Good morning. Happy Friday.
The Asian/Pacific markets leaned to the upside. China, Hong Kong and Indonesia did well; South Korea and Australia were weak. Europe, Africa and the Middle East lean to the downside. Turkey, Austria and Saudi Arabia are up; Denmark, Poland, France, Germany, Finland, Hungary and Portugal are down. Futures in the States point towards a slight up open for the cash market.
————— VIDEO: Recent Trades —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Bulls on the loose
There’s exuberance in the markets again as traders celebrate in style following the first CPI reading of the year that drifted lower. Never mind that the drop was minuscule, and the rate of inflation is still holding well above 3%, all that matters is that Fed Chair Jay Powell has signaled the next rate move will in all likelihood be down, and not up. On that note, the major indices are notching fresh all-time highs, the meme stock rally has recharged, and it almost feels like new stimulus checks are about to be delivered (don’t get your hopes up).
Latest milestone: While it ended the session shy of the mark, the Dow Jones Industrial Average (DJI) traded above 40,000 for the first time ever on Thursday. There’s nothing like some big round numbers to get the bulls excited, and in fact, there are reasons to bring out the champagne glasses. The U.S. economy has been resilient despite many macro pressures, corporate earnings season has been better than expected, and consumer spending still appears to be healthy amid a tight labor market.
The Dow is one of the oldest U.S. indexes, and was first launched in 1896. It took almost a century for the gauge to reach 10,000, but subsequent milestones are only getting quicker. 20,000 was reached in 2017 and it took less than four years to climb to 30,000 (and that was with the coronavirus pandemic). Each 10,000 points also just gets easier, with things less exciting in percentage terms. See the leaders and the laggards.
In comparison: There are key differences between the Dow and other market indices. The DJIA is U.S.-centric and only tracks blue-chip companies in a limited number of sectors. The Dow (DJI) is also a price-weighted index, meaning it’s valued through the share prices of its 30 components vs. market cap-weighted alternatives like the S&P 500 (SP500) and Nasdaq Composite (COMP:IND). As a result, changes in the highest-priced stocks have a bigger influence on the index level, while stock splits and other factors call for regular rebalancing.
To the rescue
As it looks to stave off a deeper property crisis, China has announced a sweeping rescue package that includes easing mortgage rules, allowing local governments to buy units to convert to affordable housing, and vowing more efforts to ensure the delivery of unfinished homes. The measures come as prices on residential real estate slump in China, with April witnessing the steepest sequential declines since the crisis began in 2021. Chinese stocks ended the session higher on the news, with the SSE Composite Index (SHCOMP) finishing up 1% and the Hang Seng Properties Index rising 2.5%. (7 comments)
Retail earnings
Walmart (WMT) is in the spotlight after delivering a powerhouse quarter. The biggest U.S. retailer benefited from high-income shoppers hunting for lower prices, as well as growth in digital advertising. Shares notched all-time highs on Thursday, with Wall Street analysts confident the winning streak can continue given the retail giant’s ability to take market share and its outsized margin expansion. SA analyst Justin Purohit is a bit more cautious, saying expenses related to new initiatives and ongoing competition from Amazon (AMZN), Aldi, and Kroger (KR) may ultimately catch up to Walmart.
RedditAI
It had voiced hopes for data licensing agreements during its IPO process, and it just got its big wish. A new partnership will bring Reddit (RDDT) content to OpenAI’s ChatGPT by allowing the Microsoft-backed (MSFT) firm to access its data API. Reddit shares spiked over 14% in premarket trading following the announcement, which will see OpenAI become a Reddit advertising partner as well. “Including it in ChatGPT upholds our belief in a connected internet, helps people find more of what they’re looking for, and helps new audiences find community on Reddit,” declared CEO Steve Huffman. (20 comments)
Today’s Economic Calendar
10:00 E-Commerce Retail Sales
10:00 Leading Indicators
10:15 Fed’s Waller Speech
12:15 PM Fed’s Daly Speech
1:00 PM Baker Hughes Rig Count
What else is happening…
Cannabis stocks rally as DOJ proposes reclassifying marijuana.
Faraday Future (FFIE) skyrockets in apparent short squeeze.
Supreme Court rules that CFPB funding structure is legal.
Restaurant overhaul: Cracker Barrel (CBRL) slashes dividend.
Boeing shareholders to decide if Calhoun will remain on board.
XPeng (XPEV) will soon begin taking orders for its flying car.
Baltimore coal shipments set to resume ahead of schedule.
Chevron to exit North Sea; proxy firm backs Hess (HES) deal.
Neuralink recruiting next participant for cybernetic brain implant.
AI investing: UBS lists stocks providing exposure to tech boom.
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Good morning. Happy Thursday.
The Asian/Pacific markets posted big gains. Japan, Hong Kong, South Korea, India, Taiwan, Australia, New Zealand, Indonesia and the Philippines did the best. Europe, Africa and the Middle East are mixed. Finland, Switzerland and Saudi Arabia are up; Denmark, Israel, Sweden and the Czech Republic are down. Futures in the States point towards a slight up open for the cash market.
————— Courses: An Overview —————
The dollar is up. Oil is up; copper is down. Gold is down; silver is up. Bonds are up.
Stories/News from Seeking Alpha…
No limits
Vladimir Putin has landed in Beijing for a two-day state visit, where he was greeted by Chinese leader Xi Jinping with a red-carpet welcome and a full military band. The trip will build on their commitment to the “no limits” relationship they signed at the Winter Olympics in 2022, just before the full-scale invasion of Ukraine. As Russia becomes isolated from the West on the world stage, it has sought to boost trade in the East and elsewhere, helping prop up its economy in the face of sanctions.
Quote: “Relations between Russia and China are not opportunistic and not directed against anyone,” Putin declared. “Our cooperation in international matters is one of the stabilizing factors in the international arena.” Xi echoed the sentiment, adding that China will “work together to achieve the development and rejuvenation of our respective countries” and “to uphold equity and justice in the world.”
Trade between the two nations has soared to record levels, rising 26% last year to $240B and hitting targets ahead of schedule. Russia has even overtaken Saudi Arabia as China’s main oil supplier, while the latter sends back key commodities, vehicles and other consumer goods. Trade has also seen Russia’s economy top expectations to expand by 3.6% in 2023, according to the IMF, despite Western efforts aimed at draining the Kremlin’s war coffers.
Reaction? Wall Street Breakfast ran a survey last November, and again this week, on how the U.S. should manage its economic relationship with China. The biggest changes over the past six months showed that more subscribers have less faith in rapprochement and trade deals (24% to 15%), while a greater number believe decoupling and sanctions are the way to go (11% to 19%). It’s noteworthy as Washington has recently threatened additional sanctions on Chinese banks and entities that handle Russian trade involving dual-use goods that can be used for both civilian and military purposes. How does all of this factor into your investing decisions? Join the discussion in the comments section.
Soft CPI
Thought the Fed was only data dependent? Guess again. Data-centric traders celebrated in style after April’s Consumer Price Index increased by 0.3% from March, easing from the +0.4% pace seen in the previous three months. The print, which meant inflation is still running well above the 3% level on an annualized basis, helped push Wall Street indices to new record highs, with the S&P 500 (SP500) crossing 5,300 for the first time ever. Meanwhile, retail sales came in flat, while regional business activity cooled further, suggesting the Fed could ease monetary policy earlier than expected. (119 comments)
Secret stake
It’s 13F season, where hedge funds with at least $100M in assets under management reveal their holdings. The flurry of filings sheds light on what they bought and sold during the quarter, but investment managers can also make special requests to regulators to keep some of their stakes confidential. Insurance-focused Berkshire Hathaway (BRK.B) just revealed one of those positions, disclosing a prior $6.7B stake in Chubb (CB), with market participants sending the stock up 8% AH on Wednesday as some looked to copy the successful picks of Warren Buffett. Other 13F highlights include filings from Bill Ackman’s Pershing Square, Michael Burry’s Scion and David Tepper’s Appaloosa. (33 comments)
Battle of the skies
AT&T (T) is teaming up with AST SpaceMobile (ASTS) to bring satellite internet connectivity to cell phones. The news sent ASTS up 36% in premarket trading this morning, with the space-based broadband network deal set to last until 2030. Other telecom operators have also ventured into the market. T-Mobile has a similar deal with SpaceX (SPACE), while Verizon (VZ) previously partnered with Amazon’s (AMZN) Project Kuiper for connectivity solutions. Apple (AAPL) has also been offering satellite-to-cellphone emergency services on its iPhones since 2022. (43 comments)
Today’s Economic Calendar
8:30 Housing Starts and Permits
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Import/Export Prices
9:15 Industrial Production
10:00 Fed’s Barr Speech
10:00 Fed’s Barkin Speech
10:30 EIA Natural Gas Inventory
10:30 Fed’s Harker Speech
12:00 PM Fed’s Mester Speech
3:50 PM Fed’s Bostic Speech
4:30 PM Fed Balance Sheet
What else is happening…
GameStop (GME), AMC (AMC)? Meme rally is cooling off big time.
First Solar (FSLR) pops after trade probe into Asian solar imports.
Netflix (NFLX) ad plan tops 40M users; NFL deal in the bag.
Microsoft’s (MSFT) emissions rise amid surging AI demand.
BOJ rate hike? Trouble as Japan’s economy keeps shrinking.
Disney (DIS) flags spending cuts on marketing, traditional TV.
Networking: Cisco (CSCO) raises guidance after latest results.
Morgan Stanley highlights Dell’s (DELL) AI server and storage.
China’s NIO changing global strategy as U.S., EU tariffs loom.
Check out the latest hot dividend picks by Seeking Alpha analysts.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned down. Taiwan and Indonesia did well, but China, New Zealand, Singapore and the Philippines were weak. Europe, Africa and the Middle East lean to the upside. Denmark, Greece, South Africa and Spain are up; Poland and the UAE are down. Futures in the States point towards a moderate up open for the cash market.
————— VIDEO: This is a Fantastic Time to Learn Trading —————
The dollar is down. Oil is flat; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Bumpy road
With inflation staying hot in every reading of 2024, the first expected Federal Reserve rate cut in more than four years keeps pushing later in the calendar, with some wondering if the central bank will reduce its benchmark rate at all this year. Investors will get another glimpse of the inflation picture today when the U.S. Department of Labor releases the Consumer Price Index for April. With it, expect a new round of predictions as to when the Fed will finally ease its policy rate.
By the numbers: The CPI is expected to increase by 0.4% M/M in April, matching the same rate of growth seen in March and February. On a Y/Y basis, that translates to a 3.4% rise vs. 3.5% in the previous month. Stripping out the volatile categories of food and energy, core CPI is expected to increase by 0.3% M/M vs. 0.4% in March, and 3.6% Y/Y, compared with a prior 3.8%. Also pay special attention to categories like rent, housing, transport costs, and insurance.
With the January, February, and March CPI reports coming in hotter than expected, central officials have been hammering home the “higher-for-longer” message. That includes yesterday’s speech from Jay Powell, who reiterated a wait-and-see approach on monetary policy. The Fed will “need to be patient and let restrictive policy do its work,” he declared, adding that “my confidence is not as high as it was” but expects “inflation will move back down on a monthly basis to levels that were more like the lower readings we were having last year.”
Data dependent: Wholesale inflation came in hot on Tuesday, notching its highest level in a year, albeit with some prior revisions. The Nasdaq (COMP:IND) hit a fresh all-time record despite the reading, along with a NY Federal Reserve survey that showed consumers seeing stickier inflation ahead. The latest retail sales report will be released at the same time as today’s CPI, at 8:30 AM ET, and that could also be a significant data point for the broader economy as mentioned on yesterday’s Wall Street Breakfast. (8 comments)
Meme revival
The meme trade redux is continuing for the third day in a row, although the big names are notching smaller gains in the premarket session… for now. GameStop (GME) and AMC (AMC) saw a combined 37 volatility trading halts on Tuesday, eventually closing +60.1% and +32%, respectively, after Keith Gill, known as Roaring Kitty, tweeted for the first time in nearly three years. GameStop also climbed near the top of Interactive Brokers’ (IBKR) weekly list of most active assets on its platform, with many looking to make money off of GME options. Are we going to see a repeat of 2021’s meme frenzy? Only time will tell. (215 comments)
Bundle everything
As streaming services crowd the market, they are now racing to form alliances that offer “choice and value” for customers. The latest is Comcast (CMCSA), which will launch a new streaming bundle that’ll include Peacock, Netflix (NFLX), and Apple TV (AAPL) at a “vastly reduced price.” That’s “everyday pricing, not an introductory pricing,” Comcast CEO Brian Roberts announced, saying the StreamSaver bundle will be available this month. Disney (DIS) and Warner Bros. Discovery (WBD) unveiled their own streaming bundle only a week ago, following their partnership with Fox (FOX) to build a joint sports streamer. (7 comments)
Under the sea
Red Lobster will reportedly file for bankruptcy as soon as next week, as the largest U.S. seafood chain works to reach a deal with its creditors and negotiate concessions from landlords. It also just closed around 99 locations, with over 50 restaurants and their equipment being auctioned off. Red Lobster has been struggling with financial troubles for some time, on account of less foot traffic during the pandemic, higher interest rates, and a failed all-you-can-eat shrimp promotion. Majority owner Thai Union Group (OTCPK:TUFBY) previously said it would exit the chain due to “prolonged negative financial contributions.”
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
8:30 Retail Sales
8:30 Empire State Mfg Survey
10:00 Business Inventories
10:00 Housing Market Index
10:30 EIA Petroleum Inventories
12:00 PM Fed’s Kashkari Speech
3:20 PM Fed’s Bowman Speech
4:00 PM Treasury International Capital
What else is happening…
Gemini era: Google (GOOGL) reveals new AI-powered products.
Following the release of GPT-4o, OpenAI chief scientist steps down.
U.S. senators push for $32B in emergency spending on AI.
Novo Nordisk (NVO) to test obesity drugs in alcohol use.
Baidu (BIDU) robotaxi unit may turn profitable in 2025.
Auto drama: BYD (OTCPK:BYDDF) unveils new hybrid pickup truck.
Boeing (BA) ran afoul of criminal settlement on 737 crashes – DOJ.
IEA cuts 2024 oil demand outlook, copper hits record high.
Cleveland-Cliffs (CLF) CEO: ‘Almost zero chance’ of Nippon/US Steel.
NYCB to sell $5B in mortgage warehouse loans to JPMorgan (JPM) unit.
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Good morning. Happy Tuesday.
The Asian/Pacific markets were mixed and little changed. Japan, India and Taiwan moved up; Hong Kong was weak. Europe, Africa and the Middle East lean to the upside. Denmark, Turkey, Finland, Italy, Portugal and Austria are up; Poland, the UAE and Saudi Arabia are down. Futures in the States point towards a down open for the cash market.
————— VIDEO: This is a Fantastic Time to Learn Trading —————
The dollar is up. Oil is down; copper is up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
State of the consumer
Are U.S. consumers finally tightening the purse strings? That’s the main question on the minds of investors as major retailers kick off their quarterly earnings reports this week, starting with Home Depot (HD). The home improvement chain’s Q1 results came in below Street expectations, hurt by a delayed start to spring, continued softness in certain larger discretionary projects, and higher mortgage rates.
Dig deeper: Retailer earnings come at a time when consumer sentiment is weakening, amid expectations of stickier inflation for some time to come and a tempered outlook for income growth. Investing Group Leader Bret Jensen believes stagflation is an increasingly likely economic scenario. “Right now, I believe the average American consumer has a better handle on the U.S. economy than the average investor and a better take on the true level of inflation than governmental statistics.”
Scott Feiler, consumer sector specialist at Goldman Sachs, said the consumer spending concerns have been driven by updates by bellwethers in the sector, and the notable slowdown seen in April – one of the worst months of the retail quarter. Companies like Wayfair (W) and Whirlpool (WHR) have already warned that consumers are cutting back spending on big-ticket items, while fast-food chains such as McDonald’s (MCD) and Starbucks (SBUX) have observed pickier and more value-minded customers. “Consumer cracks are emerging,” especially among lower incomes, warned Bank of America analyst Savita Subramanian.
Earnings watch: Walmart (WMT), which will report Q1 results on Thursday, is expected to report modest upside to the consensus U.S. comparable sales estimates, driven by bargain-hunting shoppers. Also keep an eye on other retailers scheduled to report results next week: Lowe’s (LOW), Target (TGT), TJX (TJX), and Ross Stores (ROST).
Sustained weight loss
Patients who are taking Novo Nordisk’s (NVO) blockbuster obesity drug Wegovy have reportedly maintained an average of 10% weight loss four years after starting the treatment. “We see that once the majority of the weight loss is accrued, you don’t go back and start to increase weight if you stay on the drug,” said Martin Holst Lange, Novo’s head of development. The data could help Novo in its efforts to convince insurers and governments to provide coverage for the treatment. The U.K.’s National Health Service provides only two years of Wegovy coverage, while Medicare does not cover the drug. A recent poll showed that many people believe Medicare should cover weight loss drugs. (2 comments)
Resisting takeover
Anglo American (OTCQX:AAUKF) has unveiled a major shakeup of the company – which includes divesting its steelmaking coal and nickel businesses – as the British miner aims to stave off BHP’s (BHP) takeover bid. Anglo American will demerge Anglo American Platinum (OTCPK:ANGPY), while its diamond business De Beers will either be divested or demerged “to improve strategic flexibility.” The overhaul is aimed at sharpening Anglo American’s focus on its mainstay assets – copper and premium iron ore. “These actions represent the most radical changes to Anglo American in decades,” its CEO Duncan Wanblad said. The plan was announced just a day after the firm rejected BHP’s (BHP) new £34B proposal.
Power grid boost
The Federal Energy Regulatory Commission approved two new rules Monday that are expected to make it easier to expand the construction of big power lines and bring more renewable energy to U.S. homes and businesses. One rule will require companies that produce and transmit electricity to weigh factors such as supply and demand over at least 20 years; the other addresses the permitting of critical projects in areas that lack adequate transmission capacity. The rule requiring long-term planning is “the biggest single action by the federal government to advance transmission,” according to Rob Gramlich, president of power consulting firm Grid Strategies. (46 comments)
Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
8:30 Producer Price Index
9:10 Fed’s Cook Speech
10:00 Jerome Powell Speech
8:15 PM Fed’s Schmid Speech
What else is happening…
WSB survey results: Derisking and diversifying is still the way to go.
Biden administration raises tariffs steeply on Chinese EVs, chips.
Uber (UBER), Lyft (LYFT) face landmark trial on rideshare drivers.
BYD (OTCPK:BYDDF) sends shockwaves across auto with Seagull.
Biden faces mounting calls to take on grocery price-fixing issue.
HubSpot (HUBS) rises on report of ‘compelling’ offer from Alphabet.
Wedbush: Apple (AAPL)-OpenAI pact appears to be done deal.
OpenAI unveils new flagship model GPT-4o, available for free to all.
OPEC risks losing market share if it does not start raising output.
ZIM (ZIM) surges as container shipping stocks’ momentum continues.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets were split. Hong Kong, Taiwan and the Philippines did well; China and New Zealand were weak. Europe, Africa and the Middle East are little changed. Denmark is up; Greece and Portugal are down. Futures in the States point towards a positive open for the cash market.
————— VIDEO: This is a Fantastic Time to Learn Trading —————
The dollar is down. Oil and copper are up. Gold is down; silver is up. Bonds are up.
Stories/News from Seeking Alpha…
Tricks of the trade
The war for global economic power is set to take another turn this week as the U.S. looks to shield domestic industries and workers from foreign competition. It’s a notable development for President Biden, who has kept in place all of the Trump administration’s steep levies on about $370B of annual imports from China. Not only will those continue to remain following a years-long policy review, but further protectionist measures will likely be unveiled at a White House event tomorrow.
What’s in store? Reports suggest that tariffs will quadruple on Chinese electric vehicles to 102.5% from 27.5%. Duties will also be hiked on the solar industry, while other sectors that may see tariffs double or triple could include steel and aluminum, batteries, or other clean-energy goods. Some see the tariffs as merely symbolic, as existing tariffs have already locked Chinese cars out of the American market, while many Chinese solar companies circumvent the duties by exporting to the U.S. via transit locations in southeast Asia.
There has been a big debate in recent years about whether additional tariffs would harm the fight against inflation. That debate is likely irrelevant now as the worst of the price pressures have come down and the U.S. gears up for a contentious election cycle. Protecting industries in key battleground states, like autos in Michigan and steel in Pennsylvania, are at the forefront of some of the races, and both sides are eager to address national security concerns, the loss of manufacturing jobs, and risks associated with the supply chain. Meanwhile, billions of dollars in subsidies have been doled out to key American sectors through mega-spending measures, including the Inflation Reduction Act and CHIPS and Science Act.
What to watch: The U.S. has also warned that China is flooding the market with subsidized goods, with Treasury Secretary Janet Yellen recently flying to Beijing to discuss “unfair trade” and “industrial overcapacity.” The bigger fear here is that protectionist policy could eventually become indistinguishable from industrial policy, and China Foreign Ministry spokesman Lin Jian has promised that Beijing would “take all necessary measures to defend its rights and interests.” If China would retaliate, it could target American agricultural exports, or impose limits on critical components the U.S. still doesn’t have in its domestic supply chain, like rare earths. Take the WSB survey.
Goodbye, Siri?
Apple (AAPL) and OpenAI are reportedly in the final stages of discussions to bring ChatGPT to the next iPhone. If a deal is finalized, the popular chatbot will headline the new AI features that Apple is set to unveil next month at its annual Worldwide Developers Conference. Meanwhile, discussions with Alphabet’s (GOOG, GOOGL) Google for licensing its AI model Gemini for the iPhone are still ongoing.
Apple may reach an agreement with both OpenAI and Google, or prefer one over another. (29 comments)
More unionization
The United Auto Workers is seeking a key victory this week in an effort to unionize workers at Mercedes-Benz (OTCPK:MBGYY) factories in Alabama. A victory would be significant for the UAW, which has worked to overcome resistance to unionization in the Deep South. This week’s vote also comes after the UAW recently succeeded in unionizing a Volkswagen (OTCPK:VWAGY) facility in Tennessee. Elsewhere on the organized labor front, workers at Apple’s (AAPL) first unionized store in the U.S. voted in favor of a strike over unresolved workplace issues. (6 comments)
Strong dollar
Dollar strength makes Americans’ travels abroad relatively cheap, but that comes at some cost, according to Wells Fargo. When money is spent abroad, the expenditure is counted as an import in the GDP accounts, because it is consumption that doesn’t contribute to the value-added of the U.S. economy. The U.S. Dollar Index (DXY), a measure of the dollar’s value against six currencies, is up ~4% in 2024. Currency analysts have widely said support comes in part from the Fed’s higher-for-longer stance on interest rates. (2 comments)
Today’s Economic Calendar
9:00 Fed’s Mester Speech
What else is happening…
Memes are back: GameStop (GME) surge continues premarket.
Schumer tells FTC to pump the brakes on Chevron-Hess deal.
Trump asks oil industry for $1B, vows to scrap Biden policies.
McDonald’s (MCD) franchisees balk at $5 Meal Deal revival.
‘Kingdom of the Planet of the Apes’ rules the weekend box office.
Marc Benioff takes over for Warren Buffett at charity lunch auction.
SoftBank bets big: Arm (ARM) planning AI chip launch next year.
Magnificent 7 are predicted to reinvest close to $350B in 2024.
What’s next for Disney (DIS)? SA analysts weigh in after results.
Elon Musk: SpaceX’s Starlink under pressure from solar storm.
BofA strategist recommends pain trades for bulls and bears.
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