Good morning. Happy Friday.
The Asian/Pacific markets were weak. Japan did well, but China, Hong Kong, South Korea and India posted moderate losses. Europe, Africa and the Middle East are doing great. The UK, Denmark, France, Germany, South Africa, Norway, Spain, the Netherlands, Italy, Portugal, Austria, Sweden and the Czech Republic are all participating. Futures in the States point to a moderate down open for the cash market.
————— VIDEO: All About Commodities – Fishing in the Right Place —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Welcome to earnings season
Get ready for the coming flood of corporate earnings, with the big banks ready to kick off the festivities. For investors in the sector, guidance may be almost as important as the results, with markets now factoring in fewer rate cuts (if any) for 2024. “Higher for longer” would support the net interest income of the big banks, but may keep a lid on their businesses tied to mergers & acquisitions and capital markets activity.
Mark your calendar: Coming up this morning are Q1 earnings from JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC). Goldman Sachs (GS) will follow on Monday, with Morgan Stanley (MS) and Bank of America (BAC) releasing quarterly numbers on Tuesday. There’s also a whole host of regional players, asset managers, credit card companies and other financial institutions reporting over the next week. See the full list on Seeking Alpha’s earnings calendar.
Many items will also be on watch in the coming sessions even for those not invested in the banking industry. Provisions for credit losses can provide a window into how well banks expect the economy to hold up and will shed light on the viability of commercial real estate. Consumer spending will also be in the spotlight, and don’t forget comments on the macro situation from some of the biggest CEOs on Wall Street.
Ahead of the show: “These markets seem to be pricing in at a 70% to 80% chance of a soft landing – modest growth along with declining inflation and interest rates,” JPMorgan CEO Jamie Dimon said in his annual letter to shareholders on Monday. “I believe the odds are a lot lower than that.” Dimon also pointed to “huge fiscal spending, the trillions needed each year for the green economy, the remilitarization of the world, and the restructuring of global trade” as contributors to inflation. “Therefore, we are prepared for a very broad range of interest rates, from 2% to 8% or even more, with equally wide-ranging economic outcomes.”
Bot benefits
Are robots and new technologies taking away jobs from humans? It’s a myth, according to Stefano La Rovere, Amazon’s (AMZN) director of global robotics. The use of new technologies has created more than 700 new job categories and enhanced over 50,000 jobs across Amazon’s fulfillment centers in Europe, including taking away repetitive motions and helping lift heavy weights. Amazon recently invested another $2.75B in AI startup Anthropic, but not all of its new tech efforts have reached the finish line, like its plan to buy Roomba maker iRobot (IRBT) due to antitrust concerns. (10 comments)
Rate cuts ahead
A “few” members of the ECB’s Governing Council were ready to cut interest rates at yesterday’s meeting, ECB President Christine Lagarde declared after the central bank kept its key rate unchanged. However, the council believes it would be appropriate to reduce rates if it’s more confident that inflation is moving sustainably to the 2% target, signaling that a June cut is in the cards. As for U.S. inflation remaining stubbornly high, Lagarde said it can’t be compared to the eurozone, adding that the ECB is “data-dependent, not Fed-dependent” and has to focus on its jurisdiction. (1 comment)
Drug shortages
323 medications were in short supply in the U.S. during the first quarter of 2024, marking the highest level on record since the American Society of Health-System Pharmacists began tracking the data in 2001. While all drug classes are vulnerable to shortages, some of the most concerning ones are generic sterile injectable medications, including chemotherapy and emergency drugs. Shortages are largely caused by supply chain disruptions, fierce price competition, and outsized demand – like in the case of the hugely popular weight-loss drugs. Here is what the government is trying to do about it. (7 comments)
Today’s Economic Calendar
8:30 Import/Export Prices
10:00 Consumer Sentiment
1:00 PM Baker Hughes Rig Count
1:00 PM Fed’s Schmid Speech
2:30 PM Fed’s Bostic Speech
3:30 PM Fed’s Daly Speech
What else is happening…
New gold rush: Rally resumes with futures hitting $2,400 an ounce.
Minneapolis delays ride-share wage hike in boost to UBER and LYFT.
Report: Morgan Stanley (MS) wealth unit probed by federal regulators.
Boeing (BA) finds executives got extra $500,000 in private jet flights.
Ford (F) cuts F-150 Lightning prices as shipments set to resume.
CarMax (KMX) slides after vehicle affordability issues dent results.
Skydance to meet with Paramount (PARA) management next week.
Big payouts for Big Oil: See how much Exxon’s CEO made in 2023.
Apple to focus M4 chips on AI; will allow used parts for iPhone repair.
Epic Games seeks reform of Google’s app store in new court filing.
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Good morning. Happy Thursday.
The Asian/Pacific markets were mostly quiet. Thailand and the Philippines were weak. Europe, Africa and the Middle East lean to the downside. Norway and Portugal are up; Poland, Germany, South Africa, Spain, Italy, Israel and Sweden are down. Futures in the States point to a down open for the cash market.
————— VIDEO: All About Commodities – Fishing in the Right Place —————
The dollar is unchanged. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Data mining
Riddled with rates
What goes on six in the morning, three at midday, one in the evening, and possibly none at night? Traders trying to play the legendary Oedipus are up against that riddle posed by the Federal Reserve as rate cut predictions continue to dwindle for 2024. The latest Consumer Price Index has reinforced more hawkish expectations after accelerating to an annualized 3.5% in March, or an amplified 0.4% M/M, while elevated core figures are also a cause for concern.
Decipher me or be devoured: Each successive number is adding to the picture being assessed by the data-dependent Federal Reserve. It’s now looking increasingly likely that the “last mile” of the inflation fight will be the most challenging, with a higher for longer theme coming into view due to “sticky” inflation. Economic growth is also strong at the moment, so the central bank doesn’t feel intense pressure to cut rates. However, policymakers also don’t want to risk falling behind the curve again, like they did at the beginning of the latest cycle, and may have to act earlier than expected to pull off a so-called soft landing.
Some Fed officials even warned that recent increases in inflation “had been relatively broad-based and therefore should not be discounted as merely statistical aberrations,” according to the minutes of the last FOMC meeting on March 19-20. That indicates there were at least some policymakers who didn’t hold the view that the hot January and February inflation data was a “bump” on the path to the Fed’s 2% inflation goal. With regards to quantitative tightening, officials also started discussing a process to slow the balance sheet runoff, which the Fed has indicated would be “fairly soon.”
Market movement: As inflation continues to run hot and rate cut expectations get pushed further out, Treasuries all over the curve made some big moves on Wednesday. The yield on the 2-year note soared more than 22 basis points to trade near 4.97%, while the 10-year yield climbed 19 bps to top 4.55%. Stock market indices fell back, with the Dow Jones Industrial Average shedding over 400 points, as well as losses for the S&P 500 and Nasdaq. It can also mean some choppy trading for the near future, just as the first-quarter earnings season kicks off on Friday. Check out the latest SA commentary on the CPI report here.
Water standard
Compliance with the first-ever U.S. rule to limit “forever chemicals” in drinking water is expected to cost about $1.5B annually, according to the EPA, although an industry body expects the cost to be more than three times the amount. While American Water Works (AWK) and California Water Service (CWT) are prepared to meet the new standards, they are both pursuing government funding to mitigate compliance costs. Also a great call by Investing Group Leader Courage & Conviction Investing, who flagged Arq (ARQ) last August and how it can benefit from the proposed framework. Since then, the stock has returned over 250%. (3 comments)
Swipe away
Credit card delinquency rates reached their highest level on record in Q4 2023, according to the Federal Reserve Bank of Philadelphia. “Firms recording the worst 30+, 60+, and 90+ account-based days past due levels,” the report said, warning that stress among cardholders was underscored in payment behavior and further performance deterioration could be on the horizon. Meanwhile, mortgage originations declined to a series low as market headwinds continued to stifle demand, including housing affordability. (14 comments)
Mideast tensions
Barreling through the $80-level only two weeks ago, WTI crude oil (CL1:COM) is on watch as it heads closer to $90/bbl. The upward march was sparked in part by reports that an attack on Israel by Iran and its proxies was imminent, though things got a little wobbly after a hot CPI and a build in U.S. crude oil stockpiles. The head of the U.S. Central Command, General Michael Kurilla, will land in Israel today to hold consultations with Defense Minister Yoav Gallant. Yesterday, President Biden said the U.S. commitment to “Israel’s security against these threats from Iran and its proxies is ironclad.” (42 comments)
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Producer Price Index
8:45 Fed’s Williams Speech
10:30 EIA Natural Gas Inventory
12:00 PM Fed’s Collins Speech
1:00 PM Results of $22B, 30-Year Bond Auction
1:30 PM Fed’s Bostic Speech
4:30 PM Fed Balance Sheet
What else is happening…
President Biden still expects a rate cut before the end of the year.
Report: DOJ opens probe into Nippon’s deal for U.S. Steel (X).
Meta (META) unveils latest custom-made chips for AI workloads.
TikTok’s divestiture timeline may undergo extension in Senate.
Jack Ma backs Alibaba (BABA) restructuring efforts in rare memo.
Safety officials interview Boeing (BA) again on 737 door plug blowout.
Fitch flags Medicare utilization trends ahead of managed care earnings.
DOJ files complaint against Regeneron over Eylea Medicare pricing.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned to the upside. Hong Kong, India, New Zealand and Thailand did well; Japan and China were weak. Europe, Africa and the Middle East are mostly doing very well. Denmark and Israel are down, but the UK, Poland, France, Germany, Russia, South Africa, Norway, Hungary, the Netherlands, Italy, Portugal, Saudi Arabia and the Czech Republic are doing well. Futures in the States point to a huge gap down open for the cash market. This stems directly from the inflation data.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Data mining
“The incoming data will guide our decisions.” That’s been the tagline of the Federal Reserve since the central bank paused its rate hike cycle nearly ten months ago. The stance has left investors guessing the future of the Fed’s policy path, with many eager to predict what is in store and how it will impact the market.
Final countdown: The central bank is about to get its latest dose of inflation numbers this morning, with the Consumer Price Index to be released at 8:30 AM ET. After strong prints in January and February, the new figures will be a deciding factor as to whether the two previous months were a “bump in the road” toward the 2% inflation goal or something more “sticky.” Note that the latest FOMC minutes will also be released today at 2 PM ET.
March CPI is expected to rise 0.3% M/M, slowing from the 0.4% pace in February. Core CPI, which excludes the volatile food and energy categories, is also seen increasing 0.3% M/M from 0.4% in the prior month. On a year-over-year basis, economists, on average, forecast the CPI will increase 3.5%, accelerating from 3.2% in February, while the core CPI is projected to climb 3.7% in March, compared with 3.8% growth in the previous month (both paces remain solidly above the Fed’s target).
Higher for longer? Even meeting the consensus would constitute a “hot” report, said Michael Kramer, Investing Group Leader of Mott Capital Management. “A hotter-than-expected number would come as a surprise and not be well received because it would clearly indicate an unexpected uptick in the pace of inflation,” he added, with SA analyst Damir Tokic agreeing with the view. “If the core CPI continues to surprise to the upside, which is anything above the required 0.2% M/M core CPI, it would start becoming more likely that we are possibly witnessing a resurgence of inflation – or possibly the second wave of inflation.” (23 comments)
Buy the dip?
Nvidia (NVDA) shares have entered correction territory, with companies battling to challenge the semiconductor giant’s dominance. Another leg down for the stock on Tuesday means NVDA is now off 12% from its record high seen in March. Turning up the heat in the chip race, Google (GOOG, GOOGL) just unveiled its in-house processors and Intel (INTC) introduced its latest AI chip to rival Nvidia’s H100. As for the other Magnificent 7 stocks, Apple (AAPL) entered correction territory last month and Tesla (TSLA) is in a bear market, compared to the rest of the group which is trading near their 52-week highs. (3 comments)
Robotaxi ramblings
A busy period for self-driving development continues as General Motors’ (GM) Cruise unit resumes testing its robotaxis (with safety drivers) in Phoenix, Arizona. While Cruise plans to expand the effort to other cities – with the goal of eventually resuming driverless operations – it did not provide a timeline for doing so. Note that most WSB subscribers see the robotaxi market as a niche service. Cruise suspended all U.S. operations after an accident in California led to the temporary loss of its license in the state, while the fallout saw the exit of many top executives, including its CEO. (13 comments)
Sino spotlight – Part 2
A day after Janet Yellen left China, Fitch has cut the country’s credit outlook to negative from stable, but affirmed its A+ sovereign rating. The decision reflects growing risks to public finances and uncertain economic prospects as Beijing transitions away from property-reliant growth to a more sustainable model. That shift will require sustained fiscal support from the government. Moody’s also revised China’s credit outlook to negative last December, attributing the move to rising costs to support cash-strapped regional and local governments, as well as state firms.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
8:45 Fed’s Bowman Speech
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Petroleum Inventories
12:45 PM Fed’s Goolsbee Speech
1:00 PM Results of $39B, 10-Year Note Auction
2:00 PM FOMC Minutes
2:00 PM Treasury Statement
What else is happening…
FAA to probe Boeing (BA) whistleblower’s claims about 787 flaws.
Gold adds to record-breaking run ahead of CPI and Fed minutes.
…Costco (COST) may be sitting on gold with new metals business.
Reports of a big profit surge at TikTok parent ByteDance (BDNCE).
Morgan Stanley raises crude oil outlook on rising geopolitical risk.
EIA cuts April coal export forecast after Baltimore bridge collapse.
Microsoft (MSFT) is investing heavily in Japanese data centers.
Taiwan Semiconductor (TSM) revenue surges amid AI chip boom.
Chinese EV stocks gain as double-digit volume growth continues.
Moderna (MRNA) gets a boost from latest cancer vaccine data.
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Good morning. Happy Tuesday.
The Asian/Pacific markets mostly did well. Japan, Hong Kong, Taiwan, Australia, Singapore and Thailand led while South Korea and New Zealand posted losses. Europe, Africa and the Middle East currently leans to the upside. Poland, Turkey, Greece, South Africa and Finland are up; Germany and Israel are down. Futures in the States point to a positive open for the cash market.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is down. Oil is down; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Plan B
The Biden administration is doubling down on efforts to cancel student loan debt, with a new initiative that is aimed at forgiving the bills of around 30M Americans. “While a college degree still is a ticket to the middle class, that ticket is becoming much too expensive,” President Biden declared. “I’m not stopping.” The latest pitch builds on the dozens of executive actions taken to cancel $146B for 4M borrowers, which followed a Supreme Court decision from last summer that struck down a broader proposal aimed at eliminating nearly a quarter of America’s $1.7T in outstanding student debt.
Snapshot: Searching for alternative paths to debt forgiveness, the White House has amended the payments of public service workers and made changes to income-driven repayment plans. It also made debt cancellation available via administrative adjustments and for borrowers with disabilities. The latest plan would also be targeted, impacting borrowers with balances greater than what they originally borrowed and those who have been in repayment for at least two decades. Eligibility would also be extended to students who attended institutions that couldn’t participate in federal loan programs or those who are at risk of default or other financial hardship.
“When the Supreme Court struck down the President’s boldest student debt relief plan, within hours, we said, ‘We won’t be deterred.'” Education Secretary Miguel Cardona declared. “Today’s announcement shows that we’re continuing to fulfill our promises.” Expect additional legal challenges this time around, but the new measures could have more weight in court, given their scope and basis on the Higher Education Act of 1965, instead of the national emergency-focused Heroes Act of 2003.
Outlook: The concept of student debt cancellation, even if it would pass through Congress, continues to divide the country. Some say it would benefit borrowers at a time of high inflation, while others have flagged it as an unfair measure for those who chose not to go to college because of the cost, don’t have loans, or have already paid them off. Some economists even maintain that debt forgiveness can be a contributor to higher prices or encourage colleges and universities to continue raising their tuition costs. Student loan-related stocks include Navient (NAVI), Nelnet (NNI), Sallie Mae (SLM) and SoFi (SOFI). (8 comments)
Higher rates = higher inflation?
It might be a radical equation, but J.P. Morgan’s Jack Manley believes it to be the case. “You slice and dice inflation and whether you’re looking at the headline number, whether you’re looking at the core number, you’re removing the goods equation – so much of it has to do with the rate environment,” he explained, adding that there won’t be downward pressure on inflation until shelter costs cool down. With recent inflation reports surprising to the upside, markets are now pricing in just two rate cuts this year, with some starting to speculate there may be none at all. (15 comments)
Pass the chips
The Biden administration is expected to award more than $6B to Samsung Electronics (OTCPK:SSNLF) next week to support the expansion of its chip production facility in Texas. The award is expected to be the third largest of the recent grants under the CHIPS and Science Act, behind Taiwan Semiconductor (TSM), which secured up to $6.6B in grants, and Intel (INTC), which received up to $8.5B. The CHIPS and Science grants are aimed at bolstering domestic manufacturing, as well as reducing reliance on China and Taiwan. (3 comments)
Sino spotlight
Wrapping up a four-day trip to China, U.S. Treasury Secretary Janet Yellen called on Beijing to change its industrial policy. At issue are “artificially” cheap Chinese products that are flooding the global market, threatening the viability of American and foreign firms. She also recalled the “China shock” of the 2000s that caused millions of job losses, firmly stating that the U.S. “will not accept that reality again.” In response, Chinese Premier Li Qiang said the U.S. must “abide by the basic norms of market economy including fair competition and open cooperation, and view the issue of production capacity objectively.” (3 comments)
Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
1:00 PM Results of $58B, 3-Year Note Auction
What else is happening…
WSB survey results: Robotaxis are seen as another niche market.
DiDi (OTCPK:DIDIY) looks to get in on the game with 2025 target.
Trump Media (DJT) in freefall as the stock starts week in the red.
Jamie Dimon: Rates could spike to 8%, AI akin to the printing press.
Blackstone (BX) scoops up Apartment Income REIT (AIRC) for $10B.
Tesla (TSLA) settles lawsuit over man’s death in Autopilot crash.
BlackBerry (BB), AMD ink partnership on next-era robotic technology.
Gold hits another record high; China’s central bank adds gold yet again.
Guyana gas-to-power project delays could cut weeks off oil production.
Fed’s Kashkari: Central bank can’t ‘stop short’ on inflation fight.
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Good morning. Happy Monday. Hope you had a great weekend.
The Asian/Pacific markets leaned up, but other than Japan (up) and China (down), price movement was minimal. Europe, Africa and the Middle East are currently mostly up. Denmark, Poland, France, Turkey, Germany, Greece, Russia, the Netherlands, Italy, Portugal, Israel and Sweden are doing well. Futures in the States point to a positive open for the cash market.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is up. Oil is down; copper is up. Gold is flat; silver is up. Bonds are down.
Stories/News from Seeking Alpha…
License and registration
Where’s your self-driving car, dude? Promises of a robotaxi revolution have been made for years, with many estimating that companies would have tens of thousands of autonomous vehicles on the road by now. One of the pioneers of the industry, Elon Musk, has also been in the spotlight for many of his statements, especially as Tesla (TSLA) faces mounting pressures from EV competition and is forced to pursue additional revenue streams to keep its growth story alive.
Flashback: “Only a year away” has been the robotaxi theme at Tesla since 2019, with many announcements focused on the success of Autopilot and FSD. The problem is that the systems are far from perfect. Forget about challenging conditions like rain or nighttime, there are myriads of inputs that need to be accounted for in order to achieve near-100% accuracy and address safety concerns. Musk even summed up this “harder than initially thought” situation in 2022, stating, “In order to solve full-self driving properly, you actually need to solve real-world AI.” Also don’t forget regulations and social acceptance, as well as the legal frameworks needed for the new technology.
Seeing how complicated the robotaxi revolution will be to achieve, Uber (UBER) gave up on its ambitions following a fatal self-driving crash in 2020, with its operations being absorbed by Aurora (AUR). Lyft (LYFT) also left the driverless road in 2021, Ford (F) shuttered Argo AI in 2022, while it was reported that Apple’s (AAPL) Project Titan, which was aiming for an autonomous electric vehicle, got disbanded this past February. Separately, General Motors’ (GM) Cruise halted U.S. operations in October after one of its robotaxis dragged a pedestrian for 20 feet before coming to a stop.
Still driving: Tesla (TSLA) is planning to hold a Robotaxi reveal event on August 8, in an announcement that saw the stock rise 3% in premarket trading on Monday. The skeptics and believers are again going at it in the SA comments section, but the announcement likely made fund managers like Cathie Wood happy (she predicts Tesla’s robotaxis will be a trillion-dollar business and send the stock to $2,000/share). Other players that have skin in the game include Waymo by Alphabet (GOOG, GOOGL), Zoox by Amazon (AMZN), as well as technology partnerships related to names like Microsoft (MSFT) and Nvidia (NVDA). Take the WSB survey.
Climate disclosures
The SEC will stay the implementation of its new climate disclosure rule as the agency pushes to consolidate the legal challenges that have already been filed attempting to overturn it. While lawsuits from more than 20 Republican-led states and various business groups argue that the disclosure requirements are beyond the SEC’s legal authority, the regulator still believes the rule is within its power to order. The SEC recently weakened the rule, including requirements for some companies to report Scope 3 emissions from their supply chains and customers using their products. (40 comments)
Sovereign AI
Canada’s next budget includes C$2.4B ($1.8B) to support investment in artificial intelligence, according to Prime Minister Justin Trudeau. A big chunk of the allocated money will go towards building and providing access to computing capabilities and technological infrastructure for Canada’s AI researchers, startups and scale-ups. The government also aims to bring new technologies to market, and accelerate AI adoption in critical sectors such as healthcare and manufacturing. Canada’s budget will be tabled in the House of Commons on April 16. (23 comments)
Golden parachute?
David Calhoun took home nearly $33M in total compensation last year, mostly from stock awards, marking a record for a Boeing (BA) CEO who has overseen a company plagued by safety problems. To note, Calhoun gave up an around $3M cash bonus and is getting less stock this year in the wake of January’s door-plug blowout aboard a 737 MAX jet. The board also tied executive pay to two new safety and production quality goals in the aftermath of multiple safety incidents and recently said Calhoun would step down by year-end. Stock awards for senior executives in 2024 are about 22% below original targets, roughly in line with Boeing’s stock decline. (33 comments)
Today’s Economic Calendar
7:00 PM Fed’s Kashkari Speech
Companies reporting earnings today »
What else is happening…
Southwest (LUV) flight returns to airport after engine cover falls off.
Report: Paramount (PARA) may acquire Skydance for $5B in stock.
Would housing affordability wane even without Fed tightening?
Proxy advisers urge BofA (BAC) to separate CEO and chair roles.
Cannabis stock rally sparks concerns amid moves to mainstream.
Kimberly-Clark (KMB) to sell personal protective gear unit for $640M.
Solar groups warn of new U.S. trade probe into solar imports.
China’s Shein and Temu: Disruptors of fast-fashion and e-commerce.
Changing gears? Eyes on GM (GM) after Ford (F) downshifts EV plans.
The biggest S&P stocks have to do the heavy earnings lifting (again).
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