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This morning’s economic data reveal comes in the form of revised Q1 Gross Domestic Product (GDP) numbers, which is the final read. On the headline, we see this expanding slightly to the negative: -1.6% from -1.5% in the last print. It’s the first negative quarter of GDP growth since Q2 2020’s tumultuous Covid-related shutdown.
Back then, the two months of negative GDP growth (Q1 2020 was -5.1%) constituted a technical recession, but that was it — very short-lived. Depending on how Q2 shakes out (and Q2 GDP numbers don’t start coming out until a month from now), especially in terms of growth in the Energy space, we may see our second technical recession in two years.
The other sub-headline numbers come in as follows: Final Demand +2.0% (prior +2.7%), Consumption +1.8% (+3.1% last time), Gross Domestic Income +1.8% (+2.12% previous). The quarter-over-quarter Core (stripping out volatile food and energy prices) Expenditure came in slightly higher at +5.2% from a downwardly revised +5.0%. This is still a high number, though thankfully well off the +6.1% we saw in June of last year.
Tomorrow, we see the full compliment of Personal Consumption Expenditure (PCE) numbers — well known as the Fed’s favorite inflation barometer — for the month of May. Last time around we saw year-over-year figures of +6.3% on headline, +4.9% on core. This core number is lower than the +5.2% we saw in March. Core PCE inflation month over month is expected to be +0.4% — higher than the previous month’s +0.3%.
Over the Atlantic this morning, the latest European Central Bank (ECB) conference is just getting underway at this hour. Addressing central bankers in the Eurozone and beyond will be ECB President Christine Lagarde, Bank of England President Andrew Bailey and U.S. Fed Chair Jerome Powell. If we here in the U.S. are fretting recessionary conditions, the EU — with its close proximity to the Ukraine war, among other things — is almost assuredly heading toward negative growth.
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Vale will gain from focus on delivering higher margins in iron ore operations, investment in projects and efforts to transform its base metals business into a significant cash generator.
Columbia Sportswear has been gaining from brand enhancement initiatives. The company is also benefiting from its direct-to-consumer e-commerce operations.
Twitter has been benefiting from the platform’s simplicity, increased character limits, live streaming deals and focus on fostering healthy conversation on the platform.
Chemours should gain from strong demand for Opteon refrigerant. Its cost actions should also support its margins. The company also has a strong liquidity position.
Customer concentration, leveraged balance sheet and stiff competition from other major storage players remain major concerns limiting the growth prospects of Western Digital.
Abiomed’s operation in a stiff competitive space and a sluggish macroeconomic climate is worrying. Other headwinds like pricing pressures, forex woes and third-party reimbursement prevail.
Stiff competition for ad dollars, a plethora of controversies over the company’s treatment of user data and increasing regulations related to user privacy are key concerns.
Altra Industrial Motion (AIMC)Downgraded: 06/25/22
Supply-chain restrictions, labor shortages and inflation are likely to be concerning in the first half of 2022. Softness in the renewable energy market might be problematic.
Urban Outfitters reported higher SG&A expenses during first-quarter fiscal 2023. Higher marketing and creative spend to support digital growth might increase SG&A going forward.
Sun Life faces earnings pressure due to volatility in equity markets and interest rates, increased expenses weighing on margin expansion and regulatory uncertainties are concerns.
J&J is making rapid progress with its pipeline and line extensions. Several pivotal data readouts and regulatory milestones are expected in the near term.
Kroger has been making significant investments to enhance product freshness and quality, and expand digital capabilities. Impressively, it has been introducing new items under its “Our Brands” portfolio.
Abiomed’s extensive product portfolio and robust demand for its Impella line of products will continue to serve as key growth catalysts over the next several years.
Align Technology’s robust product line, balanced growth across all channels and consistent focus on international markets to drive growth bolster our confidence in the stock.
