opportunity around video games, games in general, digital experiences is to really leverage the relationship we have with consumers.  This area is fast growing. And we all know the amount of time that children spend in front of screens.  As the owner of the underlying IP, we have the opportunity to reach, engage, connect with consumers wherever they are.  And we know that children, and consumers in general, even older consumers, do engage with our product, and the opportunity for us is to do it through licensing arrangements. Being a first-party publisher on Mattel 163, which is our mobile game studio where we focus on mobile games, as well as on a children-oriented platform such as Roblox, with two games, Hot Wheels and Masters of the Universe, we've already published. So significant opportunity there. JULIA BOORSTIN: And looking forward at, you know, this conversation about the metaverse, I know that you've been doing NFTs, and the Roblox worlds are a part of that metaverse conversation.  But how do you see the NFT business growing and perhaps intersecting with some of your metaverse investments? YNON KREIZ: Well, the two key features of NFTs in general is collectability and community.  And in our case, we have brands that really play on those planes very successfully. Barbie, Hot Wheels have a huge collector market that is still untapped, and we believe we can be very successful there.  And, of course, the community, the built-in fan base is very vibrant.  And we know how people are engaged with our key brands. We've had three NFT campaigns that were not very large, they were more early stage, and for us to really test the market, and our product got -- our NFTs got sold almost instantly, different types, different genres, and it's been very successful. So, we know there's high engagement with our brands, and the opportunity to translate that relationship into the metaverse and the digital sphere is very exciting. JULIA BOORSTIN: Well, certainly so many opportunities as you move these iconic brands and intellectual property into, film, entertainment, games, now NFTs in the metaverse, as well.  We are very curious to see what comes next. Ynon Kreiz, thank you so much for joining us today from Mattel headquarters. YNON KREIZ: Thank you, Julia.  It's been great.  Thank you.   Updated on Jul 14, 2022, 4:29 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 14th, 2022

Here"s Why You Should Hold Ralph Lauren (RL) Stock Right Now

Although inflation and elevated expenses remain worrisome, the solid online show, strong AUR growth and gains from the Next Great Chapter plan are likely to aid Ralph Lauren (RL). Ralph Lauren Corp. RL looks promising on the back of brand strength and high-potential product categories, as well as expansion across all channels. A solid online show and strong AUR growth bode well.This led to a robust surprise trend, which continued in fourth-quarter fiscal 2022. The company reported the seventh straight earnings beat and the fifth consecutive revenue surprise in the fiscal fourth quarter.Earnings and revenues also improved year over year. Net revenues grew 18% year over year and 22% on a constant-currency (cc) basis. The uptick was attributable to double-digit growth across all regions. Adjusted earnings per share of 49 cents advanced 29% year over year in the fiscal fourth quarter.The company has been expanding digital and omni-channel capabilities through investments in mobile, omni-channel and fulfillment. In fourth-quarter fiscal 2022, the digital business continued to be a key growth driver, with accelerated digital sales across all regions. The global digital ecosystem continued to witness robust improvement, recording year-over-year revenue growth of more than 80%. On a cc basis, the metric grew in the low-double digits. This was driven by strength across owned and wholesale digital channels globally.Revenues for the company’s owned digital sites rose 18% year over year, driven by strong product assortments, consumer acquisition, expanded connected retail capabilities, and high-impact marketing. New customers on its digital sites grew more than 70%. Digital sales benefited from full-priced sales, owing to the right product mix, a pull-back on promotions, and investments in Artificial Intelligence (AI)-powered capabilities and new full-price consumer acquisitions.In the quarter, the company launched localized digital commerce sites, including the first digital flagship in Australia and the Middle East, as well as 15 new ship-to destination largely across broader Europe, as part of its ecosystem expansion globally. It remains focused on further digital investments to continue with the creation of content for all platforms, enhancing digital capabilities to improve the user experience, and continuing to leverage AI and data to serve its consumers more efficiently.Ralph Lauren continues to scale and expand its connected retail capabilities, including virtual selling appointments, “buy online, pick up in store” and endless aisle product availability. The company launched its first-ever full catalog Ralph Lauren mobile app during the holiday season, efficiently leveraging its connected retail capabilities to deliver the most personalized and content-rich platform.Average unit retail (AUR) increased 13% for fourth-quarter fiscal 2022, marking 20th straight AUR growth, driven by its persistent brand elevation efforts with increases across every region. The company has been navigating through the ongoing inflationary environment, driven by a favorable product mix and strong pricing power.It expects to continue delivering AUR above its annual long-term target of low- to mid-single-digit AUR growth through fiscal 2023, which will help mitigate mid to high-single-digit cost inflation. The company’s strategy of product elevation, acquisition of new full-priced consumers, and favorable channel and geographic mix, as well as ramping up its targeting and personalization efforts, are likely to support long-term AUR growth. This is expected to continue aiding gross margin growth.For fiscal 2023, the gross margin is expected to expand 30-50 bps at cc on a 52-week comparable basis, driven by solid AUR growth, and positive product and channel mix, which is expected to more than offset higher freight and product cost inflation. The operating margin is forecast to be 14-14.5% at cc. This compares favorably with the last year’s reported operating margin of 13.1% on a 52-week comparable basis and 13.4% on a 53-week basis.It is also accelerating its “Next Great Chapter plan,” which includes creating a simplified global organizational structure and rolling out improved technological capabilities. As part of the plan, it completed the transition of Chaps to a licensed business, concluding its portfolio realignment announced last year. The move will likely enable it to focus on core brands as part of the Next Great Chapter elevation strategy.For fiscal 2023, RL anticipates revenue growth (cc) in the high-single digits or 8% year over year on a 52-week comparable basis. For the first quarter of fiscal 2023, the company expects year-over-year revenue growth of 8% at cc. The company earlier revealed plans of returning 100% free cash flow to shareholders in the next five years, amounting to $2.5 billion on a cumulative basis through fiscal 2023, in the forms of dividends and share repurchases.Cost HeadwindsRalph Lauren continued to witness elevated marketing expenses in fourth-quarter fiscal 2022 to support various initiatives around the holiday season, digital expansion into new markets and categories, and consumer acquisition. In fourth-quarter fiscal 2022, marketing investments rose 48% year over year.Driven by higher marketing investments as well as compensation and selling expenses, adjusted operating expenses increased 19%, while adjusted operating expenses, as a percentage of sales, expanded 30 bps year over year. Management anticipates marketing expenses for fiscal 2023 to be 6-7% of net sales to support the new website, mobile apps, consumer acquisition and key brand moments.Persistent cost inflation due to the ongoing supply-chain disruptions, and higher logistics and raw material costs remain concerning. Management’s first-quarter and fiscal 2023 guidance includes the current supply-chain condition, inflationary pressures, the war in Ukraine, COVID-19 variants and other COVID-related disruptions. It expects freight and labor expenses to remain high in fiscal 2023.For first-quarter fiscal 2023, the company anticipated an operating margin of 13.5% at cc, which includes the negative impacts of higher freight and marketing expenses, which are likely to reduce in the second half of fiscal 2023. The gross margin is predicted to decline year over year at cc due to rising freight and product costs, offsetting continued AUR growth. The company expects the highly volatile and inflationary input cost environment to continue in fiscal 2023.Also, it has been reeling under adverse currency impact. For fiscal 2023, the company expects adverse currency rates to hurt revenues by 400 bps. On a 53-week comparable basis, the metric is likely to be hurt by an unfavorable currency of 100 bps. For the fiscal first quarter, the unfavorable currency is likely to negatively impact revenues by 480-500 bps, the gross margin by 100 bps and the operating margin by 130 bps.Conclusion Image Source: Zacks Investment Research We believe that the above-mentioned upsides are likely to continue working well for this Zacks Rank #3 (Hold) stock, thereby helping it counter escalated inflation and cost-related hurdles. Shares of RL have lost 22.8% year to date compared with the industry’s decline of 34.8%.Stocks to ConsiderSome better-ranked stocks from the same industry are Delta Apparel DLA, Oxford Industries OXM and GIII Apparel Group GIII.Oxford Industries is an apparel company, which designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands. It currently flaunts a Zacks Rank #1 (Strong Buy). OXM has a trailing four-quarter earnings surprise of 99.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 10.9% and 7.1%, respectively, from the year-ago period's reported numbers.Delta Apparel, a manufacturer of knitwear products, currently sports a Zacks Rank #1. DLA has a trailing four-quarter earnings surprise of 95.5%, on average.The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.GIII Apparel, the manufacturer, designer and distributor of apparel and accessories, presently has a Zacks Rank #2 (Buy). GII has a trailing four-quarter earnings surprise of 160.6%, on average.The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales and earnings suggests growth of 8.7% and 5.2% from the year-ago period’s reported numbers, respectively. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ralph Lauren Corporation (RL): Free Stock Analysis Report GIII Apparel Group, LTD. (GIII): Free Stock Analysis Report Oxford Industries, Inc. (OXM): Free Stock Analysis Report Delta Apparel, Inc. (DLA): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 12th, 2022

Markets Sell Off Going into Q2 Earnings, June CPI

Without much direction early in the week, market participants aren't exactly keeping the faith. Markets closed at or near session lows on this first trading day of a new week, after seeing a decent holiday-shortened last week continuing the bounce off our lows four weeks back. While much of the recession fears and Q2 earnings worry have already been priced into the market, whether or not we’ve seen the lows for the year is very much an open question.The Dow dropped -0.52% on the day, -162 points, while the tech-heavy Nasdaq fared noticeably worse: -2.26%, -262 points. The S&P 500 split the difference, -1.15% on the day, while the small-cap Russell 2000 nearly notched as bad a session as the Nasdaq: -2.21%. Only the Dow spent any time in positive territory today.That said, we’ve definitely been enjoying a bounce off our June lows overall — Dow +5%, S&P and Russell +6%, Nasdaq +8% — but without much direction early in the week, market participants aren’t exactly keeping the faith that markets will sustain and continue these gains. Q2 earnings will give us some answers, as will Wednesday’s Consumer Price Index (CPI) report, but the jury is still out which direction these numbers are headed.More immediately, we’re still seeing Covid lockdowns mar China’s economic rebound, especially regarding the gaming industry today. Shutdowns across Macau — its massive gambling district a boat ride from Hong Kong — have sent international gaming companies down on the day, such as Wynn Reports WYNN -6.5% and Las Vegas Sands LVS -6.2%. We also saw the fallout — or the latest chapter — in the Elon Musk/Twitter TWTR saga take down that share price -11.3% today.Tomorrow morning we’ll get Q2 results from PepsiCo PEP, which is expected to bring in flat earnings year over year, $1.72 per share. The stock has been a model of consistency over the past decade-plus — not necessarily always beating earnings estimates but never missing them. PepsiCo carries a Zacks Rank #4 (Sell) into the earnings announcement, but has outperformed its sector, down less than -2% year to date and +14% in the past year.Questions or comments about this article and/or its author? Click here>> Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PepsiCo, Inc. (PEP): Free Stock Analysis Report Las Vegas Sands Corp. (LVS): Free Stock Analysis Report Wynn Resorts, Limited (WYNN): Free Stock Analysis Report Twitter, Inc. (TWTR): Free Stock Analysis Report To read this article on click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report.....»»

Category: topSource: zacksJul 11th, 2022

Blain: Markets Are "Distracted, Confused, & Not Seeing The Downright Obvious"

Blain: Markets Are "Distracted, Confused, & Not Seeing The Downright Obvious" Authored by Bill Blain via, “ Chaos is the law of nature. Order is the dream of man.” Inflation will dominate the headlines while the US earnings season kicks off. The prospects for stocks on the back of falling numbers and crashing consumer sentiment bode ill for recovery, and strongly suggest there is further market downside to come in Q3. Even though I am faced with this uncomfortably empty screen to fill with words of market and economic wisdom, it’s difficult to be unhappy this glorious morning. The sun is shining! I just had a great swim in the river, my wife and dog apparently love me, and I’m going on holiday next week. As I said, the only fly in the ointment is writing this morning’s Porridge on the week ahead. After last week’s strong US jobs report – momentarily suggesting there is less of a global recession threat – this week will reverse into rising inflation fears again, raising the higher/faster interest rate spectre. We’ve got a host of inflation numbers coming out, but also the shutdown a key Russia/Europe gas pipeline for “maintenance”, which many analysts think will crush European efforts to build winter reserves, promising further energy price spikes through the second half of this year. The talk in markets is all further China lockdowns, and Euro-dollar parity as inflation and recession look increasingly dangerous for Europe in particular. There is so much to say about the up/down of markets, but I am not sure I can articulate it clearly! Therefore I think I shall go a bit free form this morning – throw a couple of ideas at the screen and see what happens: Broadly, markets are distracted and confused, not seeing the downright obvious. I’m trying to figure out how vulnerable that leaves them to shock and awe surprises, the actuality of the macro-outlook, and the systemic consequences of policy mistakes. The only upside in such conditions is they do create price moves that translate into opportunities! Last week was an extraordinary lesson in markets – watching tech stocks recover on the hope recessionary expectations would mean a slower series of interest rate rises, thus raising hopes for accommodative central banks to juice markets higher to stave off recession. Doh! Some market commentators say it’s a reverse rotation out of value/fundamental stocks back into more speculative growth stocks – saying the 9 month tech bear phase is basically played out, and it’s time to buy corrected tech names… Really? It called talking their book. There is an assumption the market knows best, and will set the right price of everything, based on the market being the collective intelligence of all participants. Except it is not. The market has no memory and certainly doesn’t remember making the same mistakes over and over again. The market is just a voting machine. It’s a form of popularity contest – whoever markets/plugs their ideas/positions best, wins! A good example of the kind of hype that propels stocks in febrile markets, and ridiculous false assets like cryptos and NFTs, is investors ongoing fascination with Cathie Wood’s ARK. The narrative is simple – it must be a great investment, look what it was worth! The papers are full of stories that support it: I saw a headline on CNBC about the charts suggesting a rally (but it was behind a paywall, and it’s probably bunkum anyway). Most of the stocks in the ETF have never, and never will make a profit. Market participants believe what they want to believe, and if they believe ARK is undervalued because only Cathie perceives the future – their call. It’s not the market that is stupid – its participants! The reality is nothing has changed about speculative tech stock fundamentals. Food delivery companies are still struggling to deliver food at a profit. Internet warehouses and subscription services are still struggling to make all the expensive approaches work. Media manipulation companies are still trying to persuade increasingly distracted used to let them monetise us through advertising. It’s all dressed in a wash of modernity, the next-new-new-thing, but Tech stocks that sound ever so clever and remain ever so unprofitable will likely remain so. And they remain vulnerable to shocks. This morning Tencent and Alibaba are leading further collapses in value after Chinese fines on their monopolistic policies. Regulation bites. The next shock for markets is likely to be corporate earnings. Thus far they’ve been insulated by the pandemic reopening. The Q2 numbers start this week and will likely show the impact of long-term supply shocks, energy inflation and the increase labour scarcity as workers seek better paid employment. (If they don’t, be suspicious!) Corporates will put the best possible spin on their numbers, but the macro economic reality has to bite soon. As interest rates rise, and corporate credit spreads widen faster, leverage within the corporate sector will start to take down multiple credit zombies – overly indebted companies. All these years spend borrowing money at ultra-cheap rates to finance stock-buy-back programmes will be shown to have been valueless; the company bankrupted, and the stock tanked! I’ve come to a very simple conclusion about economics. The reason it’s called the dismal science is it’s basically chaotic. Economics is all about analysing events to understand what happens next. But events have a path all of their own – we can plot broad expectations, but not the increasingly unpredictable consequences that ripple outwards from every decision like a nuclear chain reaction. The way in which inflation and interest rates will impact the economy is very well documented and understood by students of economic history – perhaps not so well by inexperienced investment managers – the ones who buy the hype. One of the biggest risks to markets is always policy mistakes, the obvious one being central banks triggering a recession through the pace of interest rate hikes, or being too slow to address inflation. But there are equal risks in politics. There is a frightening headline on Bloomberg this morning – 4.5 million UK families are already in financial trouble as a result of financial distress. More are struggling with the consequences of higher energy and food prices. Wages have failed to address inflation, and the welfare net is full of holes. Food banks and free school dinner schemes have been instituted by concerned individuals around the country. Even the financial services industry will not be immune – the BBerg article noted workers are cutting their pension saving contributions. Yet, the headlines in the UK are all about the multiple number of Conservative Politicians putting themselves forwards as our next prime minister. I forced myself to watch the Sunday Political Shows, and read the papers to understand their approach – and came to the conclusion most of the challengers are economically illiterate. Only one of them seemed to connect the urgency of the situation – the need for tax cuts to boost jobs and consumer sentiment to address the looming stagflation/recession threat, but all the interviewer wanted to know about was his non-dom status 2 decades ago. Its going to be that kind of contest – how clean they are. Not how they will save the UK economy. Most of other candidates seemed blithely unaware of the reality on the streets. The biggest threat to the UK Economy is the urgent need for decisions, but the fractured government is going to be spending the next three months listening to candidates blather about how different they are to Boris.. Words… just words. Tyler Durden Mon, 07/11/2022 - 08:50.....»»

Category: personnelSource: nytJul 11th, 2022

Markets Gain Ahead of Friday"s Big Jobs Report

Job growth is expected to slow to around a quarter-million new jobs filled per month, down from the half-million-plus we'd been seeing. Market indices enjoyed another trading session finishing in the green today, turning a holiday-shortened week into something of a success story — so far. The S&P 500 and Nasdaq each are sporting four-day winning streaks, while the Dow is up three of the past four days. The Dow gained +346 points, +1.12%, while the Nasdaq grew +259, +2.28%. The S&P split the difference, +1.49%, while the small-cap Russell 2000 beat the field, +2.43%.Notice, however, the use of the term “so far”: we have a big monthly jobs report out tomorrow morning from the U.S. Bureau of Labor Statistics (BLS), and results therein may be received by market participants with a complex set of reactions: while over the past few years, higher jobs numbers with higher wage growth was always met with applause, because we’re looking for metrics displaying a work-down of inflation, wage growth acceleration would likely be an unwelcome metric.As it is, job growth is expected to slow to around a quarter-million new jobs filled per month, down from the half-million-plus we’d been seeing since the Great Reopening followed our Covid shutdown period. As we saw in yesterday’s JOLTS report, we still have north of 11 million job openings in the U.S., meaning it remains a job-seeker’s market. As such, wage growth is likely a key factor in filling many of the jobs that will show up in tomorrow’s data.Still, a four-day winning streak — matching the longest we’ve seen in 2022 so far — is nothing to sneeze at, with Utilities the only one of 11 sectors of the S&P today to finish the session in the red. Clearly, the market feels good about having priced-in much of the bad news that may be on the horizon. Further, if that recession we’ve been worried about is what our economy has been enduring over the first half of this year — and blue skies are ahead of us — then maybe we’re already through the worst of it.Again, though: “maybe.” This year providing what it has for us so far, we’d be foolish not to be wary of what 2022 may yet have in store for us. For now, however, it’s “Summertime — and the livin’ is easy…”Levi Strauss & Co. LEVI reported fiscal Q2 earnings after the closing bell today, with positive surprises on both earnings and revenues in the quarter. A bottom line of 29 cents per share beat the Zacks consensus by 6 cents, while revenues of $1.47 billion in the quarter surpassed the $1.44 billion analysts were looking for. Thus far, LEVI has not missed an earnings expectation since its IPO back in 2019.Even better, the iconic apparel company reiterated full-year (ending November this year) guidance, which is something of a victory in an earnings environment when analysts are looking for companies to guide down expectations for the remainder of the year. LEVI shares briefly touched +5% in late trading before ebbing a bit, though still a good way toward building back from the -35% performance so far this year.Questions or comments about this article and/or its author? Click here>> 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports Levi Strauss & Co. (LEVI): Free Stock Analysis Report To read this article on click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report.....»»

Category: topSource: zacksJul 8th, 2022

US Rail System Still Deteriorating

US Rail System Still Deteriorating By Rick Paterson of Loop Capital Markets, first published in Railway Age We’re now in the second half of 2022, when the four major U.S. Class I’s have committed to turning their operations around, but the current state of play is not encouraging. Only Union Pacific has made any progress in recent months, but that has been from a low base and fading somewhat over the past two weeks. We would regard UP and Norfolk Southern as now in a “steady state” and it’s the other two we’re more worried about in terms of trajectory. BNSF’s intermodal business, in particular, is really struggling and in no shape to handle peak season volumes, which typically start around mid-August. Last week, BNSF Intermodal hit new lows in terms of network velocity (28.9 mph vs. 32.3 average in 2021) and on-time performance (only 57% of containers deramped within 24-hours of schedule), and a new high in terms of intermodal cars sitting idle for 48-hours or longer (1,610 out of 19,969 intermodal cars-on-line). To be fair, weather and other external factors had an impact. More broadly, the full system has seen record trains holding for crews over the last six weeks and a high in recrews to 1,789 at a recrew rate of 13.4% last week. Over in the east, CSX is coming off two bad weeks, recording multi-year lows in velocity and multi-year highs in trains holding for crews, terminal dwell, and the proportion of cars-online sitting idle for 48 hours or more. Last week on-time performance in its manifest network hit a new record low of 64%. While it pains us to recount these statistics (download the complete State of the Rails report below), for what it’s worth we’re confident both BNSF and CSX have the talent to turn this around and fully expect them to do so, but you can’t start getting better until you stop getting worse and more patience will, unfortunately, be required from all of us. Fourth of July Double-Edged Sword Last week we talked about 4th of July as both a blessing and a curse for the US railroads and we’ll dig into that a little more here. On the positive side, the holiday on Monday, subsequent four days of heavily reduced customer activity, and bookending weekends represents the second biggest drop in volume pressure of the year, behind of course the Christmas to New Years period. Historically, weekly volumes temporarily subside by 14% at NS, 13% at CSX, 11% at UP, and 8% at BNSF. These are big drops in volume pressure over a 9-day period, which is both positive and badly needed given the current state of affairs. However… This period also represents peak summer vacation season, and the networks can obviously ill-afford to lose crews during a crew capacity crunch. In terms of putting some numbers around it, if we look at the monthly seasonality in the four years prior to the pandemic, midmonth crew headcount fell by 0.5% on average from mid-June into mid-July for the US rail industry. For some reason it’s more pronounced in the east, with CSX and NS down 3.3% and 0.8%, respectively, versus -0.2% at UP and +0.5% at BNSF. Clearly these mid-month statistics also understate the crew shortfalls over the first ~nine days of July. By July 15th the heavy vacation effect has partially normalized. The railroads are of course well aware of this dynamic and no doubt doing all they can to buy out/stagger/delay vacations next week, but it likely won’t be completely successful and we’re still looking at a situation where the opportunity try to improve operations during the volume pressure reprieve will be diluted by temporarily increased crew scarcity. Crew Deficit: ~4,100 Updating our crew models with the most recent data points for network velocity (last week) results in the following updated estimates with regard to the minimum number of additional crews required to trigger a service recovery. We’ve regressed slightly, with net velocity for the four major systems slightly slower last week, which pushes our estimated crew deficit from ~4,000 to ~4,100. In terms of predicting the order in which these systems operationally inflect for the better, look at the % Deficit column on the far right. The smaller the number, the closer to recovery. Some of the railroad’s T&E crew headcount numbers (Actual Crews) include trainees, which are higher as a percentage of total now than historically, which in turn makes the crew deficit numbers look slightly better (smaller) than they actually are. When railroads are running poorly, crew capacity is diluted by non-productive crew starts, such as deadheads (repositioning crews by road transport) and recrews (replacing a crew due to an unanticipated expiration of the allowable 12 hours). It will likely take several months before conductor graduates in the field are satisfactorily productive. Tyler Durden Thu, 07/07/2022 - 19:00.....»»

Category: personnelSource: nytJul 7th, 2022

A British Airways passenger says she still hasn"t got her luggage back 19 days after her flight and had to spend $200 buying replacement items on her vacation

The passenger said staff told her that no hold luggage was taken on her flight from London to the French island of Corsica. Susie Mullen said that her partner's luggage arrived after a few days, but hers never showed up.Robert Smith/MI News/NurPhoto via Getty Images A British Airways passenger told Insider that she is still missing luggage 19 days after her flight. Susie Mullen said staff in Corsica told her no hold luggage had boarded the flight from Heathrow. She said that her partner's luggage arrived after a few days, but hers never showed up. A British Airways passenger says she still hasn't got her luggage back nearly three weeks after her flight.Susie Mullen told Insider that she flew from London Heathrow to Bastia Airport on the French island of Corsica on June 18. She said it wasn't until after she'd landed that British Airways staff told her they hadn't brought any hold luggage on the plane.Mullen said that after waiting a while at the baggage carousel at Bastia for her suitcase to arrive she "realized that nobody's bag was coming."I went to the BA desk to avoid the rush. And it was when I got to the BA desk, I was told that there were no bags on that flight."Mullen said that after two or three days her partner's bag arrived at the airport, but hers never showed up and she had to spend around 200 euros ($204) on replacement products."We didn't have sun cream, we didn't have toiletries," she said. "It ruined our holiday."Mullen said that when she had arrived at Heathrow to check in her bag, airport staff were asking passengers to line their luggage up under pieces of paper with flight numbers on."I didn't have much confidence that my luggage was actually going to arrive because it was never really properly checked in so I took a little bit of stuff out my suitcase," she said.Mullen said that British Airways told her last Tuesday that her bag was at Heathrow, that the airline was waiting for a courier to collect it, and that it should be with her within the next 48 hours. She said she was then told on Thursday morning that it was actually still in Corsica and would be flown to London on Saturday.Mullen said that she completed a compensation claim form on Saturday, but is yet to hear back about it. She added that she had tried to call British Airways nine times on Sunday to ask about her luggage but "couldn't get through," and said she'd spent two and a half hours on hold to the airline since then."We've been in touch with the customer directly to resolve the matter and are doing everything we can to reunite them with their bag as soon as possible," a British Airways spokesperson told Insider. "We apologise for the delay and inconvenience caused."Mullen said that she and her partner had booked their flights last-minute using points after their original EasyJet flight from Gatwick was canceled around five hours before it was scheduled to depart.Mullen's missing luggage comes amid a period of mounting travel chaos, including other passengers who say they've been left for days without their suitcases.Flights have been canceled, delayed, and changed because of a combination of labor shortages at both airports and airlines, staff strikes, technical problems, and bad weather. In some cases, passengers have been left standing in line for security for hours or have struggled to contact customer services.British Airways said on Wednesday it's canceling 10,300 short-haul flights this summer, bringing the airline's total cuts from its summer schedule to almost 30,000. BA tweeted Wednesday that it was "experiencing high call volumes due to current disruption."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 7th, 2022

Nasdaq May Be Weaker As Beijing Performs Another Round Of Mass COVID-19 Testing

(Tuesday Market Open) Equity index futures are pointing to a lower open as investors come off the extended holiday weekend. Even though the week has just started, investors are already looking forward to Friday’s Employment Situation report. Potential Market Movers There are several employment indicators leading up to Friday’s June job report, and they’ll likely serve as tea leaves for analysts trying to guess those key numbers at the end of the week. With an increasing number of firms seeing a higher likelihood of a recession, June’s jobs report will be an important one as analysts and investors look for chinks in the armor of a strong labor market. In fact, it’s likely that the yield curve will invert once again this week. The 2s10s yield spread is near zero which is a popular indicator for recession. The 10-year Treasury yield (TNX) continued to slide this morning in premarket action, falling more than seven basis points to 2.81% as investors still appear to be looking for safe havens. The Cboe Market Volatility Index (VIX) confirms that nervousness as it shot up more than 5% ahead of the opening bell to a reading just shy of 29. The U.S. Dollar Index ($DXY) also broke higher once again this morning as international investors leaned toward the safety of U.S. Treasuries as well.  The higher dollar is likely to be a drag on multinational stocks as currency headwinds are getting stronger again. The dollar index appears to be building toward another 52-week high and is trading at 2002 levels. In fact, the dollar and the euro could trade at parity soon, which hasn’t happened since 2003. However, in today’s economic headlines, Asia is drawing the attention. Japan’s service PMI reached a nearly 9-year high, good news for the country that has struggled with decades of economic doldrums. The Nikkei was up more than 1%. China may be getting some tariff relief from the United States.  President Biden is considering ending some Trump-era restrictions that would give the U.S. some inflation relief by opening fresh supplies from China. However, simply repealing tariffs could just make Chinese goods cheaper, which could lead to higher demand and with China still locking down its people due to its zero-COVID policy, its plants may not be able to meet demand. Additionally, removing tariffs runs a potential risk of the White House looking weak on China in a midterm election year where Democrats may lose majority in both the House and the Senate. The Shanghai index was down 0.04% as Beijing performs another round of mass ...Full story available on»»

Category: earningsSource: benzingaJul 5th, 2022

Fact-Checking 8 Claims About Crypto’s Climate Impact

Cryptocurrencies are bad for the environment—at least, that’s what most people online seem to believe. Pro-crypto posts on social media are often flooded with angry comments about the industry’s outsized contribution to greenhouse gas emissions. Studies estimate that Bitcoin mining, the process that safeguards the Bitcoin network, uses more power globally per year than most… Cryptocurrencies are bad for the environment—at least, that’s what most people online seem to believe. Pro-crypto posts on social media are often flooded with angry comments about the industry’s outsized contribution to greenhouse gas emissions. Studies estimate that Bitcoin mining, the process that safeguards the Bitcoin network, uses more power globally per year than most countries, including the Philippines and Venezuela. On the other side, members of the crypto community argue that crypto mining is actually good for the environment in several crucial ways. They say that it offers a new, energy-hungry market that will encourage renewable projects. In the long run, they say, crypto will revolutionize the energy grid, and soak up excess energy that would have been otherwise wasted. [time-brightcove not-tgx=”true”] As lobbyists have volleyed arguments on both sides, a blow was dealt to crypto mining’s hopes for rapid expansion in the U.S. on June 30 when New York officials denied the air permits of Greenidge Generation, a Bitcoin mining operation, on June 30, citing “substantial greenhouse gas (GHG) emissions associated with the project.” The decision could set a precedent for how local jurisdictions across the country approach a hotly contested topic. So which side is correct? To investigate, TIME spoke with several energy and environmental experts to break down some of the crypto community’s main arguments. While some experts say that there’s potential for positive impact from crypto mining, most agree there are few indications that the industry is going in the right direction. “There is a narrow path upon which they could be useful to the energy system—but I don’t see that happening,” says Joshua Rhodes, an energy research associate at the University of Texas at Austin. And right now, he says, damage is already being done. “Writ large, they’re probably adding to carbon emissions currently.” Claim: Crypto mining relies on renewable energy. Bitcoin’s network relies on groups of computers, all around the world, to run complex math equations. These computing centers act less like “miners” in the literal sense and more like network watchdogs, used for security and stability. The process, known as proof of work, is energy-intensive by design, in order to prevent hacks and attacks. Crypto advocates argue that the proof-of-work process is becoming more energy efficient: that more and more miners are turning to renewable energy sources like wind, solar, or hydropower, as opposed to coal or natural gas. However, one peer-reviewed study from earlier this year shows the opposite: that the Bitcoin network’s use of renewable energy dropped from an average of 42% in 2020 to 25% in August 2021. Researchers believe that China’s crackdown on crypto, where hydropower-driven mining operations used to be plentiful, was the primary catalyst of this decrease. At the moment, the rate at which crypto miners use renewable energy sources is heavily disputed. The Bitcoin Mining Council, an industry group, argues that 60% of mining comes from renewable sources, which is 20 percentage points higher than the number listed by the Cambridge Center for Alternative Finance. George Kamiya, an energy analyst at the International Energy Agency, says that while the Bitcoin Mining Council likely has access to more data, its numbers come from a survey that hasn’t been peer-reviewed and lacks methodological details, and encouraged them to share the underlying data and methodology with outside researchers like Cambridge. Regardless of which statistic is closer to the truth, there are still many mining operations using non-green energy sources. In New York, Greenidge repurposed a coal power plant that was previously shuttered. It’s now powered by natural gas, which is also fossil-fuel-based. Yvonne Taylor, vice-president of Seneca Lake Guardian, an environmental non-profit, told TIME in April that Greenidge would emit “over a million tons of CO2 equivalents into the atmosphere every year, in addition to harmful particulate matter.” A representative for Greenidge wrote in an email to TIME that the company has offered to reduce its greenhouse gas emissions by 40% from its currently permitted levels by 2025, and that it plans to be a “zero-carbon emitting power generation facility” by 2035. The company also plans to appeal the denial of its air permits and remain operational. Claim: Crypto mining will lead to a renewable energy boom. If crypto mining isn’t sustaining itself on renewables right now, might it in the future? Fred Thiel, the CEO of the crypto mining company Marathon Digital Holdings, has announced his intention to make the company fully carbon-neutral by the end of this year, and says that companies like his could have a huge impact on the future of the renewable energy industry. It’s worth noting that many cryptocurrencies already use much less energy-intensive processes than Bitcoin’s proof of work. Smaller blockchains like Solana and Avalanche use a security mechanism called proof of stake, which Ethereum Foundation researchers claim reduces energy usage by more than 99% compared to Bitcoin’s system. Ethereum, the second largest blockchain behind Bitcoin, is in the process of switching from proof of work to proof of stake this year. It doesn’t seem like Bitcoin will transition away from proof of work any time soon. But renewable energy developers need customers in order to grow, and proof-of-work miners provide exactly that, Thiel argues. As an example, Thiel suggested that there are wind farms in Vermont that have no ability to sell their energy because of their remote locations and the lack of transmission lines. Putting a crypto mining plant on top of the farms would theoretically give them immediate revenue. “If the goal of this country is to convert to green or sustainable energy forms for the majority of our energy use by 2050, the only way it’s going to happen is if the power generators have an incentive to build the power plants,” Thiel says. But Thiel declined to give the name of the Vermont wind farms, and a follow-up email to a Marathon representative asking for the name of that operation or any similar ones received no response. Most experts TIME spoke with dispute the idea that there has been any sort of boom in renewables due to crypto. “I am not aware of any specific examples where a major crypto mining project directly—and additionally—boosted renewable energy production,” Kamiya wrote. “The proof is in the pudding–and I have not seen that play out in the state of Montana,” says Missoula County Commissioner Dave Strohmaier, whose county hosted energy-intensive mining operations that rankled local communities, leading the local government to restrict miners’ ability to set up new operations. Joshua Rhodes says that counties in Texas were ”chock-full of renewable projects getting built and turning on” even before the Bitcoin mining rush. He also argues that even if crypto did spur a renewables boom, it might not even help the right places. While wind and solar energy is plentiful in West Texas, for example, it requires extensive infrastructure and transmission lines to run that power back east to the cities that desperately need it, like Houston and Dallas. “All of the cheap electricity can’t get out,” he says. And even if it were true that crypto mining is creating rapidly accelerating demand for solar and wind farms—which, again, doesn’t seem to yet be the case—there’s the problem of where to put them. Many communities or organizations have opposed them on various grounds ranging from aesthetic to conservational. In New York, Assemblymember Anna Kelles—who spearheaded a bill to impose a moratorium on crypto mining in the state—says that a crypto-driven influx of solar and wind operations would be “directly competing with farmland in New York State at a time when it’s becoming more and more the breadbasket of the country because of climate change.” With major resistance and long timetables to erect wind and solar projects, impatient crypto miners are more likely to set up shop using other, less clean forms of energy. In Kentucky, abandoned coal mines are being repurposed into crypto mining centers. Claim: Crypto miners improve electricity grids If crypto companies aren’t yet supercharging a renewables boom, then maybe they’re helping other ways, like making our electricity grids more resilient. Thiel argues that crypto miners are uniquely suited to help grids for several reasons: that they can be turned off quickly during peak hours of energy usage in a way that, say, pasteurization machines can’t; that they can soak up energy from the grid that would be otherwise wasted; that they can be located very close to sources of energy. “We voluntarily curtail whenever the grid needs the energy,” Thiel says. “It acts as this ideal buffer for the grid.” During peak stretches of Texas’s energy usage, Thiel says, Marathon has lowered or completely shut off their usage of the grid for two to three hours a day. Flexible energy loads are, in fact, good for the grid, Rhodes wrote in a study last year. He found that if crypto miners were willing to curtail their energy usage during peak times so that their annual load is slashed by 13-15%, then their enterprises would help reduce carbon emissions, improve grid resiliency under high-stress periods, and also help foster the shift to renewables. But Rhodes and others are skeptical that most miners will be willing to operate on someone else’s schedule. Crypto miners have shown that in order to maximize their profits, they would much rather operate 24/7. Strohmaier, in Montana, says that when he met with crypto miners operating in his county about their activity, the topics of grid resilience or curtailment “never came up once. We never got the sense there was any willingness to scale back even for a nanosecond of what they were doing. It was all, ‘We have to keep every one of these machines running—and add more if we are able to remain viable,’” he says. Thiel says that when there isn’t enough energy from the wind farms to power Marathon’s plants—as wind doesn’t blow all the time—the company then supplements it partially with natural gas from the grid. When asked for a breakdown of Marathon’s energy usage, a representative wrote in an email, “We’re still in the process of installing miners in Texas. It’s hard to estimate what the ultimate mix will be.” Claim: Crypto miners are simply using energy that would have gone to waste. Plenty of electricity gets wasted in the U.S., and crypto miners are hoping to take advantage of it. The process of oil extraction, for example, produces a natural gas byproduct that many companies simply choose to flare (burn off and waste) rather than building the infrastructure to capture it. But in North Dakota, crypto miners signed a deal with Exxon to set up shop directly on site and use gas that would have been flared for new mining operations instead. Some experts say this process could still be severely damaging. “I don’t see that as a benefit: They’re still burning the gas,” says Anthony Ingraffea, a civil and environmental engineering professor at Cornell University, who co-wrote a paper in 2011 on the environmental hazards of extracting natural gas. Further, Ingraffea argues, by giving Exxon extra business at their oil drilling sites, crypto mining theoretically incentivizes the fossil fuel industry to keep investing in oil extraction. Kamiya contends that there are other productive uses for flared gas, including producing electricity to be sold back to the grid, but that crypto mining “could disincentivize the operator from finding other uses and markets for its gas that can drive higher emission reductions.” And crypto miners are running into problems even in ideal energy circumstances. A paper released this month from the Coinbase Institute contends that in Iceland, a “new gold rush” of mining activity has led to minimal environmental impacts due to the country’s “abundant geothermal energy.” But in December, the country experienced a severe electricity shortage, causing its main utility provider to announce they would reject all future crypto mining power requests. Claim: Some crypto mining operations are already carbon neutral. Last year, Greenidge Generation, the crypto mining facility in New York, tried to quell criticisms about its environmental impact by announcing its intention to become carbon neutral. In a press release, the company said it would purchase carbon offsets and invest in renewable energy projects to account for its gas-based emissions. Replacing fossil-fuel-based energy with renewable energy is certain to be an environmental good. But carbon offsets are not as clear-cut. The offset industry has come under fire from many scientists who say that many such projects are poorly defined and not as helpful as they seem—that it’s common for projects that have no positive environmental impact to be rewarded on technicalities. Offsets essentially allow companies to pay to continue polluting. Greenpeace even called the entire system “​​a distraction from the real solutions to climate change.” Carbon offsets “do not reduce global emissions, they just move them around the globe,” Ingraffea says. He argues that they should only be used in the case of emissions that are impossible to reduce. Read more: The Crypto Industry Was On Its Way to Changing the Carbon-Credit Market, Until It Hit a Major Roadblock Claim: Data centers are just as bad for pollution as crypto mining operations. Many crypto miners feel unfairly targeted about their environmental impact, believing that data centers, which receive far less scrutiny, are just as responsible for increasing carbon emissions. Multiple experts disagree. “Crypto mining consumes about twice as much electricity as Amazon, Google, Microsoft, Facebook, and Apple combined,” says Kamiya. Jonathan Koomey, a researcher who has been studying information technology and energy use for more than 30 years, says that the two categories of machines are moving in opposite directions in terms of efficiency. A 2020 study he co-wrote found that while the computing abilities and output of regular data centers had grown vastly between 2010 and 2018, its electricity use barely increased at all. Meanwhile, in Bitcoin mining, “there’s a structural incentive for the entire system to get less efficient over time,” he says. He’s referring to the fact that, generally, Bitcoin miners are forced to solve harder and harder puzzles over time to keep the blockchain functioning—and the computing power to work through those tasks requires increasing amounts of energy. Claim: Christmas lights use more electricity than Bitcoin. This claim has been repeated over and over by Bitcoin mining defenders, including Thiel in our interview, in order to deflect attention from Bitcoin mining and onto other large uses of electricity. It’s also completely unsubstantiated. The latest major study on holiday lights came from a paper written in 2008, which put their electricity consumption in the U.S. at 6.63 terawatt hours of electricity per year. (The paper noted that figure would only decrease as LED bulbs became more common). The Bitcoin network, by comparison, consumes an estimated 91 terawatt hours yearly. Popular online posts on this topic that defend Bitcoin, including from the digital mining operator Mawson, either do not cite any sources for their data or mangle the findings of trusted institutions. Claim: Bitcoin’s value added to society will make it all worth it. Koomey and other experts say that over the last decade there’s only been one surefire reason crypto mining’s environmental impact can sometimes fall: when cryptocurrency prices go down. During these drops, miners are disincentivized to stay in the market or buy new equipment, and some close up shop, leading to fewer greenhouse-gas emissions. Indeed, as Bitcoin’s value fell from $40,000 to $20,000 from late April to June, industry power usage also dropped by a third according to the Cambridge Bitcoin Electricity Consumption Index. So why should the U.S. allow crypto miners to go on, if they’re harming the environment? Crypto enthusiasts argue that the long-term societal and economic benefits of their industry will offset its electricity usage, just as the computer revolution did before it. Koomey says that when weighing the possible environmental impacts of crypto, it’s important to take a wide-lens approach: to think about what crypto might add to society overall compared to other energy guzzlers. “Sure, Google uses a measurable amount of electricity—but I would argue that’s a pretty good use of that electricity,” he says. “So you have to come back to this question for the crypto people, aside from just how much electricity they use: What business value are you delivering? How does this technology perform a function better than the technology that it replaces? Is it worth it?”  .....»»

Category: topSource: timeJul 1st, 2022

Travelers and airlines are bracing for a chaotic July 4 weekend. Here"s what to do if your flight is canceled or delayed.

Rebooking on the airline's mobile app and familiarizing yourself with your travel card's trip insurance policies are a few of the ways to prepare. Travelers queue up at the north security checkpoint in the main terminal of Denver International Airport, Thursday, May 26, 2022, in Denver.AP Photo/David Zalubowski US airlines canceled over 900 flights on Wednesday and Thursday ahead of the July 4 weekend. Airlines have taken action to prevent disruptions, like starting boarding earlier or bringing in extra workers. Disruptions are still bound to happen — here's what you can do if your flight is delayed or canceled. Travelers may be in for a hectic Fourth of July weekend. In the days leading up to the long holiday, airlines have already started canceling and delaying flights. On Wednesday, United Airlines and American Airlines both delayed over 20% of their scheduled flights and canceled 103 and 277 others, respectively, according to FlightAware data.Delta Air Lines was not much better, delaying 538 flights, or 18% of its schedule, and canceling 65. The three mainline carriers continued the trend into Thursday, having canceled over 250 flights, per FlightAware. Over 5,500 flights total were delayed or canceled by all airlines operating to, from, or within the US.Another 350 have been canceled or delayed by American, Delta, and United on Friday, as of the time of publication, according to FlightAware.The disruptions come as booming demand and staffing shortages create chaos for airlines and passengers, especially over key holiday weekends. Over the Juneteenth weekend, more than 35,000 flights were canceled or delayed from Thursday to Monday, while 4,500 were canceled over Memorial Day weekend in May. With travelers getting nervous ahead of the likely hectic weekend, airlines are making efforts to keep their flights on schedule, like cutting departures, bringing in more workers, and starting boarding earlier.Delta Air Lines CEO Ed Bastian said in a message on Thursday that the airline deployed its "Peach Corps" program for the Fourth of July weekend, meaning the company has sent corporate workers to assist at its Atlanta and New York airports, like checking in passengers and helping with bag drop, among other duties. Moreover, the carrier is offering a fare difference waiver for travelers who want to change their flights over the weekend. United has opted to slash 12% of its daily departures out of its busy Newark Liberty International Airport hub, which is the second-most delayed airport in the nation, CNBC reported. The company says the move will improve on-time performance and make flying through Newark easier for all travelers. The Chicago-based carrier told Insider that it anticipates 5.2 million customers to fly United over the Independence Day weekend, which is 24% higher than in 2021 and about 92% of what they saw in 2019.Despite the airline's best efforts, many travelers are going to face challenges at the airport regardless of how well they prepare. Here are six things to do if your flight gets canceled or delayed.Know the ways to contact your airlineBreeze agents in Las Vegas during a long delay.Taylor Rains/InsiderAirline customer service can be reached via phone or by talking to agents at the airport. However, some airlines have a dedicated center in the terminal where everyone must go to get help, but those lines can be very long. If you prefer to call instead, here are the customer service numbers for US carriers:Alaska: 1-800-252-7522Allegiant: 1-702-505-8888American: 1-800-433-7300Avelo: 1-346-616-9500Breeze: No phone number. The fastest way to contact Breeze is via Facebook Messenger.Delta: 1-800-221-1212Frontier: 1-801-401-9000JetBlue: 1-800-538-2583Southwest: 1-800-435-9792Spirit: 1-855-728-3555Sun Country: 1-651-905-2737United: 1-800-864-8331While you wait for a representative to answer, which has taken up to four hours for some customers, try reaching out to companies via social media, like Twitter. Sending a direct message early on can act as a virtual placeholder, and you may hear back via a chat before you talk to a live human. However, this method is not fool-proof and is best to be used in conjunction with other lines of communication.Know how the airline is preparing for inclement weatherAmerican plane after landing on a snowy day.EchoVisuals/ShutterstockIf you travel this summer, it is almost guaranteed you'll experience some type of weather event. Thunderstorms and hurricanes are common across the US and can cause significant delays and cancellations, which are out of the airline's control.If there is impending weather then carriers known will disrupt operations, they will typically send an email or text message to customers, or publish a warning on their website. For example, Frontier Airlines waived change fees for passengers scheduled to travel during a tropical storm that moved across Florida in early June.Rebook flights on an airline's website or mobile appSouthwest Airlines mobile app.Brenda Rocha - Blossom/ShutterstockWhen flights get delayed or canceled, there is typically a rush of people eager to talk to a customer service agent at the airport. However, it is easier and faster to make changes on the carrier's website or mobile app. In most cases, flight changes should be free, or you can request a refund. During high-traffic situations where thousands of people are making changes at once, it is possible that all of the options will be taken. So, act quickly, or you may need to seek out a customer service agent as your plan B.Know your traveler rightsTravelers queue up move through the north security checkpoint in the main terminal of Denver International Airport, Thursday, May 26, 2022, in Denver.David Zalubowski/APIf your flight is canceled altogether, airlines must offer customers a refund, according to the Department of Transportation. In other cases, like a voluntary cancelation, airlines may offer credits that can be used at a later date. Refunds, however, give more freedom to the customer to rebook a flight on a different carrier.If you find yourself stranded at an airport due to a delay or cancelation caused by the airline, like crew staffing, then you can ask for a meal or hotel voucher. Airlines, however, are not obligated to give passengers anything when things outside of their control, like weather, cause disruptions. Moreover, DoT laws do not require them to compensate customers for delays. In these cases, you should be familiar with your airline's reimbursement policies, and always ask for a meal voucher regardless of the reason for the delay — it never hurts to ask.Know what your travel credit card or trip insurance policy coversPassport and Chase Sapphire Reserve credit card.Evgenia Parajanian/ShutterstockHigh-dollar credit cards like the Chase Sapphire Reserve and American Express Platinum Card have built-in trip insurance when you make any travel-related purchases with those cards.There are also travel insurance companies, like Allianz, that cover costs lost by disruptions. For example, if you don't make it to your final destination for at least 24 hours "due to severe weather (or another covered reason)," then Allianz has a coverage plan.Allianz's 24-hour policy is not always the case. Chase's "trip delay reimbursement" policy reimburses customers for 6-hour delays or overnight stays.Insider used Chase's reimbursement benefit on a trip in summer 2021 and was covered for all expenses.Get ready for long lines, but know when enough is enoughPassengers in line in Miami to rebook canceled American Airlines flights in 2021.Taylor Rains/InsiderDuring the busy summer travel season, understand that airlines will be rebooking thousands of passengers and long lines will form. Expect to wait on hold with customer service agents for hours, and be ready to wait for a response via social media.Give yourself a cut-off time that you will wait for your flight or an agent. Once that passes, start looking at other options to get to your destination, like driving or taking a train. In many cases, these expenses are covered by trip insurance.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 1st, 2022

4th of July: A by-the-numbers look at the American holiday

On the Fourth of July, a federal holiday, Americans spend money on food, fireworks, travel and patriotic decorations. Here are 10 quick facts on leading industries......»»

Category: topSource: foxnewsJul 1st, 2022

Soaring Inflation And Crashing Rates Are Sparking Trucking"s "Great Purge"

Soaring Inflation And Crashing Rates Are Sparking Trucking's "Great Purge" By Craig Fuller, CEO at FreightWaves The last trucking market crash was in 2019. The current market could end up worse for small truckload fleets. The freight market crash in 2019 was caused by two factors – a freight slowdown due to tariffs on Chinese imports and a surge of new fleets flooding the market, even as rates continued to fall.  Until 2019, we had never seen that many new fleets enter the market, especially during a market downturn. During 2019 an average of 7,200 fleets entered the market per month compared to an average of 5,200 fleets per month during 2008-18.  The 2019 drop in freight volumes wasn’t significant. At their deepest trough, tender volumes registered a 4.6% drop in year-over-year load requests, and that lasted for just a few short months (May-July). Trucking is a commodity and anyone that has been around commodity markets understands that it doesn’t necessarily take a dramatic move on one side of the market to change the balance of supply/demand and cause significant price swings.  In 2019, the trucking market already had too much capacity relative to demand. The year-over-year decline was only in the mid-single digits. But, it was enough to push rates below carriers’ operating costs. Removing the cost of diesel from the spot rate, here is what the market looked like in 2019 (van per mile):  Low: $1.51 Average: $1.59 High $1.75 We are nearing 2019’s rock-bottom, inflation-adjusted spot rates Trucking companies have much higher operating costs now than they did in 2019, even when removing fuel from the number. Every fleet’s operating cost will be different, but using data from TCA, ACT, and FreightWaves’ own analysis, we can draw some conclusions about the cost increases that a fleet would experience in 2022 compared to 2019.  Assuming a fleet averages 6,500 miles per truck per month and purchased a four-year-old used truck in 2019 at $50,000, plus sales tax, financed for five years at 5% interest, the monthly payment would cost around $0.15/mile. With used truck prices surging during the pandemic, a four-year-old used truck last fall would run $77,000. If the vehicle was financed with similar terms, the per mile cost would be around $0.23/mile.    A driver employee with experience working for a top-paying fleet can expect to make around $0.62/mile. In 2019, the same driver would have made around $0.47/mile.  Higher variable operating costs include insurance (+$.02/mile), maintenance (+$.06/mile), equipment (+$.08/mile) and driver wages (+$.15/mile). All in, variable costs have increased at least $0.31/mile more for fleet operators in 2022 compared to 2019. These numbers are likely understated, as they don’t include increases related to back-office operations and support staff, which can vary widely among fleets.  Adjusting the 2019 numbers, the rates per mile total:  $1.82 (low)  $1.90 (average) $2.16 (high) The current spot rate (net fuel) is $1.95/mile. On a variable cost-adjusted basis, the trucking spot rates have matched 2019 since May 2022 – $2.16/mile, dropping $0.21/mile. It’s likely to get worse. The month of May typically has among the highest rates we’ll see all year, with July and August being some of the weakest months.  It is conceivable that spot rates will drop below the inflation-adjusted 2019 low of $1.82 per mile in July, since there doesn’t seem to be any near-term market catalysts to drive additional demand.  U.S.- bound container volumes, which have been driving a substantial amount of the freight surge in the U.S. trucking market since 2020, are seeing a significant drop, as reported by Henry Byers, FreightWaves’ senior global trade analyst.   There are also the economic challenges that are apparent in the economy, including record-low consumer confidence, declining construction and industrial activity, surging inflation, and a Federal Reserve that is determined to slow the economy down to tame inflation, even if it means putting the economy into a recession.  All of this means that the freight market will likely encounter additional headwinds and there are more reasons to believe that trucking spot rates have further to fall. Capacity matters Of course, trucking is a two-sided market. Demand is only one part of the equation; capacity also matters.  Capacity is really just a function of how much dispatchable capacity is in the market. Like 2019, the trucking industry has seen a record number of new entrants enter the trucking market to take advantage of what were strong market conditions and record high spot rates created because of government stimulus over the past two years. The number of new entrants into the trucking industry nearly doubled the 2019 monthly record average. Since 2020, the monthly average of new fleets entering trucking has increased to 13,370 per month, up from 7,200. In April, the number hit 23,479.  This large number of new entrants means that the trucking industry has many companies that are brand new, have higher cost structures (because they joined when the freight market was peaking) and that have never experienced a downturn.  This massive surge of dispatchable capacity was built for a market that had much more freight activity. If the economy contracts further, it could spell disaster for many of the most vulnerable operators. The summer doldrums Even if the economy doesn’t contract, July and August are always slower than June. It is the time of the year when supply chains take a break and get ready for the retail surges that typically begin after Labor Day.  The retail surge is a really important part of the freight calendar and often offers some of the highest spot rate opportunities. In the first half of the year construction, auto, beverages, and fresh produce drive the surges in trucking.  In the second half of the year, surges are caused by retailers scrambling to get inventories placed for the holiday shopping season. That may not happen this year, with many retailers’ inventories overstocked. Since their warehouses and distribution centers are full, they are reluctant to add additional inventory to their supply chain and will focus their efforts on liquidating what they currently have in stock. Trucking spot rates will not increase significantly until the Great Purge is over As long as the market has excess capacity, freight rates will remain depressed. It will take a substantial purge of capacity before spot market carriers can expect relief.  FreightWaves editorial director Rachel Premack covered this topic last week in her article titled “the Great Purge.” The unfortunate reality of trucking is that the market is often “feast or famine” and with so many new mouths to feed, the famine this year could be much worse than was experienced in 2019.  Tyler Durden Tue, 06/28/2022 - 10:20.....»»

Category: blogSource: zerohedgeJun 28th, 2022