Good morning. Happy Thursday.
The Asian/Pacific markets leaned to the upside. China, Hong Kong, India, Australia and New Zealand did well; Japan, Singapore and Thailand were weak. Europe, Africa and the Middle East lean to the upside. Poland, Turkey, South Africa, Hungary and the Czech Republic are up; Finland and Sweden are down. Futures in the States point to a flat open for the cash market.
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The dollar is up. Oil is up; copper is down. Gold is up; silver is down. Bonds are down.
Stories/News from Seeking Alpha…
Record after record
Holiday reminder: Wall Street Breakfast won’t be published tomorrow with markets closed for Good Friday.
Stock investors are closing out a great first quarter, with the market continuing to crush it with near-daily record highs. The S&P 500 (SP500) is up 10% in the first three months of the year, already hitting the 5,200 mark that even the most bullish of analysts had predicted for all of 2024. Any weakness hasn’t continued for more than several sessions, with dip buying and fresh money continuing to come off the sidelines.
Broad-based: It’s not only the AI revolution and the Magnificent Seven (or “Super Six” minus Tesla). All of the 11 S&P 500 sectors have risen on a YTD basis, except for Real Estate (SP500-60), and the momentum has even recently spread to other indexes like the Russell 2000 (IWN). The records also haven’t been limited to stocks, with bitcoin (BTC-USD) and gold (XAUUSD:CUR) notching new highs, in a rally that has spread across asset classes.
“The timing of the rate cuts, which was of paramount importance last year, has become less of a concern, largely because of the economic resilience we have seen so far this year,” Investing Group Leader Lawrence Fuller writes in Rotation Is Keeping This Expansion And Bull Market Alive. “The soft landing that has gone from a pipe dream to the consensus view on Wall Street is at hand. That is why markets have performed so well since last October.”
What’s next? The market is closed tomorrow for Good Friday, meaning today will be the last session of the quarter. According to Dow Jones Market Data, when the S&P 500 notches an 8% gain or more in Q1, it is nearly assured to finish the rest of the year on the right foot with an average advance of 9.7% in the following three quarters. Also remember that there is a presidential election in November, which is usually positive for the market regardless of who is declared the winner.
Behind bars
Sam Bankman-Fried, the disgraced founder of collapsed crypto exchange FTX, will hear today how much time he’ll spend in prison. Back in November, SBF had been found guilty on all seven criminal counts related to fraud and conspiracy, as part of a scheme U.S. Attorney Damian Williams referred to as “one of the biggest financial frauds in American history.” Federal prosecutors are recommending a sentence of 40 to 50 years, while lawyers for the former crypto mogul are pushing for a term of no more than six and a half years given expectations that customers and creditors will be paid back in full.
Take it slow
There is “no rush” for the U.S. central bank to start cutting interest rates, according to Federal Reserve Governor Christopher Waller. “The risk of waiting a little longer is significantly lower than acting too soon,” he added, citing “the strength of the US economy and resilience of the labor market.” Waller also pointed to recent economic data, which has “made me uncertain about the speed of continued progress.” Implementing rate reductions too soon could risk a resurgence in inflation, meaning it would be better to hold rates at the current 5.25%-5.50% target range for longer. (31 comments)
Disney vs. DeSantis
Walt Disney’s (NYSE:DIS) Hulu integration isn’t the only news making headlines. The House of Mouse and allies of Florida Gov. Ron DeSantis have reached an agreement over Disney World’s future development. A state court settlement will bring an end to almost two years of litigation around the Central Florida Tourism Oversight District, the entity that provides municipal services to the giant theme park. Elsewhere, activist investor Nelson Peltz won the backing of investment adviser Egan-Jones in Trian’s campaign for two board seats at Disney. (64 comments)
Today’s Economic Calendar
8:30 GDP
8:30 Initial Jobless Claims
8:30 Corporate Profits
9:45 Chicago PMI
10:00 Consumer Sentiment
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Baker-Hughes Rig Count
SIFMA Early Close at 2:00 PM
3:00 PM Farm Prices
4:30 PM Fed Balance Sheet
What else is happening…
Meet the latest additions to the S&P 500 Index (SP500).
Amazon (AMZN) spends billions on AI startup Anthropic.
Easier acquisition? Paramount (PARA) ratings cut to junk.
Carnival (CCL) warns Baltimore bridge collapse could clip profits.
In and out: Discover (DFS) President and CEO Rhodes resigns.
Schlumberger (SLB) pays close to $400M for carbon-capture venture.
Russian cuts to crude output may bring $100 oil – J.P. Morgan.
Fisker (OTC:FSRN) slashes prices to clear inventory and raise cash.
Judge rules SEC case against Coinbase (COIN) can move forward.
Walmart (WMT) will refile antitrust notification for Vizio (VZIO) takeover.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned up. Japan, India, Taiwan, Australia and Singapore did well; China, Hong Kong and Indonesia were weak. Europe, Africa and the Middle East leans up but is mostly quiet. Germany, Hungary, Norway, Spain and the Czech Republic are leading; the UAE is down. Futures in the States point to a moderate gap up open for the cash market.
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The dollar is up. Oil and copper are down. Gold is up; silver is unchanged. Bonds are up.
Stories/News from Seeking Alpha…
Supply disruption
Many are still trying to make sense of the disaster that struck Baltimore early on Tuesday, when the 1.6-mile-long Francis Scott Key Bridge collapsed in the middle of the night. The 95,000-ton container ship Dali, chartered by Maersk (OTCPK:AMKBY), collided with one of the support columns following a last-minute distress call, sending eight workers atop the bridge into the water (two were rescued and six are presumed dead). Responding to the catastrophe, President Biden has called for the federal government to pick up the tab for the reconstruction of the Key Bridge, though that could take years and will require Congressional approval.
What happened? An investigation is ongoing, but videos show the cargo ship’s lights turning off – and then on again – shortly before it struck the bridge. Power to the Dali was said to have gone out shortly after it left the Port of Baltimore, including to the ship’s engines, possibly due to a failure of machinery aboard the vessel (black smoke?). While emergency generators eventually kicked the lights on, the renewed power likely didn’t impact the ship’s propulsion or steering gear. An inspection in Chile last June even identified a problem with the Dali’s “propulsion and auxiliary machinery,” but the most recent examination conducted by the U.S. Coast Guard in September didn’t find any deficiencies.
The supply chain is the most talked-about consequence for the economy, with shipping traffic suspended until further notice. Baltimore is one of the busiest ports on the U.S. East Coast, and the rerouting of cargo will create delays and raise costs at a time when consumers and policymakers alike are sensitive to inflation. It will also add to the recent disruptions on the high seas, including increased congestion in the Panama Canal and attacks in the Red Sea that have forced traffic around the tip of Africa.
Immediate impacts: Coal exporter Consol Energy (CEIX) slid 7% yesterday in response to the indefinite shuttering of the Port of Baltimore. The company’s operations are said to be highly connected to its Marine Terminal at the port, which represents over a quarter of all U.S. seaborne coal exports. Recent data also indicates that 850K cars and light trucks pass through Baltimore each year, more than at any other U.S. port, prompting Ford (F) and General Motors (GM) to comment on the possible impacts facing the American auto industry. (31 comments)
Paper into cash?
Following a stellar market debut, Trump Media & Technology (DJT) is still rallying on Wednesday, although the firm’s near $8B valuation seems excessive as it has never turned a profit. There are also risks of its biggest shareholder, Donald Trump, cashing in on the paper gains despite a six-month lock-up period. While his 60% stake is valued at around $5B, the former president is facing some big legal bills and his son and former officials of his administration sit on the company board. Trump could also seek to use his DJT stake as collateral to get a loan, although chances of securing funds this way are likely low. (17 comments)
Retirement crisis
As people live longer lives, BlackRock (BLK) Chairman Larry Fink is warning that the world is at risk of facing a retirement crisis. “What if the government and the private sector treated 60+ year-olds as late-career workers with much to offer rather than people who should retire?” he asked in his annual letter to investors. Fink also called on policymakers and investment firms to make retirement investing “more automatic” for workers, noting that building savings has never been more urgent. “When people are regularly living past 90, what should the average retirement age be?” (5 comments)
The ban that wasn’t
Raising questions about the fate of similar efforts, the city of Berkeley, California, has agreed to drop the first-ever U.S. natural gas ban following a settlement deal with the California Restaurant Association. “Climate change must be addressed, but piecemeal policies at the local level, which are preempted by federal energy laws, are not the answer,” said CRA President Jot Condie. Environmental advocates say the court decision and Berkeley’s repeal only mark the end of a chapter, and may open the door for more durable strategies to phase out fossil fuels. (47 comments)
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $28B, 2-Year FRN Auction
1:00 PM Results of $43B, 7-Year Note Auction
6:00 PM Fed’s Waller Speech
What else is happening…
Baltimore bridge collapse should be ‘manageable loss’ for insurers.
Alibaba (BABA) scraps Cainiao IPO, plans stock buyback for unit.
Boeing’s (BA) debt ratings under review for downgrade at Moody’s.
Visa (V), Mastercard (MA) settle with merchants over swipe fees.
Shockwave Medical (SWAV) surges with J&J (JNJ) in M&A talks.
Operating costs: GoPro (GPRO) set to reduce global workforce.
NBC (CMCSA) ousts ex-RNC head Ronna McDaniel after backlash.
McDonald’s (MCD), Krispy Kreme (DNUT) to expand U.S. partnership.
Merck (MRK) wins FDA approval of sotatercept for rare lung disease.
Robinhood (HOOD) unveils first-ever credit card with 3% cashback.
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Good morning. Happy Tuesday.
The Asian/Pacific markets mostly did well. China, Hong Kong, South Korea, Singapore and the Philippines led while India and Australia were weak. Europe, Africa and the Middle East currently lean up. Portugal, Germany, South Africa, Hungary, Spain, the Netherlands and Sweden are up; Turkey, the UAE and Saudi Arabia are down. Futures in the States point to a moderate gap up open for the cash market.
————— VIDEO: Trading with Technical Indicators —————
The dollar is down. Oil is down; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Cuckoo for Cocoa
It’s not only Sonny the Cuckoo Bird, but traders these days cannot get enough chocolatey goodness. Supply shortages saw cocoa futures (CC1:COM) surge well past the $9,000 per ton level on Monday as a record rally that started in early 2023 shows no sign of letting up. In fact, cocoa beans are not only now more expensive than other popular commodities like copper, but recent returns also outpace popular investments like Nvidia (NVDA) and Bitcoin (BTC-USD) over the past month (+47%) and on a year-to-date basis (+130%).
Snapshot: Cocoa production has been dented by severe weather and crop disease in Ghana and the neighboring Ivory Coast, which together are responsible for 70% of global output. Farmers in Ghana also sell their cocoa to the government under fixed contracts set at the beginning of the season, so smuggling is expected to take advantage of the higher prices. Problems surrounding forex reserves can also arise as the Ghana Cocoa Board – known as Cocobod – stands to lose access to a key funding facility due to a shortage of beans, which will further restrict seedlings and fertilizers to farmers.
“Adding complexity is the EU’s upcoming deforestation regulation that could limit output if farms don’t comply,” writes SA analyst Weather Wealth, stating that investors should avoid these three stocks as cocoa prices soar. Comments on the same article warn that the run-up could also be attributed to speculation, similar to “European gas after the war in Ukraine” and “thanks to the illiquidity of the contract and the lack of sellers.” “Here it seems the replay of that movie,” remarks Mktneutralhedger. “We know how it will end, but when?”
What to watch: Spending on candy and chocolates will drop this Easter, according to the National Retail Federation, as manufacturers pass on rising costs to consumers. Meanwhile, companies could continue cutting down on packaging and bar sizes, or promote varieties with other ingredients. There’s already an explosion of cocoa butter equivalents on the market, as well as substitutes for cocoa mass and artificial flavors, and expect some clever marketing in the near future like “I Can’t Believe It’s Not Chocolate!” (6 comments)
Boeing overhaul
Boeing (BA) is shaking up its management, with three top-level executives stepping down in the wake of quality issues that raised the ire of authorities and airline customers. CEO Dave Calhoun will resign at year-end, while Stan Deal, head of its commercial airplanes unit, will retire immediately, and board chair Larry Kellner won’t stand for re-election. The changes come as Boeing grapples with intense scrutiny after a 737 Max 9 mid-flight blowout. Boeing’s shares opened higher on Monday, but later pared gains to close up 1.4%, with Investing Group Leader Stone Fox Capital advising traders not to buy into the much-needed leadership changes. (192 comments)
Social verification
Florida Governor Ron DeSantis has signed a bill banning children under 14 from joining social media platforms and requiring those aged 14-15 to get parental consent before creating an account. The HB 3 bill, which targets social media companies, also requires apps to use age verification to block minors from accessing inappropriate sites. “This level of data collection will put Floridians’ privacy at risk, and it violates their constitutional rights,” warned NetChoice, a trade group whose members include Google (GOOG) and Meta (META). The bill signing comes weeks after DeSantis vetoed a more stringent bill called HB 1. (40 comments)
WeBid
Adam Neumann, founder and former CEO of WeWork (OTC:WEWKQ), has reportedly made a more than $500M bid to buy back his old company. The bid could also go up to as high as $900M pending due diligence. Neumann stepped down as CEO and gave up his majority voting control in September 2019, but has wanted to retake the helm of WeWork for some time. The co-working space provider filed for Chapter 11 bankruptcy last year due to a combination of financial troubles, mismanagement, demand and a high-interest rate environment. (17 comments)
Today’s Economic Calendar
8:30 Durable Goods
9:00 S&P CoreLogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg. Index
1:00 PM Results of $67B, 5-Year Note Auction
1:00 PM Money Supply
What else is happening…
WSB survey results: ETFs are the way to go.
Maersk chartered ship that rammed into Baltimore bridge.
Goldman stays bullish on commodities ahead of rate cuts.
Top oilfield services firm (SLB) has no plans to exit Russia.
Central bank digital currency: SWIFT eyes new platform.
Fisker to be delisted from NYSE due to ‘abnormally’ low price.
Trump Media (DJT) set to trade today as SPAC deal closes.
Meme stock? Reddit (RDDT) soars again after 30% rally on Monday.
Ericsson (ERIC) slashes staff due to ‘challenging’ networks market.
Supreme Court to decide on access to widely-used abortion pill.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned down. Australia and New Zealand did well, but Japan, China, Hong Kong, Singapore and the Philippines were weak. Europe, Africa and the Middle East currently lean down. Turkey and Hungary are up, but Poland, Russia, Finland, Portugal, Sweden and Saudi Arabia are down. Futures in the States point to a moderate gap down open for the cash market.
————— VIDEO: Trading with Technical Indicators —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Battle of funds
As exchange-traded funds continue growing in popularity, asset managers are increasingly converting mutual funds to ETFs to adapt to client demands. There have been more than 70 mutual fund-to-ETF conversions in the U.S., and asset managers expect this number to rise further over the next year.
Latest update: Pimco recently proposed its first mutual fund-to-ETF conversion of its $141M Mortgage-Backed Securities Fund, joining other asset managers including Fidelity, JPMorgan (JPM) and BlackRock (BLK). To note, Pimco’s mutual fund offerings saw $2.1B inflows for the year ended Jan. 31, while its ETFs recorded $3.9B inflows.
Dig deeper: While mutual funds have been favored historically, investors are now increasingly opting for rival products that offer lower fees and tax advantages. “Growing interest in active strategies since 2021 and the regulatory latitude granted to reorganizations of financial products into ETFs since 2019 have spurred increasing mutual fund to ETF conversions,” said Peter Shea, co-head of ETF Practice at law firm K&L Gates. However, while ETFs may be traded at prices less than their net asset value, mutual funds always trade at NAV – without any bid/ask spreads.
U.S. mutual funds saw net outflows of more than $1T from Jan. 2021 to Dec. 2023. “In a world where you have zero commission stock trading and can get exposure to a diversified basket of stocks through direct indexes, it’s hard to say that the mutual fund is an efficient vehicle anymore,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. Do you think ETFs are now a better investing option? Take the WSB survey.
Chip ban
China has adopted guidelines to halt the use of U.S.-made microprocessors from Intel (INTC) and AMD (AMD) in government servers and personal computers. The guidance also seeks to replace Microsoft (MSFT) Windows and foreign-made database software with domestic alternatives, although Investing Group Leader Danil Sereda doesn’t see this as a real threat. Beijing has been working to replace foreign technology in sensitive operations with local brands, with Chinese government officials ordered to stop bringing iPhones and other foreign devices to work. Meanwhile, the U.S. has been restricting sales of advanced semiconductor and related equipment to China over national security fears. (133 comments)
Treasury bets
Famed bond investor Bill Gross has recommended betting on a flattening yield curve, noting that the U.S. 10-year Treasury yield (US10Y) is right where it was 20 years ago at 4.2%. “I find it remarkable that 10-year interest rates are unchanged since the beginning of 2004,” he said, adding that there is currently too much supply. Gross said the negative yield curve must go positive sooner or later if the economy is to stay positive. “I am long 2’s (US2Y), and short 5’s (US5Y) and 10’s.” Recall that the yield curve between the US2Y and US10Y once again stayed inverted for the longest time ever last week as inflation continues to run hot. (24 comments)
Shutdown averted
U.S. President Joe Biden on Saturday signed into law a $1.2T government funding package, averting a partial shutdown and ending months of wrangling between Republicans and Democrats. Biden’s action came after the Senate earlier passed the legislation by a vote of 74 to 24. The final passage came after the midnight deadline, meaning some federal funding technically expired briefly. But the Senate’s action means that the federal government is now funded through the end of the fiscal year. “This agreement represents a compromise, which means neither side got everything it wanted,” said Biden. “But it rejects extreme cuts from House Republicans.” (78 comments)
Today’s Economic Calendar
8:25 Fed’s Bostic: “Equitable Economic Development”
8:30 Chicago Fed National Activity Index
10:00 New Home Sales
10:30 Fed’s Cook: “The Dual Mandate and the Balance of Risks”
10:30 Dallas Fed Manufacturing Survey
1:00 PM Results of $66B, 2-Year Note Auction
What else is happening…
U.S. asks Ukraine to stop drone strikes on Russian oil refineries.
16 states sue to stop Biden’s halt on LNG export project permits.
Goldman: Look beyond Magnificent 7 to Europe’s GRANOLAS.
FAA mulls limiting new routes for United (UAL) after safety mishaps.
Boeing (BA) union wants board seat to ‘save company from itself.’
Airbus (OTCPK:EADSF) may buy some Spirit Aero (SPR) assets.
Elon Musk celebrates as Neuralink patient tweets using brain chip.
Johnson Controls (JCI) receives buyer interest for $6B HVAC assets.
Credit card delinquencies dip, charge-offs rise in muted February trend.
Germany cannabis legalization on schedule as bill clears final hurdle.
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