Before the Open (Apr 15-19)

Good morning. Happy Friday.

The Asian/Pacific markets suffered big losses. India did well, but Japan, China, Hong Kong, South Korea, Taiwan, Australia, Indonesia, Thailand and the Philippines were down big. Europe, Africa and the Middle East are mostly down. Turkey and Russia are up; Germany, the UAE, Greece, Norway, Hungary, Portugal and Sweden are down. After being down big overnight, futures in the States point to a flat open for the cash market.

————— VIDEO: Breadth Report —————

The dollar is down. Oil is down; copper is up. Gold and silver are down. Bonds are up.

Stories/News from Seeking Alpha…

Half full or half empty?

Bitcoin (BTC-USD) is a little ways away from undergoing a once-every-four-years software update in the blockchain that has historically been hyped as a positive catalyst for the highest-profile cryptocurrency. The quadrennial halving event, due as soon as today, occurs when bitcoin miners’ reward for validating transactions is slashed in half, essentially reducing the rate at which new tokens are created by 50%.

No airdrop: As such, the technical event reduces the supply of new bitcoins entering the market, a move that could drive up the coin’s price should demand remain constant or rise. Given the fixed supply of bitcoin, the halving event also reinforces scarcity by reducing the rate at which new BTCs are introduced into circulation. Bitcoin had already reached a record high of $73.8K in mid-March, as the green light for spot bitcoin ETFs spurred strong and persistent demand for the token. Now, volatility has spiraled amid the countdown to the halving (as well as jitters about higher-for-longer interest rates), with bitcoin dropping some 17% since hitting its record. Overnight, the crypto was trading up 5% to around $65K.

Note that miners’ profitability generally suffers after a halving as their rewards get cut in half. This fourth halving will lower the reward to 3.125 BTC from the current 6.25. The overall halving process is expected to end in 2140, when the number of bitcoins in circulation is expected to reach its programmed cap of 21M (there are currently about 19.7M BTC in circulation).

Half full or half empty? “I view Bitcoin as better than 50/50 to top $100K this year,” notes Logan Kane, adding that bullish analyst calls have mounted despite bears drawing comparisons to past speculative bubbles. Since there have only been three halvings so far, and many of the all-time gains were reached in mid-March, it could also not be a given that bitcoin (BTC-USD) tends to rise closer to the event. SA analyst Florian Grummes warns that BTC typically weakens for about 15 to 45 days immediately before and after the halving.

Risk premiums

Mini drones? Missiles? From Israel? Elsewhere? The reports are still murky surrounding the explosions heard across the cities of Isfahan and Tabriz in Iran, but state media have played down the damage from the suspected attacks, while Tehran has lifted flight restrictions. Whether the tensions will subside is anyone’s guess, but it appears that stocks and crude oil have gotten over any initial shock. Just hours before the suspected retaliatory strike, S&P Global cut Israel’s rating by one notch, joining Moody’s Investors Service in lowering the nation’s sovereign credit score. (90 comments)

See what’s next

Netflix (NFLX) initially rose, but then pulled back 4.8% AH on Thursday, following strong Q1 results and subscriber growth that once again surpassed expectations. The streamer saw double-digit gains amid a password crackdown, but attention settled on the fact that Netflix will stop reporting subscriber numbers entirely, starting in Q1 2025. The company also issued soft Q2 guidance, given last year’s growth re-acceleration. Despite having different takes on the results, Investing Group Leaders Long Player and Michael Wiggins De Oliveira both believe Netflix is no longer a growth stock. (11 comments)

National security

As the U.S. considers banning Chinese-owned TikTok, Beijing has ordered Apple (AAPL) to remove Meta’s (META) social media apps WhatsApp and Threads from its app store in the country. Messaging apps Telegram and Signal were also removed, citing national security concerns, though some others were still available for download. “We are obligated to follow the laws in the countries where we operate, even when we disagree,” Apple said in a statement. Beijing’s order is likely part of a 2023 rule that required all apps available in China to register with the government by the end of March this year or cease operating. (7 comments)

Today’s Economic Calendar
10:30 Fed’s Goolsbee Speech
1:00 PM Baker Hughes Rig Count

What else is happening…

S&P 500 (SP500) posts five-day loss for first time since October.

Nordstrom (JWN) committee to evaluate family takeover interest.

Report: Paramount jumps as Sony (SONY) looks at joint buyout bid.

Long-term mortgage rates surpass 7% for first time this year.

Blackstone (BX) in charts: Q1 capital inflows drop sequentially.

Marijuana advocacy groups call on Biden to legalize cannabis.

Creditors of Venezuela’s Citgo seek ConocoPhillips (COP) for bid.

Tesla (TSLA) has now given up all gains made over the past year.

Schneider Electric in discussions to take control of Bentley Systems.

Meta’s (META) Llama 3-powered AI assistant reaches more platforms.


Good morning. Happy Thursday.

The Asian/Pacific markets leaned to the upside. Japan, Hong Kong, South Korea, Australia, Indonesia, Singapore and the Philippines did well; India and Thailand were weak. Europe, Africa and the Middle East lean to the upside. Turkey, the UAE, Greece, Spain, Portugal and Israel are up; Denmark and Norway are down. Futures in the States point to a positive open for the cash market.

————— VIDEO: Breadth Report —————

The dollar is down slightly. Oil is down; copper is up. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

European competitiveness

The proposal has been tossed around many times over the past decade, but EU leaders are now looking to see exactly how to move ahead with a single capital market union. The main idea aims to diversify funding sources across the bloc and facilitate cross-border investment. Deepening the single market could also benefit competition across Europe and mobilize a lot of money to fuel the bloc’s economy.

Quote: “EU businesses are hitting a notable financing barrier in the EU, encountering substantial hurdles in accessing readily available capital to scale up and innovate,” European Council President Charles Michel told members before a meeting today. “Hence, the Capital Markets Union warrants our special attention and firm guidance. It is imperative that we make significant strides in this area, where progress has lagged for too long.”

The gathering also outlined the need to pool together capital for big-ticket transitions ranging from clean energy technology to artificial intelligence. At the moment, there are many barriers for local European companies to rival their counterparts in the U.S. and China, especially amid growing geopolitical tensions, waves of protectionism, and massive subsidies being awarded in the world’s largest economies. The new plan aims to raise the competitiveness of Europe, replacing oversight of 27 member states’ capital markets, with one single market under ESMA, the financial markets regulator of the EU.

Not everyone is on board: There is a rift between larger countries like France and Italy that support the plan, and smaller countries that already have prominent financial markets like Luxembourg and Ireland. The latter are afraid the new framework may lead them to be dominated by their bigger rivals and wouldn’t give them enough control over their own financial rules and domestic markets. Granting power to a centralized supervising authority can also be difficult to unwind even for those who would like to see some kind of greater European integration.

Meet your genes

23andMe (ME) CEO Anne Wojcicki is looking to take the struggling DNA-testing company private, just under three years since its market debut. Valued at over $6B at its peak and only $188M today, 23andMe has seen its stock crater over the years as the popularity of its DNA tests waned and efforts to diversify revenue streams fell flat. It also faced mounting litigation over a hacking incident that impacted around 6.9M users. Wojcicki, who is planning to scout for potential partners and financing sources, wishes to maintain control of the company and wouldn’t support any alternative transaction. (4 comments)

Chips, chips, chips

The U.S. federal government is speeding ahead with its plans to boost semiconductor chip production. Micron Technology (MU) is the latest to be awarded a $6.1B grant to support its planned projects for advanced memory computer chips in Idaho and New York. The planned megafab in The Empire State will be “the best thing that’s happened probably since the Erie Canal” for the Syracuse area, according to Senate Majority Leader Chuck Schumer (D-NY). As previously mentioned on WSB, all grant funding under the CHIPS Act is planned to be allocated by the end of this year. (1 comment)

Goes the clock

The proposed bill forcing TikTok to divest from China’s ByteDance (BDNCE) or face a U.S. ban might get fast tracked, boosting shares of rival apps like Snapchat (SNAP) and Pinterest (PINS). To note, Wedbush Securities believes Meta (META) and Google (GOOGL) stand to benefit the most if the TikTok bill becomes law. President Biden recently discussed concerns about TikTok’s ownership with Xi Jinping, though China declared that a move to divest the app would backfire on the U.S. Recall that former Treasury Secretary Steve Mnuchin is also putting together a group of investors to acquire TikTok if the bill passes. (18 comments)

Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:05 Fed’s Bowman Speech
9:15 Fed’s Williams Speech
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 Fed’s Bostic Speech
4:30 PM Fed Balance Sheet
5:45 PM Fed’s Bostic Speech

What else is happening…

Netflix earnings preview: Subscriber growth and ad-tier performance.

Google (GOOGL) moves ahead with layoffs, planning country moves.

Oracle to invest $8B in Japan amid cloud computing, AI demand.

White House calls for tripling China tariffs on steel, aluminum imports.

Baltimore port closure costs CSX (CSX) up to $30M per month.

Weaker guidance from Equifax (EFX) on soft mortgage demand.

More chips: Check out the latest earnings from Taiwan Semi (TSM).

Fed’s Mester calls for more data before taking any action on rates.

U.S. reimposes oil sanctions on Venezuela over election concerns.

Silver outshines gold, set for second highest-ever market deficit.


Good morning. Happy Wednesday.

The Asian/Pacific markets are mixed. China, Hong Kong, Taiwan, New Zealand and the Philippines did well; Japan, South Korea, Indonesia and Thailand were weak. Europe, Africa and the Middle East are mostly up. The UK, Denmark, Poland, France, Turkey, Finland, Hungary, Spain, Italy, Portugal and Sweden are doing well. Futures in the States point to a positive open for the cash market.

————— VIDEO: Breadth Report —————

The dollar is unchanged. Oil is down; copper is up. Gold is down; silver is up. Bonds are down.

Stories/News from Seeking Alpha…

Is it transitory?

The much-awaited Fed pivot has materialized, but it’s not what investors had been expecting. The change was supposed to signal that the central bank finally reversed course on its contractionary monetary policy path, which has been in place since March 2022. It would’ve come after Powell and Co. continued to telegraph that rate cuts were soon in the cards, but policymakers are now formally taking a step back from those forecasts following three consecutive months of stronger-than-expected inflation readings.

Quote: “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said at the Wilson Center in Washington, D.C. “Last year, rebounding supply supported U.S. growth in spending and also employment, alongside a considerable decline in inflation. The more recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal.”

Many had predicted that the last mile of the inflation fight would be the hardest, and the latest comments didn’t rock equities too hard as the central bank has been clear that incoming data would determine its path forward. Suffice it to say that things will be higher for longer, but for the time being, the next rate move is still forecast to be a cut. Things could get rocky if that stance ends up shifting to a hike, which could happen if price pressures resurface and put a so-called soft landing into doubt.

Elsewhere in markets: The yield on the benchmark 10-year U.S. Treasury note just closed at its highest level since November, settling at 4.657%. Remember, the yield came into this week at just 4.25% and started the year at 3.88%, meaning that the 10-year is now nearing a full point rise for 2024, as discussed on the Wall Street Lunch podcast. At the same time, the U.S. dollar index (DXY) has been rallying, with Bespoke Investment Group noting that the greenback and the 10-year yield have been trading in lockstep since last summer. (112 comments)

Earnings roundup

All major banks have reported earnings that topped expectations, as improved sentiment drove a rebound in investment banking and a strong trading performance. It also shows that the corporate earnings story is intact, while the banking system seems to be in very good shape, as noted by SA analyst Brian Gilmartin. However, like many post-earnings movements, the trading reaction differed among the players. Morgan Stanley (MS) and Goldman Sachs (GS) both gained as investors cheered their Q1 results, while things went the other way for JPMorgan (JPM), BofA (BAC), Citigroup (C) and Wells Fargo (WFC).

Fresh sanctions

The U.S. will impose new penalties on Iran’s missile and drone program in the coming days, as well as on entities supporting its army and defense ministry. “We anticipate that our allies and partners will soon be following with their own sanctions,” said White House National Security Advisor Jake Sullivan following Tehran’s attack on Israel over the weekend. The U.S. House of Representatives has also overwhelmingly voted for legislation that will impose sanctions on Chinese financial institutions involved in buying Iranian crude, but many analysts believe those will not get over the finish line due to worries about boosting prices and angering top buyer China. (7 comments)

Fiscal sustainability

The International Monetary Fund has boosted its 2024 global growth forecast to 3.2%, compared to the previous outlook of 2.9% growth estimated earlier this year. “The strong recent performance of the U.S. reflects robust productivity and employment growth, but also strong demand in an economy that remains overheated,” according to the agency. “The fiscal stance, out of line with long-term fiscal sustainability, is of particular concern. It raises short-term risks to the disinflation process, as well as longer-term fiscal and financial stability risks for the global economy. Something will have to give.”

Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:00 Atlanta Fed’s Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $13B, 20-Year Bond Auction
2:00 PM Fed’s Beige Book
4:00 PM Treasury International Capital
5:30 PM Fed’s Mester Speech
7:15 PM Fed’s Bowman Speech

What else is happening…

Yellen echoes Biden: U.S. Steel (X) should remain in American hands.

United Airlines (UAL) rallies after strong demand boosts results.

ASML bookings miss estimates, demand for EUV machines slip.

Report: Tesla (TSLA) has delayed some Cybertruck deliveries.

Rivian skids to new low, but Amazon tie-up may provide backstop.

Grand Theft Auto maker Take-Two (TTWO) announces new layoffs.

SA Analyst Roundtable: What’s next for Boeing (BA) and its rivals?

Trump Media (DJT) keeps slipping despite plans for live-streaming.

J&J (JNJ) sets guidance below consensus as MedTech underperforms.

Is Shopify (SHOP) pitting employees against each other for higher pay?


Good morning. Happy Tuesday.

The Asian/Pacific markets got crushed. Japan, China, Hong Kong, South Korea, Taiwan, Australia, New Zealand, Indonesia, Singapore and the Philippines all suffered big losses. Europe, Africa and the Middle East are currently down big. The UK, Denmark, Poland, France, Germany, Greece, the UAE, South Africa, Sweden, Hungary, Spain, the Netherlands, Italy, Austria, Sweden and Saudi Arabia are down more than 1%. 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 slightly. Oil and copper are down. Gold is up; silver is down. Bonds are down.

Stories/News from Seeking Alpha…

Military might

The phrase “the best defense is a good offense” is alive and well as countries continue to boost military spending to record levels. Ahead of the pack is the U.S., which has allocated $825B in defense expenditures for FY 2024. That’s an amount equivalent to the military expenses of the next 10 countries combined, and if factoring in non-discretionary spending on defense, such as veterans benefits, that number would already be well north of $1T on an annual basis.

Snapshot: Taking notice of the spiraling conflicts taking place across the globe, many Western countries have been warning that “the era of the peace dividend is over.” France, which has been leading the defense spending charge across Europe under Emmanuel Macron, is raising military expenditures by more than one-third in the coming years. Another boost for NATO has come from founding member Norway, which just presented plans to double the size of its defense budget, while the U.S. Congress is debating the best path forward for a vote on aid to Ukraine, Israel and Taiwan following Iran’s attack over the weekend.

The call for increases in defense spending comes at a time when the West is struggling with diminished military recruitment, as well as pressure from giant debt loads and higher interest rates. Some have looked to defense stocks as a flight-to-arms trade, but returns there haven’t always been exemplary, and only 4.4% of WSB subscribers see the sector as an effective hedging mechanism. In fact, defense giants like Raytheon (RTX) and Lockheed Martin (LMT) are trading at roughly the same levels seen before the COVID pandemic in March 2020 despite huge new contracts like the recently announced $17B ICBM interceptor program.

What to watch: Existing backlogs and production capacity don’t carry over to immediate new order revenues, which may be reflected in share prices. It also takes a long time for Western militaries to procure advanced weapons, while contractors have to ensure their margins, especially for hefty projects that may be subject to political or strategic reviews in the future. It’s also important to note that some defense stocks are looked at more for their dividends, though there have been many share price winners in the sector. Check out the top quant-ranked aerospace and defense stocks on Seeking Alpha.

Antitrust binge

Shares of Live Nation (LYV) are under pressure amid reports that the DOJ is preparing to file an antitrust lawsuit against the concert promoter and its Ticketmaster unit as soon as next month. The stock is off nearly 8% in premarket trading, falling closer to the $90-level. Regulators will likely allege that Live Nation used its dominance to undermine competition for ticketing live events, although the specific charges aren’t known. A DOJ decree forbidding Live Nation from threatening venues with loss of access to tours was extended to 2025 on account of repeated violations. (13 comments)

Semiconductor seriousness

Soon after Samsung (OTCPK:SSNLF) was awarded up to $6.4B in grants to boost its U.S. chip production, Commerce Secretary Gina Raimondo said she expects all the $39B in CHIPS Act grant money to be allocated by the end of the year. “We’re on a roll,” she said on the sidelines of the event announcing Samsung’s grant. “We’ve done three of these in the past month. We’ll be doing more in the coming weeks.” The awards so far have focused on advanced chips, with the largest grants going to Intel (INTC) and Taiwan Semiconductor Manufacturing (TSM). The remaining grants will focus on memory chips and investments in suppliers, wafers, and chemicals. (2 comments)

Conversion conundrum

Less than a year after its launch, Peloton (PTON) has quietly pulled the plug on the unlimited free-membership option. The fitness app tier was introduced to draw customers who didn’t want to spend too much on Peloton equipment, with the expectation that they would eventually switch to paid memberships to access more classes, but it looks like that never materialized. PTON shares slid 7.3% on Monday following the news, and have declined 46% YTD, wiping nearly $1B off the company’s market cap. SA analyst Ahmed Abdelazim is bearish on Peloton, as it appears to have higher odds of going bankrupt.

Today’s Economic Calendar
8:30 Housing Starts and Permits
9:00 Fed’s Jefferson Speech
9:15 Industrial Production
12:30 PM Fed’s Williams Speech
1:00 PM Fed’s Barkin Speech
1:15 PM Jerome Powell Speech

What else is happening…

WSB survey results: Half aren’t hedging, but see what others are doing.

Another record: Gold extends safe-haven rise despite a strong dollar.

Goldman Sachs (GS) earnings beat as global banking, markets revive.

Reddit (RDDT) slips despite Street coverage weighed to the upside.

Microsoft invests $1.5B in UAE AI firm G42; Brad Smith to join board.

Tim Cook in Hanoi: Apple vows more spending on Vietnam suppliers.

China’s GDP growth tops estimates, helped by support measures.

Strong results from UnitedHealth (UNH) despite cyberattack impact.

Meta (META) to temporarily shutter Twitter rival Threads in Turkey.

Trump Media (DJT) sinks after registering shares, warrants for sale.


Good morning. Happy Monday.

The Asian/Pacific markets were weak. China did well, but Japan, Hong Kong, South Korea, India, Taiwan, Malaysia, Singapore, Thailand and the Philippines are down moderately or big. Europe, Africa and the Middle East lean to the upside. Denmark, Poland, France, Germany, Finland, Sweden, Italy and Switzerland are up; Turkey, Greece, Norway and Portugal are down. Futures in the States point to a moderate up open for the cash market.

————— VIDEO: All About Commodities – Fishing in the Right Place —————

The dollar is down. Oil is down; copper is up. Gold is down; silver is up. Bonds are down.

Stories/News from Seeking Alpha…

Time to hedge?

The market reaction to Iran’s unprecedented strike on Israel has been contained so far, as the region’s path to an all-out war seems to be contained (so far). More than 170 drones, as well as 150 cruise and ballistic missiles, were launched on Saturday by the Islamic Republic, though 99% of the aerial threats were shot down by Israel and its allied coalition partners. “We will exact the price from Iran in the fashion and timing that is right for us,” Jerusalem declared following the attacks, while Tehran said that such an event would be met with a “decisive and much stronger response.”

Flashback: Since the Gaza war erupted on Oct. 7, 2023, Israel has been fighting Iranian proxies on multiple fronts, including Yemen’s Houthis who have disrupted shipping in the Red Sea, as well as Iranian-backed forces in Lebanon, Iraq and Syria. Iran attributed its strike on Israel as retaliation for an alleged Israeli airstrike on April 1 that killed several senior IRGC commanders in Syria, which leveled the consular building adjacent to Iran’s embassy in Damascus. Over the weekend, Iran also seized an Israeli-linked cargo ship in the Strait of Hormuz, which is a key route for the oil trade.

Israelis spent Saturday night in safe rooms and bomb shelters, while the Home Front Command instituted limitations on public gatherings and other restrictions through Sunday. Those have so far been lifted, suggesting that immediate retaliation in the form of a direct strike on Iran won’t be the clearest path of deterrence. President Biden has also vowed to continue helping Israel defend itself, but the U.S. won’t take part in a counter-offensive in a bid to prevent an all-out regional war in the Middle East. A coalition will likely be established instead to isolate Iran diplomatically, with the aim of putting the war back in the shadows.

Take the win? Some thought that the moves would shake up equities, oil, gold or shipping stocks, but it appears that investors are taking the off-ramp. In fact, many of those asset classes and sectors made an unexpected U-turn as the active situation was digested, instead of the risk-on rally or selloff that might have been anticipated. More pressing to Israel is also the threat of Iran-backed Hezbollah in Lebanon, which has prevented around 100,000 of its citizens from returning home, as well as winning the war against Hamas in Gaza. Take the WSB survey.

iPhone slump

Android popularity is growing, with Samsung (OTCPK:SSNLF) reclaiming the crown as the top smartphone maker from Apple (AAPL) amid a slump in iPhone shipments. That’s according to the International Data Corporation, which also showed that Chinese brands are gaining ground, with Xiaomi (OTCPK:XIACF) taking the third global spot. Recall that iPhone sales in China have already taken a hit as Huawei regains its foothold in the market. Briefly entering correction territory, Apple shares have fallen 8.3% YTD, with its market cap shrinking from nearly $3T to $2.73T. (7 comments)

Gimme an extension

Tax Day is officially here, which can have big consequences for individual investors who sold assets held in taxable accounts. Check out Seeking Alpha’s historical Q&A to some of investors’ most common tax questions, including how stock sales and dividends are taxed, how and which cryptos are taxed, and a brief explanation of the “wash-sale rule.” The latter prevents investors from gaming the system by selling a stock at a loss for a deduction and then buying back the same stock the next day. (67 comments)

Layoffs and FSD

Tesla (TSLA) is slashing the monthly subscription price of its Full Self-Driving package to $99 per month from the prior monthly rate of $199 in what appears to be a shift in strategy from the EV giant. The automaker recently required that all customers take an FSD demo drive and offered existing Tesla owners one free month of the driver assistance system. Tesla deployed the AI-powered FSD v12, but the upgrade is still far from full autonomy, with the package now being called “FSD (Supervised).” The company has been under pressure recently and just confirmed it would lay off 10% of its global workforce. (379 comments)

Today’s Economic Calendar
2:30 Fed’s Logan: “Gender Diversity in the Workplace as a Key to Economic Growth”
8:30 Retail Sales
8:30 Empire State Mfg Survey
10:00 Business Inventories
10:00 Housing Market Index
8:00 PM Fed’s Daly Speech

What else is happening…

General Electric (GE) said to sell its famed Crotonville campus.

Alcoa (AA) rises as sanctions are slapped on Russian metal trading.

Google (GOOGL) blocks California news as journalism law looms.

Here’s how much Microsoft-backed cyber firm Rubrik plans to raise in IPO.

J&J (JNJ) cough syrup recall classified as most serious in South Africa.

Minimum wage: California’s fast-food chains weigh options after AB 1228.

FTC leans toward lawsuit to block Tapestry’s (TPR) $8B purchase of Capri.

Salesforce (CRM) in talks to buy data management firm Informatica (INFA).

Coinbase (COIN) asks court to weigh in on definition of investment contracts.

June rate cut could be a mistake – Former Treasury Secretary Larry Summers.


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