With the deadline drawing near the rhetoric and political gobblygook woke up the bears on Friday as bond yields continue to rise adding pressure to a stressed regional banking sector.  Despite the bearish move, no technical damage occurred in the indexes.  This the market faces some big economic reports, lots of political wrangling over the debt ceiling, and few market-moving earnings reports.  That said, we could experience some big point moves in the market and I would not rule out substantial head fakes and whipsaws to keep traders and investors guessing.

Asian markets traded mostly higher overnight after China leave loan rates unchanged with the tech-heavy HSI leaning the way up 1.17% at the close.  However, European markets are taking a more cautious approach this morning as they monitor the debt ceiling negotiations trading slightly bearish this morning.  With a light day of earnings and a morning filled with Fed speakers, U.S. futures suggest a flat open to begin another week as we wait and hope for a deal out of Congress and some potential market-moving economic report later this week.

Economic Calendar

Earnings Calendar

Although earnings season is winding down we will still have some substantial market-moving reports over the week.  Notable reports for Monday include GLBE, HEI, NDSN, & ZM.

News & Technicals’

The leaders of the Group of Seven (G7), an intergovernmental organization of wealthy Western nations have issued a joint statement that signals their intention to balance their economic ties with China and their security concerns over its actions. The statement says: “We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying.” This follows the remarks of U.S. Treasury Secretary Janet Yellen, who urged the G7 countries to cooperate in addressing the challenges posed by China at a meeting earlier this month. Some analysts, such as Goldman Sachs economists Hui Shan and Andrew Tilton, expect more measures to come from the G7, especially with the Committee on Foreign Investment in the United States (CFIUS), a body that reviews foreign investments for national security risks.

Meta, the parent company of Facebook, has been hit with a record-breaking fine by the European Data Protection Board (EDPB) for violating the privacy rights of its EU users. The EDPB, which oversees the implementation of the General Data Protection Regulation (GDPR) in the bloc, has ordered Meta to pay 1.2 billion euros ($1.3 billion) for transferring EU user data to the U.S. without adequate safeguards. The EDPB has also given Meta five months to stop any future data transfers to the U.S. and six months to cease processing any EU user data that was previously transferred in breach of GDPR. Meta said it would appeal the decision and the fine, claiming that it was “singled out” and that the ruling “sets a dangerous precedent” for other companies.

Rising bond yields added pressure to the already stressed regional banking sector and the political gamesmanship on the debt ceiling woke up the bears on Friday.  However, other than some possible bearish candle patterns no technical damage was created.  According to Goldman’s report, the CTA”s are maxed out but that doesn’t necessarily mean selling in the market if corporate buy-backs and retail continue to buy.  But, beware, if the profit-taking begins the sell side could quickly gain some momentum so be prepared.  With more political wrangling, some big economic reports, Fed speak, and a few random market-moving earnings reports throughout the week the potential for big price swings traders will have to stay on their toes and be ready for just about anything.

Trade Wisely,

Doug

With disappointing economic data and Fed speakers remaining hawkish on their battle with inflation but in a late-day surge investors whipsawed the indexes with the Dow reversing more than 350 points from low to high in the last 30 minutes of the day!  The SPY broke out above resistance to joining the QQQ while the DIA and IWM remain range bound after the 2-day rally.  Only a handful of the tech giants provide the majority of the rally.  Today with a light earnings calendar the focus will likely be on the economic calendar dominated by Fed speakers including Jerome Powell.

Though Japanese stocks reached their highest level since 1990 Asian markets closed mixed with Hong Kong down 1.40%.  European markets trade green across the board this morning as G-7 leaders commit to more Russian sanctions.  U.S. futures suggest a modest open on Friday with Jerome Powell’s comments following committee member comments likely to dominate today’s market sentiment.

Economic Calendar

Earnings Calendar

We have a very light day on the earnings calendar.  Notable reports for Friday include DE & FL.

News & Technicals’

Leaders in the G-7 have committed to more Russian sanctions.  “We will starve Russia of G-7 technology, industrial equipment, and services that support its war machine,” the G-7 said in a statement released late Friday. The G-7 added, “We will continue our joint effort to support Ukraine’s repair of its critical infrastructure, recovery, and reconstruction.” The United Kingdom separately imposed further sanctions on Russia’s diamonds, an industry worth $4 billion in exports in 2021.

The Walt Disney Co. has scrapped its plans to build a new campus in Lake Nona, Florida, and relocate 2,000 employees from California to work in digital technology, finance, and product development. The company cited “changing business conditions” as the reason for the decision. The move comes amid a bitter feud between Disney and Florida Gov. Ron DeSantis over a state law that bans classroom lessons on sexual orientation and gender identity in early grades. Disney filed a First Amendment lawsuit against DeSantis and other officials last month. The new campus was expected to cost $1 billion and create 13,000 jobs over the next ten years.

Investors whipsawed the indexes on Thursday, despite the uncertainty over Fed rate comments and the debt-limit talks in Washington. Hotter-than-expected jobless claims and a very weak economic outlook in the Philly Fed report started the day sharply lower but surged sharply higher in the last 30 minutes of the day with the Dow moving more than 350 points from low to high. The good news is that the late-day surge finally broke the resistance in the SPY with the tech giants doing most of the lifting.  However, the DIA and IWM remain range bound although looking improved with the 2-day rally. We have a light day on the earnings calendar and the economic calendar will be dominated by Fed speakers with Jerrome Powell speaking at 11:00 AM Eastern.

Trade Wisely,

Doug

The bulls were energized on Wednesday triggering a short squeeze when both the President and Speaker came out with statements saying they are working together for a deal on the debt ceiling.  Unfortunately, the rally didn’t break the trading range of the DIA, SPY, and IWM which has kept indexes trapped for more than one and a half months.  Today along with WMT earnings we will get Jobless Claims, the Philly Fed numbers, Existing Home Sales, and more Fed member chatter to add the potential for price volatility.   

Asian markets took a cue from the U.S. surge closing the day with gains across the board with the Nikkei leading the way up 1.60%.  European markets are also decidedly bullish this morning reacting to the debit ceiling progress hopes.  U.S. futures reversed overnight losses to once again suggest a bullish open ahead of potentially market-moving earnings and economic data.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AMAT, BABA, BBWI, BILI, BRC, COOS, CSIQ, DECK, DOLE, DXC, FTCH, FLO, NIO, NTNX, PLCE, ROST, WMT, VIPS.

News & Technicals’

The global debt has reached a near-record level of $305 trillion, according to the Institute of International Finance (IIF). This is an increase of $45 trillion since the start of the pandemic, driven by unprecedented fiscal and monetary stimulus measures. However, as central banks start to raise interest rates to curb inflation, the debt servicing costs have also risen, creating a “crisis of adaptation” for borrowers and lenders. The IIF warned that the high leverage in the financial system poses significant risks to financial stability and economic growth.

The tech giants are dominating the stock market in 2023, as they continue to grow their profits and expand their businesses. Apple, Alphabet, Amazon, and Microsoft have all increased their share prices by more than 30% since January, while Meta has more than doubled its value. These five companies are outperforming the rest of the market by a wide margin, as the Dow Jones Industrial Average has barely moved in the same period. The tech sector is showing its resilience or is this an irrational move indicating a growing tech bubble?

Target is facing a serious problem of organized retail crime, which is costing the company more money and putting its stores at risk. The company expects to lose $500 million more in 2023 than in 2022 because of theft and damage by criminal groups. Target’s CEO Brian Cornell said the company is taking steps to protect its products and employees and to keep its stores open for customers. Other retailers have also complained about the increase in retail crime and blamed online platforms that allow criminals to sell stolen goods.

The market saw a substantial short squeeze after lawmakers said they are nearing a debt ceiling deal. Both sides said they don’t want to miss the deadline of early June and are working hard to a compromise. The earnings season is wrapping up with reports from big retailers like Walmart and TJX companies later this week. We will also get data from Jobless Claims, Philly Fed, and Existing Home Sales with more Fed speakers throughout the morning.  The big question for the day is; Can the bulls follow through with another day of bullishness as the data rolls out?  Buckle up for another day where anything is possible!

Trade Wisely,

Doug

Tuesday turned out to be a rough day for the DIA, SPY, and IWM after the Home Depot miss and a retail sales report that came in short of expectations.  Of course, the debit ceiling negotiation cloud hanging over the market didn’t help the overall sentiment but now it seems there has been some progress with the President seeming willing to negotiate.  Expect a market reaction if a deal is finally struck.  Target’s earning report seems to have left a mixed reaction as evidence of a slowing economy continues to grow.  Mortgage Apps, Housing, and Petroleum figures are on deck with several earnings reports that could be market-moving. 

Overnight Asian markets traded mixed in reaction to economic data and monitoring debit ceiling negations. However, European markets trade flat to mostly lower this morning with Commerzbank down 6%.  On the other hand, U.S. futures seem to have a very different opinion pushing for a bullish open and working to recover some of yesterday’s losses.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday BOOT, CPRT, CSCO, JACK, STNE, SNPS, TTWO, TGT, TJX, TCOM, WIX, & ZTO.

News & Technicals’

According to reports, there was some progress made in the negations of the debit ceiling between the President and the Speaker of the house.  This continues to weigh on the mind of the market and as information rolls out on this issue expect it to have market ramifications. 

Kraft Heinz is introducing HEINZ REMIX™, a digital sauce dispenser that lets customers create their customized condiments. The dispenser has a touchscreen that offers a choice of four bases and four enhancers, with three intensity levels, resulting in over 200 possible combinations. The company aims to attract consumers who want more variety, spiciness, and sweetness in their sauces and to use the data from the dispenser to inform its future product launches in grocery stores. The innovation is part of Kraft Heinz’s turnaround strategy that focuses on its away-from-home segment.

Target reported better-than-expected earnings for the first quarter of fiscal 2023, despite a slight decline in sales. The retailer earned $1.89 per share, beating the consensus estimate of $1.40 by 35%. However, its revenue fell 0.8% year over year to $25.37 billion, as consumers became more cautious about their spending amid inflation and recession fears. Target’s comparable sales also dipped 0.5% in the quarter. The company said it was focused on investing in its stores, digital capabilities, and merchandise assortment to gain market share and drive long-term growth.

Equities fell on Tuesday after Retail sales missed estimates and Home Depot disappointed on earnings guiding lower for the next quarter. Markets were disappointed by weak consumer-spending data and worried about the debt-ceiling deadline. Small-cap stocks suffered more today, signaling a gloomier economic outlook. This was also reflected in sector performance, with cyclical sectors like energy, real estate, and industrials among the worst performers. Treasury yields edged up slightly on the day with Fed speakers suggesting they will hold the line on rates and still willing to raise them if necessary to achieve their 2% target.  Today markets will have Mortgage Applications, Housing Starts, and Peterleum numbers along with several earnings reports with a retail theme for the day.

Trade Wisely,

Doug

The indexes finished the day about where they began the day with modest gains in another day of chop despite a truly awful Empire State MFG report showing a massive decline in the sector.  The capacity for the market to continue to ignore these data points is remarkable and makes one wonder if its actual market strength or complacency. With an earnings miss from HD this morning we have Retail Sales, Industrial Production, Inventories, the Housing Index, and several Fed speaker to keep traders on edge.  Plan for yet another day of uncertainty while hoping something happens to end the range-bound chop.

As we slept Asian market traded mixed with modest gains and losses after China reported better-than-expected retail sales activity. European markets trade with modest gains this morning as they monitor the U.S. debt ceiling negotiation progress and economic data.  Ahead of a big morning of earnings and economic reports along with Fed speakers while wrangling over the debt ceiling continues, futures suggest a bearish open.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include AGYS, BIDU, HUYA, KEYS, KD, HD, SE, SSYS, TME, & TUP.

News & Technicals’

The debt limit crisis is looming over Washington as President Joe Biden and House Speaker Kevin McCarthy are set to meet again on Tuesday with other top lawmakers. The meeting comes after a week of daily negotiations between staff from both parties, but with no clear sign of a breakthrough. The federal government could face a default on its obligations as soon as early June if Congress does not raise the debt ceiling, which limits how much the government can borrow to pay its bills. Biden and McCarthy have been at odds over how to address the issue, with Biden calling for a bipartisan solution and McCarthy insisting that Democrats act alone.

Home Depot, the largest home improvement retailer in the U.S., reported disappointing results for the fiscal first quarter of 2023. The company missed analysts’ estimates for revenue and lowered its outlook for the full year, citing weaker demand for big-ticket items and smaller home improvement projects. Home Depot’s Chief Financial Officer Richard McPhail said that customers are spending less on items such as patio sets and grills, which typically drive sales in the spring season. He also attributed the lower revenue to colder weather and falling lumber prices, which reduced the average ticket size.

China’s crackdown on due diligence consultancies, such as Capvision, has raised concerns among foreign investors about the country’s openness and transparency. Capvision is the latest firm to be accused of violating national security laws by providing sensitive information to overseas clients. This follows the recent restrictions on foreign access to China’s data and information platforms, which have hampered the ability of investors to conduct research and analysis. Some experts argue that China’s enforcement of its anti-espionage law is arbitrary and vague, as the term “national security” is not clearly defined or delimited.

Despite a terrible Empire State Mfg. number the indexes experienced another day of chop ending the day slightly positive about exactly where they began the day.  Retail giants, HD, Target, and Walmart prepare to report their earnings and lawmakers will meet this afternoon hoping to reach a deal on the debt limit. The Nasdaq led the gains among the major indexes, while the S&P 500 Index and Dow Jones also advanced. Treasury yields edged up, with the 2-year Treasury yield approaching 4.0% again. However, yields are still well below their early March peaks. The market expects the Fed to lower rates by September but that thought process does not seem to be shared by the voting members of the Fed.  We shall see!  Oil prices also rose slightly, with WTI crude oil recovering above $71, but still down by about 11% this year. Today before the bell we have the market moving Retail Sales figures followed by Industrial production, Inventories, Housing Market along with several Fed speakers. 

Trade Wisely,

Doug

The bulls and bears battled for dominance last week with the QQQ trend remaining bullish while the other indexes continue to chop in the same price range they have been stuck in for weeks.  Unfortunately, regional banking outflows continued last week which is a troubling problem as the economy continues to slow.  Today we have to deal with Empire Stae MFG numbers, several fed speakers, and a declining number of earnings reports to find inspiration for movement.

While we slept Asian markets mostly rallied with Hong Kong leading the way up 1.79%.  European markets also trade with modest gains across the board this morning as they monitor Turkish election results.  U.S. futures recover from overnight losses to suggest a bullish open despite the uncertainties in the regional banking sector. Watch for a possible morning whipsaw with substantial resistance levels above for the DIA, SPY, and IWM.

Economic Calendar

Earnings Calendar

We have a retail theme on the earnings calendar this week.  Notable reports for Monday include CTLT, RIDE, TSEM, & NVTS.

News & Technicals’

Vice Media, a digital media company that produces news, culture, and entertainment content, has filed for bankruptcy protection and agreed to sell most of its assets to a group of lenders led by Fortress Investment, Soros Fund Management, and Monroe Capital. The deal, which values Vice at $225 million, will allow the company to shed some of its debt and restructure its business amid declining revenues and audience. 

The pandemic has led to a surge in the average age of cars and trucks on U.S. roads, reaching 12.5 years in 2023, according to S&P Global Mobility. This is the largest annual increase since the financial crisis of 2008-2009 when people delayed buying new vehicles due to economic uncertainty. The aging of the vehicle fleet benefits aftermarket parts retailers such as AutoZone, O’Reilly Automotive, and Advance Auto Parts, who can expect more demand for their products and services. The number of vehicles in operation in the U.S. also rose slightly to 284 million in 2023, from 283 million in 2022.

Some crypto companies are threatening to leave the U.S. if the SEC does not ease its regulatory pressure on the industry. They are trying to use their influence and leverage to persuade the SEC to adopt a more favorable approach to crypto innovation and adoption. However, it is unclear if they will follow through on their threats, as the U.S. is a major market for crypto, with more than 50 million Americans owning some form of digital currency.

Markets were lower on Friday as the bulls and bears battled for dominance amid regional bank worries. The outperformance this week comes from the communication services and consumer discretionary sectors, while areas like energy, materials, and financials all underperformed. Treasury yields remain well below the fed funds rate, with the 2-year Treasury now just under 4.0%. This comes as markets continue to price in Fed rate cuts by the September FOMC meeting. Meanwhile, the number of earnings decline provided less inspiration though there is a retail theme this week.  Furthermore, traders will have decisions to make based on Empire State MFG. numbers with several fed speakers yacking it up throughout the day.

Trade Wisely,

Doug

The Hidden Danger That Could Derail the Stock Market Recovery

Commercial real estate (CRE) is a $20 trillion industry that plays a vital role in the US economy. It provides space for businesses to operate, jobs for millions of workers, and income for investors and lenders. However, the industry is facing a wave of defaults that could have serious repercussions for the stock market and the broader economy.

A default occurs when a borrower fails to repay a loan or meet other contractual obligations. In CRE, defaults are usually triggered by a decline in property income, a drop in property value, or a rise in borrowing costs. Any of these factors can make it difficult for property owners to service their debt or refinance their loans when they mature.

Why

The Covid-19 pandemic has exacerbated these risks for many CRE sectors, especially office and retail. The shift to remote work and online shopping has reduced the demand for physical space, leading to lower occupancy rates and rents. According to Green Street, office and retail property values have fallen by 25% since last year, while hotel values have plunged by 40%.

Meanwhile, the Federal Reserve’s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry. Higher interest rates increase the cost of borrowing and refinancing, as well as reduce the attractiveness of CRE as an investment relative to other assets. According to Morgan Stanley, about $1.5 trillion of CRE debt is set to mature over the next two years, posing a significant refinancing challenge for many borrowers.

Possible Impacts

The impact of CRE defaults could spill over to the stock market in several ways. First, defaults could erode the earnings and capital of banks and other lenders that hold CRE loans on their balance sheets. According to Goldman Sachs, about 80% of all bank loans for commercial properties come from regional banks, which are more exposed and vulnerable to liquidity shocks.

Second, defaults could trigger fire sales of distressed properties, putting further downward pressure on property values and impairing the collateral of other loans. This could create a negative feedback loop that amplifies losses and contagion across the financial system.

Third, defaults could undermine the confidence and sentiment of investors and consumers, leading to a pullback in spending and investment. This could weigh on the growth and profitability of various sectors that depend on CRE activity, such as construction, hospitality, retail, and business services.

Conclusion

In short, CRE defaults could pose a significant threat to the stability and performance of the stock market and the economy. While the Fed and other regulators have taken steps to monitor and mitigate these risks, such as providing relief measures and conducting stress tests, the situation remains uncertain and volatile. Investors should be prepared for more turbulence ahead.

Doug

After learning that April inflation was 4.9% down one-tenth of one percent the indexes finished mixed in a choppy whipsawing session.  Bonds yields slightly pulled back even as the regional banking sector experienced some renewed selling pressure and debit ceiling rhetoric swirled keeping investors on edge.  Today it’s all about the Jobless claim numbers and the April PPI with the number of earnings events starting to decline.  Although with select tech giant’s names rising the QQQ continued its bullish trend as the DIA, SPY, and IWM remained rangebound where they have traded for more than a month. 

Asian markets finished the day mixed but mostly lower with modest gains and losses.  European markets show modest gains this morning with the BOE raising rates by 25 basis points.  Ahead of market-moving economic data U.S. futures suggest a flat open however that is likely to quickly change as the data is reviled.  Plan for another challenging day of price action.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AQN, CRSP, CYBR, DDS, ENTG, FVRR, HIMX, JD, DNUT, MLCO, NWSA, NIO, PKI, TPR, USFD, UTZ, & YETI.

News & Technicals’

According to Jeffrey Kleintop, chief global investment strategist at Charles Schwab, the labor market may experience a reversal later in 2023, similar to how supply chain shortages turned into gluts of goods and materials in mid-2022.  However, some analysts argue that monetary policy may take longer to influence the labor market, especially in the services sector, where labor demand is high and labor supply is constrained by factors such as pandemic-related disruptions, demographic changes, and skill mismatches. Moreover, a contraction in labor supply may reduce labor productivity and variety, which could put upward pressure on wage growth and inflation. Therefore, meaningful policy action to grow the size and productivity of the labor force is needed to address the underlying causes of inflation and ensure a balanced and sustainable economic recovery.

The media and entertainment industry is facing a dilemma as it tries to balance raising prices and cutting costs amid a slowdown in subscriber growth and a shift in consumer preferences. Disney, for example, lost 4 million Disney+ subscribers in the quarter, most of which came from India. To find a new growth narrative, the industry may need to look at gaming, which is on track to be the primary source of entertainment across the world. Gaming not only reaches three billion people on the planet and drives multi-billion-dollar revenue streams, but also creates a sense of community and social interaction among its users. Gaming also offers opportunities for innovation and diversification, such as cloud gaming, virtual reality, augmented reality, and interactive storytelling. Therefore, media and entertainment companies may need to develop strong visions that span video, social media, and gaming sectors to create a richer and more engaging ecosystem for consumers.

On Wednesday, the indexes finished mixed with regional bank and debit ceiling issues worrying investors. This happened as April’s U.S. inflation rate was 4.9% higher than a year ago, a bit lower than the expected 5.0%, but still much higher than the Fed’s goal of 2.0%. Unfortunately, the DIA, SPY, and IWM remain stuck in the same wide trading range they have been stuck in for more than a month.  However, the QQQ managed a marginal break of overhead resistance with the tech giants doing all of the work. With the number of earnings events declining for 2^nd quarter earnings the focus this morning will be the Jobless Claims and the April PPI report with a little fed speak tossed in for good measure.  Plan for the challenging price action to continue!

Trade Wisely,

Doug

Indexes churned in a frustrating flat trading rage on Tuesday with the pending CPI report center stage.  However, the debt ceiling negotiations and the regional banking stress added to the uncertainty.  I would not rule out the possibility of a big point move in the indexes before the market open either up or down reacting to the inflation data.  That said, anything is possible with additional volatility created by another big day of earnings data. 

Asian market traded lower overnight with an eye on the pending inflation data. European markets are also red this morning waiting in a light volume session ready to react to the pending U.S. report.  Ahead of the April consumer price index report U.S. futures trade marginally lower as banking and debit ceiling stresses continue in the background.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ALRM, AAP, BYND, BILI, CAKE, COHR, CRSR, CR, DIS, EBIX, FLEX, GDRX, GRPN, HL, JAZZ, LI, MFC, NYT, NTNX, NTR, OSUR, PAAS, PFGC, REYN, RBA, HOOD, RBLX, SONO, TEVA, TTD, COOK, TUP, U, VVV, VERX, WEN, WWW.

News & Technicals’

Despite the pandemic’s impact on travel, Airbnb achieved its first profitable quarter in Q1 2021, earning $117 million in net income. This was a significant improvement from the net loss of $19 million it posted in Q1 2020. The company also grew its revenue by 5% year-over-year to $1.82 billion, surpassing the expectations of analysts. The revenue growth was fueled by higher demand and prices in North America. However, the company warned that its second-quarter performance might be weaker than expected due to the uncertainty around travel restrictions and the high demand it faced last year.

A White House meeting on Tuesday failed to break the deadlock over the debt ceiling, as President Joe Biden and House Speaker Kevin McCarthy stuck to their opposing positions on how to raise the nation’s borrowing limit before it runs out on June 1st. The meeting, which also included other congressional leaders, did not result in any new progress or agreement on the issue. President Biden called on Congress to pass a clean debt limit increase without any strings attached, while House Speaker McCarthy demanded spending cuts as a condition for any votes to support more borrowing.

Another day of sideways chop as investors monitored banking turmoil, and debit ceiling wrangling while pensive about the pending CPI data.  Opinion Survey released yesterday indicated that banks continued to tighten lending standards, but the tightening was not as severe as feared given the recent stress in the banking sector. Nevertheless, with banks less willing to lend and demand for loans weakening, economic growth and inflation will likely slow further in the quarters ahead. We will also get Mortgage data, Petroleum numbers along with another big day of earnings reports to keep traders guessing and price action challenging.

Trade Wisely,

Doug

The market caught its breath on Monday trading in a very narrow range seeming waiting on the Wednesday CPI report.  Regional banks continue to be a concern for investors experiencing some selling with gold and defensive sector stock remaining strong as investors look for some safety.  Today we face a big day of earnings, some speak, and a 3-year bond auction.  Expect more chop waiting on the inflation data unless the selling picks up to worry the market.

 Asian markets mostly retreated overnight led by Hong Kong down 2.12% in reaction to China’s trade data.  European markets are also experiencing some selling this morning with red across the board. Ahead of a big day of earnings data, U.S. futures suggest a bearish open with some premarket pressure in the regional banking sector even as bond yields pull back slightly. 

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ABNB, AFRM, APD, AKAM, BIRD, ARMK, BLNK, BE, BOOT, CARG, CE, CHH, CLNE, COTY, CPNG, DAR, DOCN, DUK, DUOL, BROS, ELAN, EA, EXAS, FSR, FOXA, GFS, GPRO, GO, GXO, HRB, HAIN, HSIC, HNST, TWNK, IGT, IRBT, J, KGC, LZ, LNC, LITE, MNKD, MTTR, NKTR, NKLA, NVAX, OTLY, OXY, PAYO, PETO, PETQ, PTRA, PUBM, RTX, RNG, RIVN, SEAS, SQSP, SHOO, TPX, TOST, MODG, TWLO, UAA, UPST, WRBY, WMG, WB, WE, WYNN.

News & Technicals’

Nintendo, the Japanese gaming giant, reported a decline in both profit and revenue in its fiscal year that ended in March 2023. The main reason for this drop was the lower sales of its flagship product, the Nintendo Switch console series. The Nintendo Switch is a hybrid device that can be used as a home gaming system or a handheld million units of the Switch in the fiscal year, which was slightly below its forecast of 18 million. For the next fiscal year, Nintendo expects to sell 15 million units of the Switch, indicating a further slowdown in demand for its popular console.

Google will show some new AI things at a big event this week. One of them is PaLM 2. PaLM 2 is a computer program that can understand and write in many languages. It can also do creative writing, math, and coding. Google will also show some new things it made with Bard and Search. Bard is another computer program that can write like humans. Search is what you use when you want to find something on the internet. Google says these new things will help people do more with computers.

Aramco, the world’s largest oil company, made $31.8 billion in net profit in the first quarter of 2023. This was lower than the $32.2 billion it made in the same quarter last year. The company faced challenges from inflation and rising interest rates, which reduced global oil demand and raised worries about a recession. However, Aramco’s net profit was higher than what analysts expected. The company also said it will pay a dividend of $19.5 billion in the second quarter.

Monday the market caught its breath after the sharp rally as we wait for the CPI. The indexes did not change much chopping in a narrow range. Stocks in Europe and Asia mostly went up, and so did the prices of gold and oil. Some sectors that depend on the economy, such as communication services, consumer discretionary, and financials, did better than others, but this did not mean that the big issues facing the market were solved. These issues include the Fed’s possible change in policy, the problems of some banks, and the slowing down of the economy. Interest rates went up a bit on Monday, but they are still around 3.5% for the 10-year Treasury bond, which is where they have been for the last two months.

Trade Wisely,

Doug