In the wake of the U.S. index whipsaws in an FOMC decision reaction, the Hang Seng index in Hong Kong emerged as the frontrunner, registering a notable 2.4% increase. This uptick was further accentuated in the technology sector, with the Hang Seng Tech index experiencing a significant 4.4% surge. Meanwhile, Mainland China markets were closed in observance of the Labor Day holiday.

European markets experienced a modest downturn on Thursday morning, in response to the U.S. FOMC’s recent decision and the impact of various corporate earnings reports. The Stoxx 600 index saw a slight decline of 0.25% as of 11 a.m. in London, indicating a mixed bag of sectoral performance. While bank stocks showed resilience with a 0.5% rise, the oil and gas sectors weren’t as fortunate, witnessing a 1.35% fall.

U.S. stock futures indicate a bullish gap this morning as investors’ anticipation grew for the upcoming corporate earnings. However, the initial enthusiasm was tempered by the end of Wednesday’s volatile price action. The Dow managed to eke out a modest gain, closing approximately 0.2% higher, while both the S&P 500 and Nasdaq Composite receded, ending the day down by nearly 0.3%.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include AGCO, AGIO, ATUS, APO, APTV, MT, ARES, ARW, BAX, BDX, BWA, BTSG, GOOS, CAH, CHD, CNK, CNHI, CGNX, COP, CMI, CYBR, D, DRVN, ENOV, ES, EXC, EXLS, RACE, FTDR, ULCC, HWM, HII, IDA, INMD, NSIT, ICE, IDCC, IQV, IRM, ITRI, ITT, JHG, K, KRP, KIM, KTB, LAMR, LANC, LNC, LIN, LXP, MBUU, NRMA, MCO, MUR, OGN, PH, BTU, PTON, PENN, PNW, PBI, PWR, REGN, SABR, SEE, SHAK, SSTK, SWI, SO, SWK, CI, TPB, UTZ, WNT, VMC, WD, W, WEN, WRK, XPEL, XYL, & ZTS.. After the bell include AAPL, AAON, ACCO, AES, AMH, AMGN, ACA, ASUR, BECN, BBAI, BILL, BJRI, SQ, BKNG, BFAM, CABO, CPT, CIVI, NET, COHU, COIN, ED, CTRA, DVA, DRH, DLR, DLB, DKNG, LOCO, EOG, EXPE, FRT, FIVN, FND, FTNT, FOXF, GDDY, HOLX, HUN, ILMN, KRC, LYV, MTZ, MSI, MP, OHI, OTEX, OPEN, PCTY, PXD, POST, KWR, RMAX, RGA, RKT, RYAN, SIMO, SM, SWN, TNDM, TXRH, X, OLED, VIAV, WK, WW, XRH, & XPOF.

News & Technicals’

Jeffrey Gundlach, CEO of DoubleLine Capital, provided a revised outlook on Wednesday, suggesting that there may be at most one interest rate cut by the end of the year. This statement came in the wake of the Federal Reserve’s policy meeting, where Chair Jerome Powell made a pivotal announcement that virtually eliminated the prospect of an interest rate hike in the near future. Following Powell’s remarks, the financial markets reacted swiftly; treasury yields plummeted to their lowest points of the session, while stock prices soared to their highest, reflecting investor sentiment that the next move by the Fed would steer clear of increasing rates.

The perception of China among Americans has notably shifted, with 42% now considering China as an adversary of the United States—a significant increase from just 25% two years prior. This sentiment is echoed in Pew Research findings, where for the fifth consecutive year, approximately 80% of respondents harbored unfavorable views towards China, and nearly half of that group expressed a very unfavorable stance. Notably, older Republican demographics, alongside individuals dissatisfied with the U.S.’s economic climate, exhibited the strongest opposition toward China. This data underscores a growing trend of skepticism and concern regarding U.S.-China relations among the American populace.

Carvana’s stock experienced a remarkable surge, soaring over 30% in after-hours trading on Wednesday. This leap was fueled by the company’s announcement of record-breaking results and a profitable first quarter. A key metric, the gross profit per unit (GPU), stood at an impressive $6,432, capturing the attention of investors. Additionally, Carvana reported an adjusted EBITDA profit margin of 7.7% for the quarter. These strong financial indicators are the fruits of a strategic shift implemented over the past two years, emphasizing profitability in response to previous bankruptcy worries in 2022. The company’s pivot from aggressive expansion to financial stability appears to be paying off, as evidenced by these positive outcomes.

Peloton is set for a leadership transition as CEO Barry McCarthy prepares to step down, marking the end of his tenure that began in February 2022. McCarthy, who previously held executive roles at Netflix and Spotify, was instrumental in steering Peloton through a period of transformation aimed at cost reduction and revitalizing growth. Despite his departure from the CEO role, McCarthy will continue to influence Peloton’s strategy, serving as a strategic advisor until the year’s end. In the interim, the company will be guided by two of its board members who will assume the roles of co-CEOs, ensuring continuity in Peloton’s journey towards sustainable growth.

Trade Wisely,

Doug

Amidst a tense atmosphere, the Australian and Japanese markets experienced a downturn on Wednesday. Investors are holding their breath in anticipation of the FOMC rate decision. Adding to the market’s unease is the performance of the yen, which has had a tumultuous beginning to the week, with suspected interventions occurring as early as Monday. Currently, the yen is hovering around the 157.7 mark when paired against the U.S. dollar, a level that market participants will be watching closely as these events unfold.

This morning London’s FTSE 100 index saw a modest increase, standing out in a quiet European market landscape, as most markets were closed in observance of the May Day/Labor Day public holiday. Despite the regional pause, investors have their work cut out for them, with the U.S. Federal Reserve’s impending interest rate announcement looming large.

US futures indexes declined Wednesday morning. The focus of traders is now shifting to the Federal Reserve’s interest rate decision. Investors are keenly awaiting insights from Fed Chair Jerome Powell regarding the conditions necessary for a potential rate decrease in the future.

Earnings Calendar

Notable reports for Wednesday before the bell include MA, AER, ALKS, APA, ARCC, ADP, AVA, AVT, AXTA, BLCO, BRY, TECH, BIP, CDW, GIB, CHEF, CLH, CNDT, CTS, CVS, DAY, DD, EL, EXTR, GRMN, GNRC, ROCK, GSK, GPN, IDXX, JCI, KKR, KHC, LTH, LIVN, MAR, NBIX, NCLH, OGE, PSN, PFE, PPL, RGEN, SMG, SLGN, SDHC, SR, STGW, COCO, TRN, TTMI, WLK, WING, & YUM. After the bell include ACHC, AFL, ALB, ALKT, ALL, AFG, AIG, AWK, ANSS, CAR, ACLX, CAR, ACLX, AXS, BALY, BZH, BV, CHRW, CWH, CVNA, CF, CWAN, CDE, CTSH, CRK, CTVA, CCRN, CW, DVN, DGII, DASH, EBAY, NVST, EPR, EQC, ETSY, EXPI, FSLY, FSLR, FRSH, GKOS, GRBK, THG, HTLF, HLF, HST, HPP, INFA, JAZZ, KMPR, KN, KLIC, MRO, MET, MTG, MGM, MCW, MPWR, MOS, MUSA, NFG, NSA, NTGR, PGRE, PAYC, PPC, PCOR, PTC, QRVO, QCOM, RDN, RYN, RSI, RHP, SDGR, SFM, NOVA, TTEK, UGI, UPWK, VMI, VTR, VICI, WOLF, & ZG.

Economic Calendar

News & Technicals’

In a significant move, the Biden administration has announced the cancellation of over $6.1 billion in student loans, affecting approximately 317,000 former students of The Art Institutes. This decision comes after the U.S. Department of Education’s investigation into the for-profit education chain and its parent company, the Education Management Corporation (EDMC). The investigation revealed that both institutions engaged in “pervasive and substantial” deceptive practices, misleading students about crucial factors such as employment rates, potential salaries, and the effectiveness of career services post-graduation. As a result of these findings, all eligible borrowers will automatically receive debt forgiveness. This relief extends even to those who have not formally applied for loan forgiveness under the borrower defense program, ensuring that all affected individuals are covered by this unprecedented act of financial reprieve.

In a landmark shift, the Biden Administration is set to reclassify marijuana as a Schedule III controlled substance, aligning it with drugs such as Tylenol with codeine, anabolic steroids, and testosterone. This groundbreaking decision, as reported by NBC News citing four informed sources, marks the end of marijuana’s over 50-year designation as a Schedule I drug—a category it shared with substances like heroin and methamphetamines. The reclassification reflects a significant change in the federal stance on marijuana, acknowledging its medical benefits and lower potential for abuse. Concurrently, this news has sparked a notable upswing in cannabis-related stocks, which stood out with gains in contrast to the overall market’s downturn.

The Federal Reserve appears to be in a state of inertia, with expectations set for this status quo to be evident at the conclusion of its meeting on Wednesday. Market analysts predict virtually no possibility of the Federal Open Market Committee (FOMC), which is responsible for setting the central bank’s monetary policy, to alter the current interest rates. The most noteworthy announcement anticipated from the meeting is the Federal Reserve’s plan to decelerate the reduction of its bond holdings on the balance sheet. This move signals a cautious approach by the Fed amidst economic uncertainties, as it opts to maintain a steady course rather than introducing new monetary policy changes.

Anticipate a turbulent trading day filled with significant earnings and economic reports, culminating with a FOMC rate decision. Traders should brace for potential sharp swings in points as they respond to the influx of data. Additionally, it’s wise to monitor bond yields closely for any shifts that may occur following comments from Fed Chair Jerome Powell later today, which could offer hints at the market’s future trajectory.

Trade Wisely,

Doug

Traders and investors are dealing with a mix of anticipation and Unertainty with post-market earnings announcements from Amazon, Advanced Micro Devices, and Starbucks garnering significant attention. At the same time there is a palpable uncertainty surrounding the Wednesday FOMC and the possible hawkish tone and higher for longer statemets as the inflation fight continues  

During the night, Asian markets mostly upticked on Tuesday, mirroring the trends set by Wall Street. Investors’ attention was particularly focused on the April manufacturing purchasing managers’ index (PMI) from China. The latest data revealed that China’s manufacturing sector grew at a reduced rate in April, with the official PMI registering at 50.4, a slight decrease from March’s 50.8.

European trade mixed and lower this morning, marked by the release of numerous earnings reports and critical economic indicators. Most industry sectors experienced a minor downturn, with, the euro zone’s inflation rate unchanged at 2.4% in April. The core inflation rate, which excludes volatile items such as energy, food, alcohol, and tobacco, was reported at 2.7%.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include MMM, ACIW, APD, AEP, AMT, ADM, AWI, ATI, EAT, CNP, CO, GLW, DAN, ETN, ECL, LLY, EPD, ETRN, FELE, IT, GEHC, GPK, HRMY, HUBB, ITW, INCY, LEA, MAC, MPC, MLM, MCD, TAP, MPLX, NOG, OCSL, OMF, PACR, PYPL, PAG, PEG, SIRI, SYY, SMHC, TT, UFPI, & ZBRA. After the bell reports include AMZN, AMD, ASH, AX, BLKB, BXP, CZR, CHK, CLX, DENN, FANG, DBRG, EIX, EQH, ESS, EXEL, EXR, GPOR, HI, HURN, INVH, LEG, LMND, LC, LFUS, LPLA, LUMN, MATX, MIR, MDLZ, OI, OKE, PK, PDM, PINS, POWL, PRU, PSA, RSG, SWKS, STAG, SBUX, SYK, SMCI, SKT, UDR, UNM, VOYA, WPC, & WERN.

News & Technicals’

McDonald’s disclosed mixed financial outcomes. The fast-food giant reported a modest surpass on revenue, indicating a resilient performance in sales. However, the earnings per share (EPS) fell marginally short of market expectations, reflecting some underlying challenges. In the U.S., McDonald’s observed a downturn in expenditure among low-income consumers, signaling economic pressures that could affect the company’s domestic market share. Internationally, the brand contended with boycotts sparked by its Israeli licensee’s promotional offers to soldiers, leading to a temporary shutdown of several outlets. This controversy has notably impacted McDonald’s sales in the Middle East, adding to the complexities of operating a global franchise amid varying geopolitical climates.

Walmart has announced a significant shift in strategy, revealing plans to shut down all of its healthcare clinics nationwide. This move marks a departure from its previous ambitions to extend its affordability ethos to medical services, alongside its traditional retail offerings. Additionally, the retail giant is set to close its telehealth service, which was acquired in 2021 for an undisclosed sum. Citing the inability to sustain a profitable healthcare business model, Walmart pointed to the difficult reimbursement landscape and escalating expenses as the primary reasons for this decision. This development represents a notable retreat from the company’s healthcare venture, underscoring the complexities of the healthcare industry.

Volkswagen’s first-quarter financials have signaled a challenging period for the automotive giant, with a 20% decline in operating profit. This downturn is attributed to a faltering demand for its high-end vehicle lines. The total vehicle sales stood at 2.1 million units, marking a slight decrease of approximately 2% from the previous year. The impact was more pronounced in Volkswagen’s luxury division, Porsche, which experienced a steep 30% fall in operating profit. Concurrently, the global car manufacturer Stellantis also faced economic headwinds, reporting a 12% drop in revenue. Stellantis attributes this decline to diminished sales volumes and the adverse effects of foreign exchange rates, despite maintaining stable net pricing. These reports from Volkswagen and Stellantis reflect the broader challenges faced by the auto industry, including shifting consumer preferences and economic pressures.

In a pivotal moment for the cryptocurrency industry, U.S. District Judge Richard Jones is set to deliver a sentence to the founder and former CEO of Binance, Changpeng Zhao, in a Seattle court on Tuesday. This sentencing follows Zhao’s guilty plea to criminal charges last November, an admission that led to his resignation from the helm of the world’s largest crypto exchange. The decision by Judge Jones comes after months of deliberation over the suitable penalty for Zhao’s actions, which have had significant repercussions within the crypto community and beyond. The outcome of this sentencing is highly anticipated, as it could set a precedent for how legal systems around the world handle similar cases in the rapidly evolving digital currency landscape.

Plan for considerable price volatility as the market deals with anticipation and uncertainty of pending big tech reports with the looming FOMC decision.  Keep a close eye on overhead resistance levels and of course the bond yields that continue to trend upward as the inflation battle continues.   

Trade Wisely,

Doug

Asian markets experienced a positive trend last night, buoyed by the previous week’s tech rally on Wall Street. Despite the closure of Tokyo’s market for a national holiday, other key indexes saw notable gains. Sydney’s S&P/ASX 200 rose by 0.8%, South Korea’s Kospi surged 1.2%, Hong Kong’s Hang Seng edged up 0.5%, and the Shanghai Composite increased by 0.8%. The optimism was tempered by caution as investors await the Federal Reserve policy meeting later this week.

European markets opened on a positive note this morning, continuing the upward momentum from the previous sessions. The FTSE 100 index in the UK opened 50 points higher at 8,124, while Germany’s DAX was up 62 points at 17,980. France’s CAC saw an increase of 38 points, opening at 8,049, and Italy’s FTSE MIB rose by 185 points to 33,857. This optimistic start is attributed to the positive closure of the tech rally on Wall Street and the anticipation of corporate releases from major companies like L’Oreal, TotalEnergies, and NatWest.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell include DPZ, BEN, JKS, ON, RVTY, & SOFI. After the bell reports include AMKR, ACGL, BRX, CHGG, COUR, CCK, CVI, PLOW, ESI, EG, FFIV, FLS, HLIT, KFRC, LSCC, LTC, MED, MSTR, NXPI, PARA, PCH, QGEN, RMBS, SANM, SBAC, ST, SUI, WELL, WWD, & YUMC.

News & Technicals’

In Monday morning’s trading session in Asia, the Japanese yen experienced a notable depreciation, reaching a level of 160 against the U.S. dollar. This weakening trend has been consistent since the Bank of Japan’s decision to terminate its negative interest rate policy back in March, with the yen hovering around the 150 mark or lower when paired with the dollar. Despite this downward pressure, Japanese authorities have consistently issued warnings against precipitous fluctuations in the currency’s value. However, as of yet, they have refrained from making any definitive statements or taking concrete actions to support the yen, leaving market participants watching closely for any signs of intervention.

Over the weekend, the geopolitical landscape was marked by significant developments. The United Nations Secretary-General Antonio Guterres highlighted the transition into a new multipolar era characterized by the highest level of major power competition in decades. He emphasized the growing challenges such as complex conflicts, potential nuclear threats, and the climate emergency, all exacerbated by the ongoing tensions resulting from Russia’s invasion of Ukraine. Guterres’ remarks were part of his “New Agenda for Peace,” which calls for a renewed commitment to multilateralism and collective action to address these pressing global issues.

The financial world is poised on the edge of its seat as the U.S. Federal Reserve gears up for its latest interest rate announcement this Wednesday. This highly-anticipated update comes on the heels of a U.S. inflation report that delivered figures higher than many had forecasted last Friday. While the consensus among market analysts is that the Fed will hold the borrowing cost steady, investors are nonetheless preparing to scrutinize every word from Chair Jerome Powell’s post-announcement press conference. The market’s reaction to this delicate balance of anticipation and prediction could set the tone for economic trends in the coming months.

The hope for a continued tech rally coupled with worry of stubron inflation, bond yields and the pending FOMC is likely to keep traders on edge this week so look for continued big point swings as the bulls and bears battle for domance near the overhead price and technical resistance. 

Trade Wisely,

Doug

Meta’s recent quarterly report has cast a shadow of concern over the upcoming earnings releases of other tech giants, particularly Microsoft and Alphabet, which are expected to announce their earnings after the market closes on Thursday The apprehension stems from Meta’s shares tumbling by 17% in after-hours trading, despite the company beating revenue and earnings-per-share. This reaction is attributed to Meta’s forward-looking statements, which indicated higher-than-anticipated spending, especially in AI and the. The market’s response to Meta’s report could be a bellwether for how investors might react to the financial disclosures of Microsoft and Alphabet, with particular attention being paid to their guidance and investment strategies.

In addition to corporate earnings, traders are also bracing for the release of key economic data. The U.S. Bureau of Economic Analysis is scheduled to publish the first-quarter GDP reading at 8:30 a.m. ET on Thursday, with Dow Jones economists predicting a 2.4%. Concurrently, the latest weekly jobless claims data will be released, providing further insight into the labor market’s health. These economic indicators are crucial as they will influence the Federal Reserve’s monetary policy decisions. Currently, the Fed funds futures market is signaling the possibility of an interest rate cut at the September Fed meeting, as per the CME FedWatch Tool. This anticipation of a policy shift reflects the market’s expectations that the central bank may pivot in response to evolving economic conditions.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell AOS, ADT, ALLE, MO, AAL, AIT, ARCH, ABG, AZN, BMY, BC, CWT, CARR, CAT, CBZ, CHKP, CMS, CNX, CMCSA, CFR, DOV, DTE, XPRO, FCN, GWW, HOG, HTZ, HES, HON, IMAX, IIIN, ITGR, IP, KDP, KEX, LH, LKFN, LAZ, MRK, MBLY, NDAQ, NEM, NOC, OSK, PCG, POOL, RS, RCL, SPGI, SAGE, SNY, SAH, SBSI, LUV, STM, FTI, TXT, TSCO, TW, TRU, TPH, UNP, VLO, VC, WST, WEX, WTW, WNS, & XEL.  Thursday after the bell includes MSFT, GOOG, AB, APPF, ATR, AJG, TEAM, AVB, SAM, BYD, COF, CSL, CWST, CINF, COLM, CUBE, DXCM, EMN, EXPO, FICO, FHI, FFBC, FE, GLPI, GILD, HIG, DOC, HUBG, INTC, JUNP, KLAC, LHK, MHK, NRDS, OLN, PECO, PFG, PTCT, RMD, RHI, ROKU, SKX, SKYW, SNAP, SPCS, TDOC, TEX, TMUS, VRSN, WDC, WY, WSFS.

News & Technicals’

In a significant legal development, a Russian court has ruled in favor of VTB Bank, a state-controlled lender, in its legal battle to recover $439.5 million from JPMorgan Chase. The U.S. bank had reportedly frozen these funds following the invasion of Ukraine. The court’s decision mandates the confiscation of JPMorgan’s funds held within Russian jurisdiction, as well as its tangible and intangible assets, which notably include the bank’s equity in a Russian subsidiary. This ruling comes on the heels of VTB’s lawsuit filed in a St. Petersburg arbitration court, which sought restitution for the funds frozen by the U.S. financial institution. VTB’s legal move was partly driven by JPMorgan’s announcement of its planned withdrawal from the Russian market, prompting the state-run bank to seek judicial intervention to reclaim the blocked capital.

The Japanese yen has experienced a notable depreciation of 4.2% since the Bank of Japan’s (BOJ) meeting in March, a trend exacerbated by the strengthening of the U.S. dollar this weakness is partly attributed to the persistent inflation in the United States, which has led Federal Reserve Chair Jerome Powell to hint that rate cuts may not be on the horizon for the next few months]. Analysts are calling for decisive measures to bolster the yen, yet there is widespread skepticism that such actions will emerge from the upcoming BOJ meeting on FridayThe market’s anticipation of continued low-interest rates in Japan, contrasted with the U.S.’s higher rates, has put additional downward pressure on the yen, leaving investors and policymakers alike watching for any potential shifts in the BOJ’s stance that could impact the currency’s trajectory.

During Meta’s recent quarterly earnings call, CEO Mark Zuckerberg emphasized the company’s commitment to long-term investments in artificial intelligence (AI) and the metaverse, a strategy that appeared to unsettle investors. Despite the potential of these emerging technologies to revolutionize digital interaction and business models, the immediate market reaction was negative, with Meta’s shares plunging by up to 19% in after-hours trading. Zuckerberg acknowledged the market’s response, noting that such volatility is not uncommon for Meta during periods of significant product development and innovation. His comments suggest a focus on future growth and transformation, even as current shareholders grapple with the implications of these ambitious projects on short-term financial performance.

The Meta disappointment makes today’s reports a significant moment for the tech industry as both Apple and Alphabet are set to report their earnings after the market closes. This event is highly anticipated by investors and market analysts alike, as the financial performance of these tech giants often serves as an indicator of the sector’s overall health and future direction. The results will be closely scrutinized for insights into consumer demand, advertising revenue trends, and the companies’ ability to navigate the current economic landscape. With the global economy facing various challenges, the outcomes of these reports could have substantial implications for market sentiment and tech stock valuations moving forward. Expect significant volatility, whipsaws. Anything is possible!

Trade Wisely,

Doug

Today investors find themselves at a crossroads of anticipation and caution. The market has witnessed a rebound, with Big Tech companies poised to release their earnings, sparking a collective breath of optimism. This week is particularly crucial as it sees the convergence of financial disclosures from approximately 30% of the S&P 500 entities, setting the stage for potential market reassurance.

However, the recent past has painted a more sobering picture. Wall Street experienced a sharp decline, marking its worst performance since October, as the S&P 500 fell by 1.5%. This downturn was part of a broader trend, with the S&P 500 extending its losing streak influenced by slumps in major tech firms like Nvidia and Netflix.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday. Before the bell, BANC, DHR, EWBC, FBP. FCF. FI. FCX. GATX. GE. GM, HAL, IVZ, JBLUE, KMB, LMT, MSCI, NEE, NEP, PNR, PEP, PM, PII, PHM, DGX, RTX, R, SHW, SPOT, UPS, WRB, WBS, & XRX.  After the bell reports includeTSLA, BKR, CNI, CB, CGSP, ENPH, EQT, EQR, HA, IEX, MTDR, MAT, RRC, STX, STLD, LRN, TXN, TRMK, VBTX, VICR, V, WSBC, & ZWS.

News & Technicals’

The upcoming days are set to be a defining moment for the U.S. technology sector as industry giants such as Tesla, Meta, Microsoft, and Google’s parent company Alphabet are on the cusp of revealing their latest financial figures. The earnings week is set to ignite with Tesla, the electric vehicle pioneer led by Elon Musk, announcing its results after Tuesday’s market close. This series of disclosures follows a tumultuous period for the tech market, evidenced by a 5.5% drop in the Nasdaq Composite last week. The sentiment in the market is one of cautious scrutiny, as noted by Nicolai Tangen, CEO of Norges Bank Investment Management, who highlighted the presence of speculative “froth” in the tech sector during his interview with CNBC. The true measure of this speculation, however, remains to be seen, casting a veil of uncertainty over the impending earnings announcements.

The dichotomy between hope and reality is further accentuated by the mixed results of the current reporting period. While a majority of companies have exceeded expectations, the overall growth for Q1 remains tepid, with FactSet data indicating a flat year-on-year trajector. This stands in stark contrast to the more than 3% growth that analysts had projected at the onset of the earnings season.

As investors navigate this complex environment, they remain vigilant, weighing the potential impact of upcoming earnings reports against the backdrop of recent market volatility. The question on everyone’s mind is whether the forthcoming financial revelations will serve as a catalyst for recovery or contribute to ongoing market trepidation.

Today’s stock market is an interplay of various economic forces with trader at the corssroads of hope and uncertainty. From the anticipation surrounding Big Tech earnings to the cautious reflection on recent downturns, investors are reminded of the inherent uncertainties that define the financial world. As we look ahead, it is clear that the market’s trajectory will be shaped by a multitude of factors, likely to create considerable emotion and price volitility.

Trade Wisely,

Doug

Index prices whipsawed higher with the SPY, QQQ, and IWM surging as investors seemed to say they didn’t care or didn’t believe the higher-than-expected CPI figures. The VIX declined sharply as fear disappeared in a rush to hurry up and buy.  This morning we learned that both the U.K. and Japan have slipped into technical recession though both of their markets continued to move higher.  On tap is a very busy earnings and economic calendar so plan for considerable price volatility as traders and investors digest the data. As you plan forward remember we have a pending PPI report on Friday before slipping into a 3-day weekend.

Overnight Asian markets not still in celebration of the lunar holiday closed mostly higher with Japan stretching above 38,000 for the first time since 1990 though also slipped into recession according to their GDP figures.  European markets trade with bullishness across the board this morning despite learning that the U.K. also slipped into recession.  Ahead of a big day of data U.S. futures look to extend yesterday’s gain suggesting a bullish open but anything is possible as the data is revealed.   

Economic Calendar

Earnings Calendar

Notable reports for Thursday include COIN, DKNG, AEM, AMAT, ARCH, BJRI, BE, CBRE, COHU, CON, CROX, DE, DLR, DASH, DBX, GPC, GLOB, HBI, H, IDA, IR, NSIT, IDCC, IRWD, LH, LECO, LTC, LXP, MERC, OGN, PENN, RS, ROKU, SABR, SHAK, SN, SWAV, SQ, SWAV, SO, SPWR, SKT, TXRH, TTD, TOST, TNET, USFD, VNT, WD, WEN, WFG, YELP, YETI, & ZBRA.

News & Technicals’

Japan, the Asian economic powerhouse, has lost its position as the world’s third-largest economy to Germany, as it entered a recession in 2023. Japan’s nominal GDP, which measures the value of goods and services produced in the country, increased by 5.7% in 2023 compared to 2022, reaching 591.48 trillion yen, or $4.2 trillion. However, this was not enough to keep up with Germany, which grew its nominal GDP by 6.3% in 2023, hitting 4.12 trillion euros, or $4.46 trillion. Germany, the largest economy in Europe, benefited from its strong export sector and fiscal stimulus, while Japan suffered from the impact of the pandemic and natural disasters.

Cisco, the world’s largest maker of networking equipment, announced that it would slash 5% of its global workforce, or about 4,250 jobs, as part of its restructuring plan. The company said the job cuts were necessary to adapt to the changing market conditions and customer needs. Cisco also lowered its revenue and earnings guidance for the current quarter and the full year, citing weak demand and increased competition. The company’s shares fell by more than 7% after the news.

TSMC, the world’s leading chipmaker, saw its stock price soar to a new record on Thursday, after Morgan Stanley raised its price target on Nvidia, one of its major customers. Nvidia, a dominant player in the artificial intelligence (AI) chip market, has been benefiting from the strong demand for its products across various sectors. TSMC, which makes chips for Nvidia and other tech giants like Apple, has also been enjoying robust growth and profitability, as it leverages its technological edge and scale. TSMC’s shares closed at $142.5, up 3.6% from the previous day.

Stellantis, the maker of Jeep and Dodge vehicles, saw its profit decline in 2023, as it faced the impact of labor strikes that affected the Detroit Three automakers. The company’s adjusted operating income margin in North America dropped by 1% from the previous year to 15.4%, as it suffered from production losses and higher labor costs due to new contracts. However, the company still posted solid earnings for the full year, as it benefited from its global scale and diversified portfolio.

The prices whipsawed up on Valentine’s Day after a higher-than-expected U.S. CPI inflation report that sent indexes sharply lower. The SPY, QQQ, and IWM surged higher while the DIA finished the day strong after several substantial whipsaws through the session. A U.K. inflation that remained static helped the European market rally though today the GDP showed they have slipped into recession. Overnight the Nikkei closed above a 1990 high while at the same time, their GDP figures also indicated recession. Today we have a very busy economic calendar that includes Jobless Claims, Retail Sales, Industrial Production, Manufacturing Figures, Import/Export numbers, Inventory Data, Housing figures, and more for the investors to digest.  The earnings calendar is also chalked full of notable reports so prepare for another wild price action day with a pending PPI report on the horizon. 

Trade Wisely,

Doug

Some of the shine of the relentless bullish rally quickly faded yesterday as the inflation report surprised to the upside dashing hopes of rate cuts early this year.  Treasury yields surged higher with 10-year coming near this year’s high spiking the VIX sharply as investors grappled with high stock valuations in light of the new data.  Plan for price volatility to be high as we deal with a significant number of earnings reports, Mortgage Apps, Petroleum Status, and Fed Speakers.  With a very busy economic calendar on Thursday and the uncertainty of the pending PPI Report on Friday be prepared for challenging price action as we head for a 3-day weekend.

Overnight Asian markets that were not closed for the Lunar Holiday closed lower in reaction to the U.S. inflation data. However, European markets trade modestly higher this morning after the U.K. reported their inflation of 4% even with their last reading.  The U.S. futures also look higher this morning trying to relive some of the painful decline of yesterday ahead of earnings and economic data.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include CSCO, ALB, ATUS, AWK, AM, AR, APP, ACGL, AVNT, CNQ, CVE, CEVA, CF, CRL, CHEF, CC, CME, CNHI, CDNT, ET, EQIX, FSLY, AG, FCPT, FNV, GNRC, GPN, HL, HLF, HUBS, INFA, IQV, FROG, KGC, KRNT, LAD, LPX, MGY, MTW. MFC, MLM, NROS, NUS, OXY, OC, PGRE, PSN, PTEN, QS, RGLD, R, SAGE, SU, SUN, TMHC, TSEM, TRIP, TWLO, UPWK, VECO, WCN, WMB, & WH.

News & Technicals’

Lyft, a ride-hailing company, saw its stock price surge by 16% in premarket trading on Wednesday after it reported better-than-expected results for the fourth quarter of 2023. However, the company also admitted that it made a serious mistake in its press release, which overstated its earnings outlook for 2024. The company initially said that it expected its adjusted earnings margin to grow by 5% in 2024, but later corrected it to 0.5%. The company apologized for the error and said it was due to a typo.

Airbnb, the online platform for renting and booking accommodation, delivered a strong performance in the fourth quarter of 2023, surpassing analysts’ expectations. The company reported $2.22 billion in revenue, up 22% year-over-year, and said that its guest demand was robust despite the pandemic. Airbnb also expressed confidence in its outlook for the first quarter of 2024, projecting a revenue growth of 25% to 30%. The company attributed its success to its resilience, innovation, and diversification of its offerings.

The U.K. inflation rate remained unchanged at 4% in January, as the cost of furniture and household goods, food, and non-alcoholic drinks eased. However, the core CPI measure, which strips out the volatile components of food, energy, alcohol, and tobacco, was still high at 5.1%, slightly below the expected 5.2%. According to Marion Amiot, a senior European economist at S&P Global Ratings, this reflects the tightness of the labor market, which is driving up wages and inflation, especially in the service sector.

The stock market plunged on Tuesday, but recovered some losses by the end of the day, as the January U.S. CPI inflation report surprised to the upside. Annual inflation was 3.1%, higher than the expected 2.9%, and disappointing the market, crushing rate cut anticipations. Treasury bond yields were up sharply, with the 10-year Treasury yield rising by 0.13% to around 4.31%, close to its yearly peak. This also weighed on stock indexes, which fell by more than 1% each. The Nasdaq, which has more technology stocks, trailed the wider S&P 500, dropping by about 1.8%. The VIX volatility index, which measures Wall Street’s “fear level,” jumped by about 18% to around 16.5. Today traders and investors will have a slew of earnings to navigate along with Mortgage Apps, Fed Speakers, Petroleum Status, and a short-term Bill Auction.  However, traders should keep in mind we have a very busy economic calendar on Thursday as well as the uncertainty of the pending PPI report on Friday.  Plan for volatility to be high and expect big whipsaws as the market tries to come to grips with the economic reality of the longer-than-hoped-for inflation fight.

Trade Wisely,

Doug

Yesterday indexes finished mixed as the Russell 2000 surged higher hinting at a possible rotation for the high-flying tech sector to small-cap names.  The afternoon selling raised some caution leaving behind some shooting star patterns on the Nasdaq and SP-500 charts with VIX moving higher diverging from the overall market.  Of course, this action was not a surprise with all eyes on the CPI data pending and the uncertainty that brings to the minds of traders.  We also have a big day of earnings reports so I think it’s fair to say that anything is possible today.  Stay with the trend but continue to raise your stops in case the bears find a reason to attack because big-point moves are possible.

Overnight with many Asian markets still closed, the Nikkei touched 38,000 and nears an all-time high.  However, European markets trade lower across the board this morning with cautiousness as they wait on U.S. inflation data.  U.S. futures also suggest a lower open as we wait on the CPI data that could move the market substantially in either direction.  Buckle up it could be a wild and price action morning.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ABNB, AKAM, ALC, AIG, ANGI, AN, BIIB, KO, CRK, CRSR, DDOG, DVA, DENN, ECL, WIRE, ENTG, EWT, FELE, GFS, DGGY, GXO, HAS, HE, HRI, HWM, IAC, INCY, CART, INVH, KTOS, DON’T, LDOS, LYFT. MAR, MGM, TAP, MCO, PAAS, PRI, QSR, HOOD, SITM, STAG, MODG, TPG, TRU, UPST, WXO, WELL, WCC, KLG, ZG, & ZTS.

News & Technicals’

JetBlue Airways, a low-cost airline based in New York, is facing pressure from activist investor Carl Icahn, who disclosed a 9.9% stake in the company on Monday. Icahn believes that JetBlue is undervalued and has the potential to grow its market share and profitability. He has expressed his interest in joining the board of directors and influencing the company’s strategy and governance. JetBlue, which has been struggling to recover from the pandemic and the failed merger with Spirit Airlines, has been implementing cost-cutting measures and operational improvements to boost its performance and competitiveness.

Nvidia, a leading chipmaker and technology company, has seen its stock price soar to record highs, sparking fear of missing out (FOMO) among investors. According to Julian Emanuel, a senior managing director at Evercore ISI, many of his clients, who have experienced the dot-com bubble and burst, are more concerned about not having enough exposure to Nvidia than having too much. He said this is the first time he has seen this sentiment since 2021, which he views as a warning sign. He also expects a 13% correction in the stock market this year, which he thinks is normal in a non-recessionary environment.

The perception of China and Russia as threats to the West has decreased in the past year, according to a new survey that reveals the growing awareness of non-conventional risks. The survey, conducted among G7 countries, shows that mass migration caused by war or climate change and the spread of radical Islam are now the most feared risks among Western populations. The survey also indicates that most Westerners expect China and the Global South to gain more influence and power in the next ten years, while the West will face stagnation or decline.

The stock market was mixed on Monday, with the S&P 500 falling slightly, while the Dow added about 120 points and the Russell 2000 surged higher, gaining about 2%. The best-performing sectors were energy, utilities, and materials, while information technology and consumer discretionary trailed behind. Treasury yields were stable, with the 10-year yield ending around 4.17%.  Oil prices did not change much, closing at about $77 a barrel. This morning the Small Business Optimism Index missed expectations showing a decline disappointing the market sending premarket futures lower. Before the market opens the Inflation data will be the main focus for markets, with the CPI report, and could create significant price volatility considering the very extended condition of the indexes. Beyond that, we have a large number of earnings that will keep traders gambling on the next big mover. Buckle up anything seems possible today.

Trade Wisely,

Doug