Starbucks New CEO Sets Priorities As It Drifts From Core

Posted on September 11, 2024 by RTT Staff Writer

Starbucks Corp.’s new CEO Brian Niccol announced his priorities for his initial days, with a view to focusing on improving the coffee giant’s U.S. business before moving to the international markets. In an open letter to employees, customers and stakeholders, he pointed out the firm’s drift from its core, and presented a plan for the first 100 days to reestablish Starbucks as the community coffeehouse.

Noting that the customers miss the Starbucks magic in the U.S., Niccol outlined four areas for improvement for the company, which has been struggling with weak financial performance for the past few quarters. These include empowering barista experience, morning service, bringing back community coffeehouse experience, and the company’s branding.

To support this vision for U.S., the company plans to make investments in technology to enhance the partner and customer experience, improve supply chain, and evolve its app and mobile ordering platform.

Calling himself a long-time Starbucks customer, Niccol said, “Many of our customers still experience this magic every day, but in some places — especially in the U.S. — we aren’t always delivering. It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic. These moments are opportunities for us to do better.”

Further, regarding the international markets, Niccol said the firm needs to understand the potential path in China to capture growth. Internationally, there is enormous potential for growth, especially in regions like the Middle East, where it will work to dispel misconceptions about the brand, and in Asia Pacific, Europe and Latin America, where the love for Starbucks is strong.

Niccol, who most recently was Chairman and CEO of Chipotle Mexican Grill, Inc., took charge as the chairman and chief executive officer of the coffee chain on September 9. He succeeded Laxman Narasimhan, who resigned as CEO in mid- August, following challenging headwinds including weak profits amid slumping sales.

In its latest third quarter, Starbucks earnings dropped 7.6 percent from the prior year, on a 1 percent drop in revenues. A 1 percent rise in net revenues for the North America segment was offset by a 7 percent drop in International segment.

Global comparable-store sales also declined 3 percent, hurt by a 5 percent drop in comparable transactions. U.S. comparable-store sales edged down 2 percent, and International comparable store-sales decreased 7 percent. China comparable store sales also fell 14 percent.

At the time of Niccol’s appointment, Starbucks had said that since becoming the CEO of Chipotle in 2018, he has transformed that company, by doubling the revenue with nearly sevenfold profits, seeing nearly 800 percent gain in its stock price during his leadership. All these were achieved while increasing wages for retail team members, expanding benefits, and strengthening the culture.

The Coffee chain, which operates in 87 markets around the world, has its own coffee farm, five roasting facilities, as well as Reserve Roasteries in Milan, Shanghai, Tokyo, New York City, Chicago and Seattle.

U.S. Stocks May Give Back Ground Following Inflation Data

Posted on September 11, 2024 by RTT Staff Writer

After moving mostly higher over the two previous sessions, stocks may give back ground in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.5 percent.

The futures remained in negative territory following the release of the Labor Department’s closely watched report on consumer price inflation in the month of August.

While the report showed consumer prices increased in line with economist estimates, core consumer prices rose by slightly more than expected.

The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

However, core consumer prices, which exclude food and energy prices, climbed by 0.3 percent in August after rising by 0.2 percent in July. Economists had expected core prices to rise by another 0.2 percent.

The Federal Reserve is still likely to lower interest rates next week, but the bigger than expected increase by core consumer prices may be seen as reducing the chances the central bank lowers rates by 50 basis points.

Following the report, CME Group’s FedWatch Tool is indicating an 85.0 percent chance of a quarter point rate cut and just a 15.0 percent chance of a half-point rate cut.

At the same time, the report said the annual rate of consumer price growth slowed to 2.5 percent in August from 2.9 percent in July. Economists had expected the year-over-year growth to decelerate to 2.6 percent.

The annual rate of core consumer price growth was unchanged from the previous month at 3.2 percent in August, in line with economist estimates.

Stocks fluctuated over the course of the trading session on Tuesday but managed to end the day mostly higher. The Nasdaq and the S&P 500 added to the strong gains posted during Monday’s session, although the narrower Dow bucked the uptrend.

The Nasdaq and the S&P 500 saw further upside going into the close, reaching new highs for the session. The Nasdaq climbed 141.28 points or 0.8 percent to 17,025.88 and the S&P 500 rose 24.47 points or 0.5 percent to 5,495.52, but the Dow dipped 92.63 points or 0.2 percent to 40,736.96.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index tumbled by 1.5 percent, while China’s Shanghai Composite Index slid by 0.8 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index is up by 0.5 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.2 percent.

In commodities trading, crude oil futures are jumping $1.45 to $67.20 a barrel after plunging $2.96 to $65.75 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,540.30, down $2.80 compared to the previous session’s close of $2,543.10. On Tuesday, gold climbed $10.40.

On the currency front, the U.S. dollar is trading at 142.45 yen compared to the 142.44 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1005 compared to yesterday’s $1.1020.

U.S. Consumer Prices Increase Modestly In August, Annual Growth Slows To Over 3-Year Low

Posted on September 11, 2024 by RTT Staff Writer

While the Labor Department released a report on Wednesday showing consumer prices in the U.S. increased in line with estimates in the month of August, the annual rate of consumer price growth slowed by slightly more than expected.

The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

Meanwhile, the report said the annual rate of consumer price growth slowed to 2.5 percent in August from 2.9 percent in July. Economists had expected the year-over-year growth to decelerate to 2.6 percent.

With the bigger than expected slowdown, consumer prices saw the smallest 12-month increase since February 2021.

The monthly increase by consumer prices was largely due to continued growth in shelter costs, which climbed by 0.5 percent in August after rising by 0.4 percent in July. A 0.8 percent decrease by energy prices helped limit the upside.

Excluding food and energy prices, the Labor Department said core consumer prices rose by 0.3 percent in August after inching up by 0.2 percent in July. Economists had expected core prices to rise by another 0.2 percent.

The annual rate of core consumer price growth was unchanged from the previous month at 3.2 percent in August, in line with economist estimates.

The higher shelter costs contributed to the monthly increase by core consumer prices along with higher prices for airline fares, motor vehicle insurance, education, and apparel.

On the other hand, prices for used cars and trucks, household furnishings and operations, medical care, communication, and recreation were among those that decreased over the month.

“The hotter core CPI increase was disappointing after several months of cooler readings and highlights the sticky nature of the recent inflation surge,” said Nationwide Senior Economist Ben Ayers.

He added, “This should clinch a smaller, 25 basis points rate cut from the Fed next week as Fed officials remain wary to feed any lingering price momentum for the economy.”

The Labor Department is scheduled to release a separate report on Thursday on producer price inflation in the month of August.

Economists currently expect the producer prices to inch up by 0.1 percent for the second straight month, while the annual rate of producer price growth is expected to slow to 1.8 percent in August from 2.2 percent in July.

U.S. Stocks Move Sharply Lower As Inflation Data Reduces Chances Of Half-Point Rate Cut

Posted on September 11, 2024 by RTT Staff Writer

Stocks have moved sharply lower over the course of the trading day on Wednesday, largely offsetting the rebound seen over the two previous sessions. With the pullback on the day, the Dow has fallen to its lowest intraday level in nearly a month.

Currently, the major averages are just off their lows of the session. The Dow is down 702.12 points or 1.7 percent at 40,034.84, the Nasdaq is down 211.98 points or 1.3 percent at 16,813.90 and the S&P 500 is down 84.97 points or 1.6 percent at 5,410.55.

The sell-off on Wall Street comes following the release of the Labor Department’s closely watched report on consumer price inflation in the month of August.

While the report showed consumer prices increased in line with economist estimates, core consumer prices rose by slightly more than expected.

The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

The Federal Reserve is still likely to lower interest rates next week, but the bigger than expected increase by core consumer prices is seen as reducing the chances the central bank lowers rates by 50 basis points.

Following the report, CME Group’s FedWatch Tool is indicating an 83.0 percent chance of a quarter point rate cut and just a 17.0 percent chance of a half-point rate cut.

“It’s possible that some will be disappointed that there wasn’t a lower-than-expected inflation reading, which might have given the Fed more room to cut 50 bps,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

He added, “But most of the Fed speakers have already telegraphed their desire to start slowly and not begin with a jumbo cut.”

The report also said the annual rate of consumer price growth slowed to 2.5 percent in August from 2.9 percent in July. Economists had expected the year-over-year growth to decelerate to 2.6 percent.

The annual rate of core consumer price growth was unchanged from the previous month at 3.2 percent in August, in line with economist estimates.

Sector News

Interest rate-sensitive housing stocks have moved sharply lower on the day, dragging the Philadelphia Housing Sector Index down by 2.8 percent.

Considerable weakness has also emerged among banking stocks, with the KBW Bank Index tumbling by 2.7 percent to its lowest intraday level in almost a month.

Transportation stocks have also shown a significant move to the downside, as reflected by the 2.4 percent slump by the Dow Jones Transportation Average.

Brokerage, energy and retail stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

Other Markets

The major European markets have also moved to the downside over the course of the session. While the French CAC 40 Index is down by 0.4 percent, the U.K.’s FTSE 100 Index is down by 0.3 percent and the German DAX Index is down by 0.1 percent.

In the bond market, treasuries have moved higher over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.4 basis points at 3.620 percent.

U.S. Stocks Show Significant Recovery After Early Sell-Off

Posted on September 11, 2024 by RTT Staff Writer

After moving sharply lower early in the session on Wednesday, stocks have shown a significant recovery over the course of the trading day. The major averages have climbed well off their lows of the session, with the tech-heavy Nasdaq climbing firmly into positive territory.

Currently, the major averages are turning in a mixed performance. While the Dow is down 180.87 points or 0.4 percent at 40,556.09, the Nasdaq is up 137.74 points or 0.8 percent at 17,163.62 and the S&P 500 is up 1.49 points or less than a tenth of a percent at 5,497.01.

The early sell-off on Wall Street came following the release of the Labor Department’s closely watched report on consumer price inflation in the month of August.

While the report showed consumer prices increased in line with economist estimates, core consumer prices rose by slightly more than expected.

The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

Meanwhile, core consumer prices, which exclude food and energy prices, climbed by 0.3 percent in August after rising by 0.2 percent in July. Economists had expected core prices to rise by another 0.2 percent.

Stocks moved sharply lower as the data seemingly reduced the chances of the Federal Reserve cutting interest rates by 50 basis points next week.

Selling pressure has waned dramatically over the course session, however, as the Fed is still expected to continue lowering interest rates in the coming months.

CME Group’s FedWatch Tool suggests the chances of a half-point rate cut next week have fallen following the release of the report, but it still points to rates being at least a full percentage point lower by the end of the year.

“Given the stickiness of services inflation, the Fed will likely cut by 25 basis points in the upcoming meeting and reserve the potential for more aggressive action later this year if we have further deterioration in the job market,” said Jeffrey Roach, Chief Economist for LPL Financial.

Sector News

Despite the recovery attempt by the broader markets, interest rate-sensitive housing stocks continue to see considerable weakness, with the Philadelphia Housing Sector Index down by 1.4 percent.

Significant weakness also remains visible among banking stocks, as reflected by the 1.3 percent loss being posted by the KBW Bank Index.

Oil producer and transportation stocks also continue to see notable weakness, while semiconductor stocks have shown a significant turnaround, driving the Philadelphia Semiconductor Index up by 2.1 percent.

Other Markets

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.4 percent, the French CAC 40 Index edged down by 0.1 percent and the U.K.’s FTSE 100 Index dipped by 0.2 percent.

In the bond market, treasuries have fluctuated over the course of the trading session. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.6 basis points at 3.670 percent.

BMW Recalls 1.5 Mln Vehicles Over Braking System Issue

Posted on September 11, 2024 by RTT Staff Writer

BMW (BMW.L) is recalling 1.5 million vehicles across five countries, including 270,000 cars in the United States, due to a braking system issue.

The affected models, produced between June 2022 and August 2024, include the BMW 5-Series and 7-Series, the Rolls-Royce Spectre, two Mini variants, and several BMW crossovers.

The automaker told to the Associated Press that the issue related to braking system, manufactured by auto supplier Continental, was first identified during an internal quality check.

Further, a BMW spokesperson informed the Associated Press that the company “has developed a diagnostic software to detect the brake fault before it occurs.” If a potential brake malfunction is detected, the software would alert the driver with a warning to visit a dealership immediately to get a free system replacement.

The spokesperson added that in the unlikely event of malfunction, the braking system would revert to a “safe mode”, ensuring the brakes work and meet legal standards, but it would require drivers to apply more force when applied.

Continental confirmed that the parts need to be replaced but assured that there is no danger of the braking performance falling below the legally required standards.

The Munich-based company anticipates costs of the recall to be in the “high three-digit million” euro range.

Amazon Launches New Private-Label Brand To Offer Cheaper Grocery Deals

Posted on September 11, 2024 by RTT Staff Writer

Amazon (AMZN) has introduced a new private-labelled brand, dubbed as Amazon Saver, offering more affordable grocery options both in-store and online.

Touted as “No Frills” brand, Amazon Saver offers most items for under $5, helping individuals stretch their grocery budgets.

“We’re always looking to make grocery shopping easier, faster, and more affordable for our customers,” said Claire Peters, worldwide vice president of Amazon Fresh.

“With expanded Prime member savings, the introduction of the new Amazon Saver brand, and simplified online shopping, it’s now easier than ever to get your weekly grocery shopping done on a budget with Amazon Fresh – whether you’re browsing the aisles or filling your online cart.”

The tech giant highlighted that Prime members will receive an extra 10 percent discount on these products. Also, it plans to gradually add more than 100 items to the lineup.

Amazon’s move follows similar strategies by competitors, with Target introducing its dealworthy brand in February, and Walmart rolling out its bettergoods brand in April, both aimed at offering cheaper deals to customers.

U.S. Stocks Recover From Early Sell-Off To Close Sharply Higher

Posted on September 11, 2024 by RTT Staff Writer

Stocks moved sharply lower early in the session on Wednesday but showed a substantial turnaround over the course of the trading day. The tech-heavy Nasdaq led the recovery, with all of the major averages ending the day in positive territory.

After tumbling by as much as 1.4 percent in early trading, the Nasdaq surged 369.65 points or 2.2 percent to 17,395.53. The S&P 500 also jumped 58.61 points or 1.1 percent to 5,554.13, while the Dow rose 124.75 points or 0.3 percent to 40,861.71 after hitting its lowest intraday level in almost a month.

The early sell-off on Wall Street came following the release of the Labor Department’s closely watched report on consumer price inflation in the month of August.

While the report showed consumer prices increased in line with economist estimates, core consumer prices rose by slightly more than expected.

The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

Stocks moved sharply lower as the data seemingly reduced the chances of the Federal Reserve cutting interest rates by 50 basis points next week.

Selling pressure waned dramatically over the course session, however, as the Fed is still expected to continue lowering interest rates in the coming months.

Sector News

Semiconductor stocks helped lead the turnaround on Wall Street, with the Philadelphia Semiconductor Index spiking by 4.9 percent. Market leader and AI darling Nvidia (NVDA) turned in one of the sector’s best performances, soaring by 8.0 percent.

Significant strength also emerged among networking, software and computer hardware stocks, contributing to the surge by the tech-heavy Nasdaq.

Steel and retail stocks also showed strong moves to the upside over the course of the session, while weakness remained visible among oil producer stocks despite a rebound by the price of crude oil.

Other Markets

In the bond market, treasuries fluctuated over the course of the session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 3.653 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to separate Labor Department reports on producer price inflation and weekly jobless claims.

Nasdaq Reverses 2% Higher, Oil Prices $2 Up But Trends Lower

Posted on September 11, 2024September 11, 2024 by Skerdian Meta

Although oil prices have rebounded by $2 from their recent lows, the broader trend remains negative. Global economic weaknesses, especially in China, are weighing heavily on the market. China’s inflation declined in August, sparking concerns about its economy, which is particularly alarming given that China is the largest oil importer in the world. This has added to the selling pressure on crude oil.

Continue reading “Nasdaq Reverses 2% Higher, Oil Prices $2 Up But Trends Lower” →

Kroger Earnings Report Tomorrow- What to Expect

Posted on September 11, 2024 by Timothy St. John

Sandwiched between the US CPI report and Thursday’s opening bell for the stock market is Kroger’s quarterly earnings report. What does the market expect from the grocery chain?

Kroger (KR) stock is down 2.33% for the day, leading into its quarterly earnings report. The company’s stock price is at $51 a share right now. The expectation is that for this quarter that just finished the company will earn $34.09 billion in revenue with a gain of $0.91 per share.

Kroger will be reporting its quarterly earnings on Thursday.

The stock is performing just below its 52-week high, so it is set for a decent earnings boost, if the report comes out positive. In the past, Kroger’s stock has moved dramatically after a quarterly report. We may see something similar here, but investors need to beware that the market is in a tight place right now.

The stock market is suffering through one of its toughest months this year, and with inflation and unemployment high, companies need to perform really well in order to see a stock price improvement following the quarterly report. That is the uphill battle that Kroger will be fighting here, and we will see on Thursday how it all pans out.

US CPI and Kroger

The CPI report came out earlier today and has surprised much of the market. The Core CPI numbers were higher than expected with a 0.3% increase. Compared to the same time last year, it is up 3.2%.

Overall CPI was up 0.2% compared to last month, which is right on par with expectations. These numbers do not paint a very promising picture for the stock market, as they indicate that inflation is likely to remain sticky for the time being.

Kroger will have to perform really well in order to help its stock to elevate after the earnings report. Right now, KR’s chances of shooting up tomorrow are very slim, even if the numbers for revenue and earnings per share meet the expectations.