Good morning. Happy Friday.
The Asian/Pacific markets did well. Japan, South Korea, India, Taiwan and Singapore posted the biggest gains; the Philippines were weak. Europe, Africa and the Middle East are currently mostly up. The UK, France, Turkey, Germany, South Africa, Finland, Switzerland, Norway, Hungary, Spain, the Netherlands, Italy, Portugal, Israel and Sweden are leading; Poland is down. Futures in the States point towards a positive open for the cash market.
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The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
We’re back!
Momentum is back in the markets, with major indices like the Dow (DJI), S&P 500 (SP500) and Nasdaq (COMP:IND) all just 1% away from their all-time record highs. The bull run is continuing despite concerns that the Fed might hold rates higher for longer, with recent data tilting expectations toward future easing. Among those are higher-than-estimated jobless claims, rising unemployment, and slowing growth that could force the central bank’s hand before it falls behind the curve.
Snapshot: It’s not all bad news is good news. Results from earnings season have caused the recent rally to grow legs, while the AI frenzy continues to be featured on corporate earnings calls and in daily headlines. In fact, over 80% of S&P 500 companies have already finished reporting, with around 5% growth in Q1 earnings per share, according to FactSet. That’s the largest Y/Y increase since Q2 of 2022 and would handily beat most analyst expectations.
What happened to “Sell in May”? As previously mentioned on Wall Street Breakfast, staying fully invested could “prove safer than trying to time the market in any given year.” While seasonal patterns do exist and equities could face some increased risk in the summer months, they still tend to go up over the long term despite additional volatility.
SA commentary: Investing Group Leader Lawrence Fuller, who previously flagged the weak track record of the ‘Sell in May and go away’ adage, is back with a fresh outlook on the rest of the year. “The bears are looking in the rearview mirror today to predict what may happen tomorrow. I think this is a big mistake, as was selling stocks during the pause to refresh in April. This bull market should march on throughout the remainder of 2024.”
Tariff time
The Biden administration is expected to announce new tariffs on Chinese electric vehicles and other strategic sectors, including batteries and solar equipment, on Tuesday. The fresh duties are a result of the White House’s multi-year review of the Trump-era Section 301 tariffs that began in 2022. It’s not just EVs. Biden last month proposed raising tariffs on Chinese steel and aluminum products to 25%, more than triple the current levy of 7.5%. An investigation into Chinese trade practices in shipbuilding, maritime and logistics may also lead to new tariffs. (26 comments)
AI content
Popular short-form video hosting service TikTok is starting to automatically label artificial intelligence-generated content from other platforms. “We want to make sure people have the ability to understand what is fact and what is fiction,” said Adam Presser, head of operations, TikTok. Meta’s (META) Facebook and Instagram, as well as Alphabet’s (GOOGL) YouTube, already have such labels in place. OpenAI is also working on a tool to let content creators manage how their content is used to train artificial intelligence. (1 comment)
Search competitor
Speaking of OpenAI, the company is likely to unveil its AI-powered search product as soon as Monday, as it attempts to break into a space dominated by Google (GOOGL). The product, which will be added to ChatGPT, will be able to search the web for information and cite sources in its results. Search is a major area of focus for the AI industry, as companies crowd the market with their own chatbots, prompting competition over features. ChatGPT has also been integrated with Microsoft’s (MSFT) Bing, while generative AI features have been added to Google. (16 comments)
Today’s Economic Calendar
9:00 Fed’s Bowman Speech
10:00 Consumer Sentiment
10:00 Fed’s Logan Speech
10:00 Fed’s Kashkari Speech
12:45 PM Fed’s Goolsbee Speech
1:00 PM Baker Hughes Rig Count
1:30 PM Fed’s Barr Speech
2:00 PM Treasury Statement
What else is happening…
BHP-Anglo American deal sets off alarm bells in Japan’s steel industry.
BP (BP) eyes Tesla’s (TSLA) supercharging sites for U.S. expansion.
Musk’s Neuralink reports malfunction in first in-human brain implant.
Pride Month: Target (TGT) limits LGBTQ-themed items in stores.
Roblox (RBLX) plummets after cutting full-year bookings forecast.
T-Mobile (TMUS), Verizon (VZ) in talks to split up US Cellular (USM).
Report: Sinclair (SBGI) explores sale of 30% of broadcast stations.
Warner Bros. (WBD) flips to gain as Lord of the Rings set to return.
Norfolk Southern (NSC) CEO keeps job, activists win board seats.
Another investigation: SEC probing Boeing’s (BA) 737 safety claims.
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Good morning. Happy Thursday.
The Asian/Pacific markets leaned down. China and Hong Kong did well, but South Korea, India, Taiwan, Australia and the Philippines were weak. Europe, Africa and the Middle East are currently little changed and mixed. Germany, Switzerland, Israel and Austria are up; the UAE, Spain and Saudi Arabia are down. Futures in the States point to down open for the cash market.
————— VIDEO: Trading the Short Side with RSI, MACD and Stochastic —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Stronger together
The streaming wars have been going on for years, but things are changing with the formation of new alliances. Walt Disney (DIS) and Warner Bros. Discovery (WBD) just unveiled a new streaming bundle that includes Disney+, Hulu and Max. The subscription will feature both the Marvel and DC universes, as well as Star Wars and HBO, and will be available in the U.S. starting this summer.
Backdrop: Netflix (NFLX) was once the all-dominant force of the streaming world, with studios happy to license their legacy content as they focused on core markets of traditional television and the box office. As the barriers to entry of launching an online platform came down, and consumer viewing habits changed, many companies decided to go at it alone when their distribution deals came to an end. Original content and original streaming platforms soon became the name of the game, with studios (like the ones mentioned above) investing significant resources to gain market share, as well as Prime Video (AMZN), Apple TV+ (AAPL), Paramount+ (PARA) and Peacock (CMCSA).
In recent years, companies have unveiled ad-supported streaming plans and password crackdowns in an effort to attract subscribers, but it is becoming as much of a quality game as it is in the numbers. Customers are also looking to downsize their subscriptions, especially as the amount of streaming apps and packages has exploded. Many have already ditched their large-bundled cable packages, but there are also risks here that the move into bundled streaming could eventually produce the same effects that led to cord-cutting.
What’s next? This new direction towards “choice and value” was heard immediately after the latest streaming bundle announcement and suggests more consolidation might be in store for the industry. “This new offering delivers for consumers the greatest collection of entertainment for the best value in streaming,” said JB Perrette, CEO of global streaming at Warner Bros. Discovery. Don’t forget that Disney and WBD, along with Fox (FOX), are scheduled to launch a joint sports-streaming service as soon as the fall. (15 comments)
Retail theft
Theft has become a big problem for retailers in recent years, especially as margins come under pressure in the current economic environment. Many locations in big cities have added plexiglass cases in vulnerable locations, while locking up or partitioning off high-price items like health and beauty products. In the latest bust, Manhattan authorities indicted a local cosmetics retailer for allegedly running a retail theft fencing operation, which housed $1M in stolen goods from shoplifters, of which $212K were stolen from Macy’s (M). NYC has proactively taken steps to combat rising retail theft, allocating $40M for dedicated law enforcement teams. (6 comments)
Off the road
After a 60-year run, General Motors (GM) is saying goodbye to the Chevy Malibu to make room for more electric vehicles and hybrids. The company will end production of the vehicle in November, and invest $390M to retool its Kansas City plant to build the next generation of the Chevy Bolt EV and resume manufacturing of the Cadillac XT4. With the Malibu and Camaro gone, the Corvette will be the last remaining Chevy ICE left. Despite the Malibu’s former glory as a NASCAR darling and 10M car sales worldwide since 1964, sales have tapered off in recent years, dropping 12.5% in Q1 2024. (3 comments)
Getting repaid
Nearly all customers of the collapsed crypto exchange FTX will get their money back, plus interest, according to a new reorganization plan. FTX owes some $11.2B to its creditors, but has $14.5B-$16.3B to distribute to them, meaning there is more funds than needed to pay back bankruptcy victims. Customer money had been locked up with the platform since a bankruptcy filing in November 2022. A year after collapsing, disgraced FTX founder Sam Bankman-Fried was convicted of seven criminal counts tied to the meltdown and was later sentenced to 25 years in prison. (1 comment)
Today’s Economic Calendar
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
1:00 PM Results of $25B, 30-Year Bond Auction
4:30 PM Fed Balance Sheet
What else is happening…
Amazon (AMZN) introduces first fleet of electric trucks for ocean freight.
Needing a ride: Guidance for Uber (UBER) gross bookings disappoints.
Google’s DeepMind unveils third version of drug discovery AI model.
Chip designer Arm Holdings (ARM) fails to live up to lofty expectations.
AstraZeneca (AZN) withdraws COVID vaccine worldwide due to glut.
Robinhood (HOOD) blows past consensus on crypto trading rally.
Belong anywhere? Airbnb’s (ABNB) near-term guidance underwhelms.
Mountain Valley Pipeline segment ruptures during test, sparking criticism.
Cyber firm Zscaler (ZS) confirms investigation into possible data breach.
Report: Sony (SONY), Apollo (APO) plan to break up Paramount (PARA).
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Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly down. Japan, China, Hong Kong, Indonesia and Singapore poste losses; the Philippines did well. Europe, Africa and the Middle East currently lean to the upside. France, the UAE, Greece, Switzerland and Saudi Arabia are up; Turkey, Italy and Austria are down. Futures in the States point to moderate down open for the cash market.
————— VIDEO: Trading the Short Side with RSI, MACD and Stochastic —————
The dollar is up. Oil and copper are down. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Divergence
Sweden is following Switzerland, Hungary, and the Czech Republic in easing monetary policy for the first time since hiking cycles began in 2022, when inflation surfaced in the aftermath of the COVID pandemic. The Riksbank overnight lowered its policy rate by 0.25 basis points to 3.75%, making it more likely that the ECB will also jump on the bandwagon. The shift is noteworthy to global investors as it highlights the current central bank divergence taking place across the world.
Press release: “When inflation approaches the target while economic activity is weak, monetary policy can be eased,” Sweden’s Riksbank said in a statement. “However, the outlook for inflation is uncertain. As inflation now falls from very high levels, there is uncertainty on both the upside and downside. The adjustment of monetary policy going forward should therefore be characterized by caution.”
This contrasts with the wait-and-see mode of the United States, which is taking a more gradual path toward easing. Many in Europe are scared of getting stuck behind the curve as growth slows and unemployment rises. The housing market is also of concern, with many mortgages across the region carrying short-term variable rates, which can pinch the economy if interest levels stay elevated for too long.
Ahead of the Fed: There have been some worries that cutting before the U.S. could cause the krona or euro to lose value against the greenback, which in turn could lift dollar-denominated imports and even cause inflation to resurface. European policymakers seem to be less concerned about these effects, putting more of a focus on domestic conditions and not linking policy to other central banks. “I have said we are data dependent, we are not Fed dependent,” ECB President Christine Lagarde declared at a press conference in April. (8 comments)
China tensions
TikTok and its Chinese parent, ByteDance (BDNCE), have sued the U.S. federal government to block a new law that would force the sale of the popular short-video app or face a ban in the country. TikTok said the bill violated the First Amendment right to free speech, adding that the divestment being demanded is “simply not possible.” Things will likely head to the Supreme Court as Washington pushes ahead with efforts to protect its national security interests. The Biden administration is also revoking export licenses that allowed Qualcomm (QCOM) and Intel (INTC) to supply Chinese firm Huawei with chips for laptops and phones. (41 comments)
House of Mouse
Sliding 9.5% to $105/share, Disney (DIS) wrapped up its worst session in 18 months on Tuesday. The company reported a profit for its entertainment streaming division (Disney+ and Hulu), and forecast full combined streaming business profitability in FQ4 (including ESPN+). So what went wrong? SA Investing Group Leader Long Player believes the decline was an overreaction, driven by a combination of “sell on the news” and some fears about a Q3 loss from its Direct-to-Consumer business. Disney’s box office and TV business might still be a problem, but does the pullback represent a buying opportunity? (20 comments)
Robotaxi rollout
Tesla (TSLA) CEO Elon Musk reportedly proposed testing Full Self-Driving software in China through robotaxis during his surprise visit to the country last month. While the government in Beijing was open to the proposal, Tesla would still need approval to collect and transfer data in China to train the software. Musk was also said to have sent one of his trusted lieutenants back to China to lead operations there, following back-to-back layoffs and executive exits. In other news, the U.S. NHTSA has threatened Tesla with $135M in penalties unless it provides more information on last year’s Autopilot recall. (5 comments)
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Petroleum Inventories
11:00 Fed’s Jefferson Speech
11:45 Fed’s Collins Speech
1:00 PM Results of $42B, 10-Year Note Auction
1:30 PM Fed’s Cook Speech
What else is happening…
Apple (AAPL) unveils new iPad Air, iPad Pro, AI-focused M4 chip.
U.S. set to resume purchases for Strategic Petroleum Reserve.
Reddit soars after first post-IPO results, forecast comes in strong.
Investigation finds sexual discrimination, harassment at FDIC.
Record cruise demand: Royal Caribbean (RCL) to hire thousands.
Uber (UBER) and Instacart (CART) team up on restaurant deliveries.
Getting a ride: Loss narrows at Lyft (LYFT) as bookings climb 21%.
Boy given Pfizer (PFE) experimental muscular dystrophy therapy dies.
Amid lawsuits, OpenAI building tool to let content creators manage use.
Biden to unveil $3.3B Microsoft (MSFT) AI data center in Wisconsin.
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned to the downside. Japan, South Korea, Taiwan, Australia, Malaysia and Thailand posted solid gains while India, Indonesia and the Philippines were weak. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, Germany, Switzerland, Spain, the Netherlands, Italy, Portugal, Israel, Sweden and the Czech Republic are leading. Futures in the States point to flat open for the S&P and a down open for the Nasdaq.
————— VIDEO: Trading the Short Side with RSI, MACD and Stochastic —————
The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Let Loose
It’s showtime. The second-biggest U.S. company by market cap will be holding a “different kind of Apple Event” today, which is somewhat unusual timing given that it’s only a month before Apple’s (AAPL) annual Worldwide Developers Conference (WWDC). The Let Loose event promises to “draft up something special for you” and there is already much speculation before kickoff at 10 AM ET. Tune in at Apple Events, Apple TV, Apple Podcasts, or on YouTube Live.
iRumors: The event is likely to center around iPads and related accessories, such as the new generation of the iPad Pro with an OLED display. More importantly, it will be the first device powered by the new M4 chip, making it more powerful than the latest Mac and giving it the possibility of new AI capabilities. The biggest iPad Air on record might also be in store, with a 12.9-inch version that could make for a good alternative to the Pro, albeit with less power. There’s also talk of slimmer bezels and camera repositioning, as well as other new hardware that might finally see the light of day, like upgrades to the Magic Keyboard and Apple Pencil.
Revenue in the category has been stalling lately, with no new iPad releases since 2022. That’ll mean a lot is riding on the event for Apple, especially after a recent set of earnings that showed some sales weakness in several categories. However, Berkshire Hathaway’s Warren Buffett is still calling for Apple (AAPL) to be his largest investment after the iPhone maker added a record $110B to its buyback program and raised its quarterly dividend by 4%.
More news: Apple is working on a “chip designed to run artificial intelligence software in data center servers,” according to the Wall Street Journal. The project, which is internally code-named Project ACDC (Apple Chips in Data Center), is being coordinated with partner Taiwan Semiconductor Manufacturing (TSM) and could give the company a much-needed edge in the AI race. The latest effort is aimed at running AI models, rather than training them, and would build on other recent silicon success stories at Apple like custom in-house chips made for its devices. (3 comments)
Psychedelic therapy
An FDA advisory committee has been scheduled to meet next month to review data for the first-ever MDMA-assisted therapy for adults with post-traumatic stress disorder. This will be the first such review of a potential new PTSD treatment in 25 years, according to the therapy’s manufacturer Lykos Therapeutics. MDMA – a party drug commonly known as ecstasy or molly – has not been approved by any regulator. A positive recommendation by the panel could bode well for other companies evaluating MDMA-assisted therapies such as Compass Pathways (CMPS) and Awakn Life Sciences (OTCQB:AWKNF). (1 comment)
Yen intervention
The Japanese government may have to intervene to support the yen (USD:JPY) in case of irregular, speculation-driven forex moves, said top currency official Masato Kanda. Many suspect Tokyo intervened twice last week, spending over JPY 9T ($58.3B) to support the currency, but the U.S. expects these interventions “to be rare and consultation to take place,” Treasury Secretary Janet Yellen declared. The Bank of Japan is trying to avoid raising ultra-low interest rates through currency intervention, per SA analyst Harrison Schwartz, which “is akin to putting a band-aid on a wound that requires a tourniquet.”
Another delay
Boeing (BA) can’t seem to catch a break. Its first crewed Starliner mission launch was delayed once again because of a faulty oxygen relief valve on the Atlas V rocket, with plans to reattempt the launch on Friday. “We are just not willing to take any chances with what is our most precious payload,” said Dillon Rice, engineer at United Launch Alliance, which is owned by Boeing and Lockheed Martin (LMT). The Starliner mission has been on hold for years, plagued by issues ranging from software coding to stuck valves. Meanwhile, Boeing is facing another regulatory probe, this time into its 787 Dreamliner inspections. (5 comments)
Today’s Economic Calendar
11:30 Fed’s Kashkari Speech
1:00 PM Results of $58B, 3-Year Note Auction
3:00 PM Consumer Credit
What else is happening…
WSB survey results: Space investment is way above the clouds.
Reddit (RDDT) to report first quarterly results as public company.
Disney (DIS), Comcast (CMCSA) turn to third firm to value Hulu.
Palantir (PLTR) tumbles despite raised guidance, earnings beat.
3 reasons why investors should stay in the market – BlackRock.
Robinhood’s (HOOD) crypto division gets ‘Wells notice’ from SEC.
Crude rises on renewed Middle East tensions, Saudi price hikes.
Big Oil bemoans ‘conflicting’ rules on U.S. clean energy subsidies.
Spirit’s (SAVE) losses accelerate on aircraft issues, competition.
Microsoft’s (MSFT) new AI model said to rival Google and OpenAI.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets mostly did well. China, Hong Kong, Taiwan, Australia, Malaysia and the Philippines led while New Zealand lagged. Europe, Africa and the Middle East are currently up big. Poland, France, Germany, South Africa, Finland, Switzerland, Norway, Hungary, Spain, the Netherlands, Italy, Austria and Sweden are participating. Futures in the States point to a moderate gap up open for the cash market.
————— VIDEO: Quant Studies to Guide Us —————
The dollar is down. Oil is down; copper is up. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
The final frontier
After the space shuttle program was retired in 2011, NASA turned to private companies for space station deliveries. SpaceX began supply runs over a decade ago, before launching its first astronauts in 2020 and ending NASA’s reliance on Russian spacecraft. It also beat Boeing (BA) in the race to space under NASA’s Commercial Crew Program after the U.S. aerospace giant, whose resume goes back to the Apollo moon missions, ran into issues and delays during flight testing and manufacturing.
Out of this world: Commercial Crew was structured as a multi-tiered competition to get private sector companies to produce the most cost effective, innovative and safe way to get to the International Space Station. While SpaceX (SPACE) has already sent nine manned missions to the ISS with its Crew Dragon capsule, Boeing’s Starliner is finally arriving to the launch pad. There’s a lot on the line for the company, which has incurred $1.4B in accounting losses for the program, as well as recent reputation problems ranging from crashes of its MAX jets to a door plug that blew out mid-flight.
Starliner is set to blast off on Monday at 10:34 PM ET, with astronauts Barry Wilmore and Sunita Williams on board. The vehicle will launch from Cape Canaveral via an Atlas V rocket built by United Launch Alliance, a joint venture between Boeing and Lockheed Martin (LMT), and will take 26 hours to reach the space station. Starliner will return the pair to Earth about a week after docking with ISS, landing in the American Southwest with giant parachutes, in comparison to the iconic water splashdowns of SpaceX’s Crew Dragon capsule.
Investing sphere: “With another $6.5B invested in Q1, there has now been $286B of equity investment into 1,779 unique space companies since 2015,” Space Capital founder Chad Anderson wrote in the latest Space Investment Quarterly. “The total investment in Satellite infrastructure over the last decade overtook Launch for the first time in Q1 signaling that the balance has shifted from getting things into orbit, to developing capabilities now that we’re there. Geospatial intelligence also overtook satellite communications for the first time, highlighting the growing demand for these orbital assets.”
Woodstock of Capitalism
Warren Buffett wants his expected successor Greg Abel to take over stock investing decisions if he were to step down. “He understands businesses extremely well, and if you understand businesses, you understand common stocks,” the Oracle of Omaha said at Berkshire Hathaway’s (BRK.A) (BRK.B) annual shareholder meeting. The statement came after the conglomerate posted a 39% jump in its Q1 operating profit, along with a cash pile that hit a record $189B. Despite a major stake cut, Apple (AAPL) is expected to remain Berkshire’s largest holding in 2024, though Elon Musk is trying to get Tesla (TSLA) in on the action. (49 comments)
Recovery plan
Trouble at Starbucks (SBUX) has prompted former Starbucks chief Howard Schultz to weigh in on the situation. “I’ve emphasized that the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace,” he wrote on LinkedIn, adding that the coffee giant needs to refocus on the customer experience after Q2 earnings “significantly” missed expectations. SBUX has declined 17% since then after slashing its guidance. SA analyst Luca Socci has sold his Starbucks position, but The Dividend Collectuh believes the bad news is a buying opportunity. (25 comments)
Earnings estimates
The Magnificent 7 contributes about one-fifth of the earnings growth to the S&P 500 (SPY) (IVV) (VOO) and analysts are ramping up expectations, according to Citi strategist Scott Chronert. Those stocks – Apple (AAPL), Amazon (AMZN), Alphabet (GOOG) (GOOGL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA) – have seen Q1 earnings estimates rise more than 29%. (Nvidia has yet to report Q1). What about the other 493? Chronert says full-year earnings growth has become slightly less negative amid stabilization.
Today’s Economic Calendar
12:50 PM Fed’s Barkin Speech
1:00 PM Fed’s Williams Speech
What else is happening…
Non-farm payrolls: Is worse than expected news good news?
Paramount (PARA) in formal negotiations with Apollo and SONY.
Tesla (TSLA) sets sights on Europe in latest self-driving push.
Mystik Dan: Kentucky Derby sets new wager record.
FTC’s attack on high-profile executive rattles U.S. oil industry.
BTIG sees ‘murky’ road ahead for cannabis reclassification.
Trump Media (DJT) accounting firm charged with ‘massive fraud.’
Major airlines agree on $8.5B Chicago O’Hare Airport upgrade.
ABC News president quits as Disney leadership reviews network.
Are AI stocks in a bubble? Here’s what Citadel’s Ken Griffin thinks.
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