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

All economic worries fell into the background on Friday with a huge reversal that I think can correctly be called the Apple effect after the companies better than expected report.  Now that the indexes are back in the choppy range they have traded for the past month can the bulls follow through with CPI and PPI reports pending?  There will be plenty of earnings events to keep traders guessing with regional banking woes and debit ceiling wrangling in Congress keeping the uncertainty of the path forward challenging.

Overnight Asian markets mostly rallied with the tech-heavy HSI leading the buying, up 1.24%.  European markets also trade bullishly this morning as the relief rally continues.  U.S. futures also suggest a mostly bullish open ahead of earnings with nothing of consequence on the economic calendar as traders monitor debt ceiling talks and the pressures in regional banking.

Economic Calendar

Earnings Calendar

Notable reports for Monday include ADTN, BNF, CBT, DDD, DBA, DVN, ENR, FN, FRPT, HI, HPP, IIPR, IFF, KKR, LCID, LL, MCK, PLTR, PLUG, PYPL, PGNY, ROVR, SIX, SWKS, TSN, VECO, & WDC.

News & Technicals’

The U.S. is facing a looming crisis as the debt ceiling deadline approaches. The debt ceiling is the legal limit on how much the federal government can borrow to fund its operations and pay its bills. If Congress does not raise the debt ceiling by June, the Treasury Department will run out of ways to avoid paying its obligations. This would have disastrous consequences for the economy, according to Treasury Secretary Janet Yellen. She warned that a default would trigger a “steep economic downturn”. She urged lawmakers to act swiftly and responsibly to avoid this scenario.

Jerome Powell thinks the US economy can skirt recession. But the odds are stacked against him considering the banking stress, debit, and debt ceiling politics.  The Fed boss thinks the US economy is doing well because many people have jobs. He saw this in the latest report that showed more jobs were added last month. He thinks this will help the US economy avoid a big slowdown, even though the Fed has raised interest rates.  But the Fed might have to keep interest rates high for a long time because there are too many jobs and not enough workers. This makes it more likely that the US economy will slow down a lot making for a not-so-soft landing after all.

I think we could correctly call the huge Friday reversal the Apple effect as the better-than-expected report had investors shake off the debt ceiling, regional banking, hot jobs figures, and higher rates. However, despite the surge higher, the indexes finished the week within the wide-ranging chop zone that has trapped prices for a month.  The QQQ has the best chance of breaking overhead resistance but we face the uncertainty of the CPI report on Wednesday and the PPI on Thursday. Toss in banking woes, the debt ceiling battle, and a slew of earnings events and we can plan for another wild week of price action!

Trade Wisely,

Doug

The FOMC disappointed the market as indexes turned negative after raising rates with a unanimous vote from the committee.  Unfortunately, the news adds more pressure to the regional banking sector with PACW now looking for a solution for the rapid selloff. We have a jampacked day of earnings and economic data to keep traders guessing and investors on edge culminating with a highly anticipated AAPL report after the bell. Don’t be surprised to see a substantial gap up or gap down, as a result, Friday morning.

Asian markets traded mixed with Hong Kong’s tech-heavy index gaining 1.27% by the close.  However, with an ECB rate decision pending European markets see only red this morning as they wait.  U.S. futures suggest a mixed open ahead of a massive day of earnings data with worrisome jobs, trade, and productivity data pending.  Keep an eye on the regional banking sector with several names under attack.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include ACCO, ACIW, AES, AAPL, ATI, AEP, AMH, AIG, BUD, MT, TEAM, BALL, BHC, BDX, SQ, BKNG, BWA, BMBL, CAH, CG, CARS, CVNA, CRUS, COHU, COIN, COP, CEG, DDOG, DISH, DKNG, DBX, LOCO, EOG, EXPE, RACE, FND, FTNT, FNKO, GDDY, GPRE, HII, H, ICE, IDCC, IRM, ITT, K, LAMR, LYFT, MMP, MLM, MTZ, MLCO, MCHP, MRNA, MNST, MSI, NIO, NOG, OGN, PZZA, PARA, PH, PTON, PENN, PCG, DOC, PLNT, PTLO, PWR, REGN, RKT, RCL, RYAN, SBH, SHAK, SWK, STWD, SHOP, TXRH, VMC, W, WCC, WLK, WRK, WPM, WOW, WW, XPO, YELP, ZTS.

News & Technicals’

Microsoft is rolling out a new version of its Bing search engine that will let anyone with a Microsoft account chat with a bot that uses an OpenAI artificial intelligence model. The bot can answer questions, provide suggestions and generate content based on the user’s queries. The new Bing also offers chat history, export options, and visual enhancements to improve the user experience. Microsoft plans to add third-party integrations to Bing in the future. The company hopes that the new Bing will help it gain more share in the search advertising market, where it still lags behind its competitors, according to Bernstein analysts.

PacWest, a California-based bank, is looking for ways to survive after the collapse of First Republic, another regional bank. PacWest’s stock has plunged since First Republic’s failure, which raised concerns about the health of smaller banks. PacWest said it is negotiating with several potential partners and investors who could help it weather the storm. The bank also said it had not seen any unusual deposit withdrawals after First Republic’s demise.

With a unanimous vote, the Federal Reserve increased rates by 0.25%, making its overnight policy rate 5% – 5.25%. The statement did not include a line that said, “some additional policy firming may be appropriate,” which may mean a pause at this level is possible The 2-year Treasury yield and the U.S. dollar declined but stocks also fell, as the decision disappointed investors, and the struggling regional banks. Today is a massive day of earnings data with the highly anticipated Apple report coming after the bell.  Traders will also have to deal with Challenger Job-Cut, International Trade, Jobless Claims, Productivity, and Natural Gas numbers while keeping an eye on regional bank pressures.

Trade Wisely,

Doug

The bears feasted on Tuesday as the renewed banking weakness sparked a sharp selloff hoping to send a message to the FOMC on the pending rate decision this afternoon.  Big tech held its ground while IWM suffered the most technical damage with many regional banking names included in the average.  Today we face a big round of earnings events so plan whipsaws and uncertain chop as we wait for the Fed decision at 2 PM Eastern with Powell’s presser thirty minutes later that may well create some wild price swings.

Asian market traded mix overnight as worries about the huge banking outflows and the next Fed decision. However, European markets seem much more upbeat with gains across the board.  The U.S. is also trying to shake off the pending Fed decision and banking worries with futures suggesting modest gains at the time of writing this report.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ALB, ALGT, ALL, ATUS, APA, ATO, GOLD, TECH, EAT, BLDR, BG, CDW, CIVI, CTSH, CXW, CTVA, DIN, EMR, EL, ETSY, EXC, FSLY, FTS, FDP, GRMN, GNRC, GOGO, HBI, HST, HUBS, INFN, IR, JNG, KHG, KTOS, KLIC, LMND, LPX, MRO, VAC, MELI, MET, MTG, MOS, MYGN, NE, NUS, OPK, PGRE, PDCE, PSX, PSA, QRVO, RDN, RYN, O, SMG, SBGI, SPWR, SYNA, TRMB, TRIP, TTEC, OLED, UTHR, UPWK, WMB, WING, WWE, YUM, & ZG.

News & Technicals’

The global economy is facing a dilemma as inflation continues to soar despite the efforts of central banks to tame it. By raising interest rates, central banks hope to cool down the demand for goods and services and reduce the cost of living. However, higher interest rates also make borrowing more expensive and can hurt economic growth and financial stability. According to a survey by the World Economic Forum, most economists believe that central banks have to choose between fighting inflation and supporting the financial sector. This could pose a serious challenge for policymakers as they try to balance the needs of the economy and society.

The clock is ticking for the U.S. government on its debt ceiling, which could trigger financial complications for the economy as worries of stagflation grow. While Democrats have publicly blamed Republicans for refusing to cooperate on raising the debt ceiling, they have also quietly taken some steps to open the door for a possible compromise. President Joe Biden has signaled his willingness to negotiate with Republicans on his spending plans, while Democratic leaders in Congress have explored ways to use their slim majority to raise the debt limit without GOP support. These moves suggest that both parties are aware of the high stakes of the debt ceiling standoff and may be willing to make concessions to avert economic consequences.

Renewed banking weakness brought out the bears on Tuesday adding pressure to the pending FOMC rate decision.  As investors worry about possible recession or stagflation the earnings season excitement is struggling to overcome.  Some people are buying bonds instead of stocks because they think bonds are safer or moving cash into money market funds to protect capital from massive uncertainty. Plan for a choppy session as we wait on the FOMC decision with a big round of earnings data and economic reports to keep the whipsaw and the price action volatile.

Trade Wisely,

Doug

The wait on the Fed began Monday producing a choppy session with little to no concern from investors about the ongoing regional banking declines.  We also learned that due to declining tax receipts, the Federal default deadline may be sooner than originally projected.  Today we investors will have a lot of earnings data to digest as well as Factory Orders and the JOLTS report.  However, don’t be surprised if we see another light volume choppy day as we wait to hear from Jerome Powell on Wednesday afternoon.

Asian markets mostly rallied while we slept with the ASX the only decliner after raising rates by 25 basis points.  European markets trade mixed with the FOMC rate decision in focus.  U.S. futures point to a slightly lower open ahead of a slew of earnings and economic data with worries about the debt ceiling, regional banks and the pending Fed action swirling.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ADT, AER, AGCO, ABC, ARNC, AMD, ASH, AXTA, BP, CZR, CHW, LNG, CQP, CHK, CLX, CMI, DENN, DD, ETN, ET, AQUA, EXR, F, FNV, IT, GPK, HLF, HWM, ITW, INCY, JRVR, KAR, TREE, MPC, MAR, MTCH, TAP, NNN, OSH, OKE, OSK, PFE, PACB, PRU, QSR, SEE, SPG, SBUX, SUN, SMCI, SYY, TROW, TRI, UBER, WTI, WU, ZBRA, & YUMC.

News & Technicals’

The US government is facing a looming deadline to raise its debt ceiling or the maximum amount of money it can borrow to pay its bills. The debt ceiling, which is set by Congress, currently stands at $31.4 If the debt ceiling is not raised or suspended by June 1, Treasury Secretary Janet Yellen warned that the US could default on its debt obligations for the first time in history. This could have disastrous consequences for the US economy and global financial stability, as investors would lose confidence in the US dollar and the government would have to cut spending on essential services. President Joe Biden has invited the top four congressional leaders to a meeting at the White House on May 9 to discuss the debt limit issue. However, Republicans and Democrats have different views on how to address the debt problem, and a compromise may be hard to reach.

Shein is a company that sells cheap clothes online. It started in China. Some people in the US government are worried that Shein uses workers who are not paid or treated well. These workers are from a group of people called Uyghurs who live in China. The US government does not like how China treats Uyghurs. The US government wants to stop Shein from selling its shares to the public in the US. They want Shein to prove that it does not use bad workers. Shein says it does not use bad workers and it follows the rules.

Stocks did not change much on Monday chopping in a range as wait on the FOMC began. Talking heads seem to make light of 3^rd bank’s failure as the pressures on regional banks continue and the market appears willing to ignore the situation. The federal default deadline is back in the news today due to declining tax revenues further complicating the Fed rate decision Wednesday afternoon. Today we investors have big wave earnings data to react to as well as Factory orders and the JOLTS report.  Don’t be surprised if we see another choppy day with Jerome Powell’s comments pending.

Trade Wisely,

Doug

Friday was another big tech-buying party as the sharp rally pushed the SP-500 up 0.9% in just two trading days. With the FRC takeover by JPM as regional bank worries continue, an FOMC rate decision Wednesday, and Apple’s earnings slated for Thursday afternoon expect another week of emotionally charged price swings.  Goldman is warning that the CTA’s could be ready to sell off as much as 200 billion of stock holdings.  If that occurs expect some big point moves as fear can trigger a rush for the door to protect gains.  Buckle up it could be a wild week ahead!

With some Asian markets closed for Labor Day the Nikkei lead the buying by 0.92% with Australia also in a bullish mood.  European markets trade mixed but mostly higher this morning with modest gains and losses as banking worries continue.  With manufacturing data pending and a slew of earnings U.S. futures trade mixed and flat this morning perhaps suffering from buying hangover after the buying party last week as we wait on the FOMC decision.

Economic Calendar

Earnings Calendar

Notable reports for Monday include AL, ANET, CAR, CF, CHKP, CHGG, CYH, FANG, RE, FMC, FRWD, BEN, GPN, HOLX, INVH, JJSF, KBR, LEG, LOGI, MSM, MSTR, NCLH, NXPI, ON, OTTR, PK, SOFI, SBAC, SFM, SYK, RIG, VRTX, VICI, VNO, & ZI.

News & Technicals’

JPMorgan Chase, the largest bank in the US, has acquired First Republic Bank, the fourth bank to fail this year, in a deal brokered by the Federal Deposit Insurance Corporation (FDIC). The deal will allow JPMorgan to assume all the deposits and most of the assets of First Republic, which had about $229 billion in total assets and $104 billion in total deposits as of April 13, 2023. First Republic’s 84 offices in eight states will reopen as branches of JPMorgan today. The FDIC said the deal avoids the agency having to use its emergency powers and minimizes disruptions for customers and loan borrowers. The takeover follows the collapse of Silicon Valley Bank and Signature Bank in March, which sparked fears of a wider banking crisis.

Charlie Munger, the vice chairman of Berkshire Hathaway and a legendary investor, has sounded a warning on the U.S. commercial property market, which he said is facing trouble due to bad loans and falling prices. Munger told the Financial Times that U.S. banks have made many risky loans to commercial property owners, such as office buildings and shopping centers, that may not be able to repay them as the demand for such properties declines amid the pandemic and changing consumer habits. Munger said that while the situation is not as bad as the 2008 financial crisis, it still poses a threat to the stability of the banking system and the economy. He also said that Berkshire Hathaway has been cautious about investing in banks because of these uncertainties.

The indexes continued their sharp rally on Friday, with the SP-500 adding 0.8% to its 2.0% surge on Thursday and ending the week with a 0.9% gain. Amazon’s warning of slowing growth in its cloud-computing segment was no match for hungry bulls willing to buy up the tech giants seemly at any cost. First Republic Bank, which plunged 49% on Friday and 95% for the week was taken over by JPM in a deal late Sunday yet more regional banks suffering massive outflows are still in question. Today trades face a possible hangover from Friday’s buying party as well as PMI, ISM, Construction Spending, and a slew of earnings reports.  The FED’s May rate decision comes Wednesday afternoon and next tech giant Apple will report Thursday afternoon this week so plan on price volatility as we wait.

Trade Wisely,

Doug

With earnings as the focal point indexes surged on Thursday as investors averted their eyes from the regional banking crisis.  Unfortunately, the situation seems to have worsened for FRC over the last 24 hours and some suggest an action by the Fed may be required as soon as this weekend.  The very bullish reaction to the initial AMZN and INTC earnings seems to have tempered after the conference calls.  Today we have fewer earnings events but have several potential market-moving economic reports highlighting the Feds favored core PCE number before the bell.  Buckle up it could be a wild Friday session.

Asian market surged higher in overnight trading as Japan keeps monetary policy unchanged weakening the Yen.  However, European indexes see only red this morning after a 0.1% GPD number with sinking bank prices raising concerns.  With bank worries back in focus this morning and tempered excitement from after-the-bell earnings reports U.S. futures point to bearish open.

Economic Calendar

Earnings Calendar

Notable reports for Friday AON, ARES, BLMN, CCJ, GTLS, CHTR, CVX, CL, XOM, LYB, NWL, NIO, SAIA, SLCA, WPC, & WT.

News & Technicals’

Amazon, the e-commerce giant and cloud leader, reported its first quarter earnings for 2023 on Thursday, April 28. The company beat analyst expectations on both revenue and profit, posting $127.4 billion in revenue and $3.2 billion in profit, or 31 cents per share. However, the company also warned of a slowdown in its cloud segment AWS, which grew 16% year-over-year, compared to 37% in the same period last year. Amazon’s online retail business also saw no growth in the first quarter, as shoppers became more cautious and less reliant on e-commerce amid the pandemic. Amazon’s stock rose 9% in after-hours trading following the earnings release.

Intel, the semiconductor giant, and PC chip leader, reported its first-quarter earnings for 2023 on Wednesday, April 27. The company reported the largest quarterly loss in its history, losing $2.8 billion, or 66 cents per share, compared to a profit of $8.1 billion, or $1.98 per share, a year ago. Revenue fell nearly 36% year over year to $11.7 billion, as the company faced fierce competition from rivals like AMD and Nvidia, as well as supply chain challenges and a global chip shortage. Intel also lowered its full-year guidance, expecting to lose $2.30 per share on revenue of $65 billion to $68 billion. Intel’s stock dropped 5% in after-hours trading following the earnings release.

The U.S. stock market earnings as the focal point, and tech companies have been delivering strong results that have boosted investor confidence and key indexes. Microsoft and Alphabet surprised the market with their earnings yesterday, and META followed suit today with a beat that sent its shares up 14%. The earnings season is not over yet, and Amazon could be the next big mover when it reports later today. The U.S. economy, however, is slowing down, according to the GDP report released this morning. This suggests that the Fed will not raise rates much more, but also that it will not cut them soon either, as inflation remains high.

Trade Wisely,

Doug

Wednesday was not the day most would have expected as regional bank woes offset earnings from the tech giants that beat estimates.  Today could be as volatile with a huge round of earnings and economic reports while the banking uncertainty continues to worry markets not to mention depositors!  META results will keep the tech sector inspired as we wait for AMZN after the bell today to report their results.  Pops, drops, and whipsaws are likely as so continue to expect challenging price action as details emerge and banking worries simmer.

As we slept Asian markets saw mostly modest gains as the new Bank of Japan chief takes the reins.  European markets trade mixes and near the flatline even as Barclays eases bank fears beating expectations.  Once again U.S. futures shrug off the banking issues pointing to a substantial gap up open as earnings inspire the fear of missing out with a premarket pump.  Plan for another wild day as market-moving data rolls out.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include AOS, ABBV, ATVI, AMZN, ALL, AMGN, MO, B, BZH, BJRI, BMY, BC, SAM, COF, CAT, CHE, CC, CHD, CINF, NET, CMCSA, COUR, CROX, CUBE, CLR, DPZ, LLY, ESS, FHI, FSLR, FE, GLPI, GILD, GWW, HOG, HAS, HTLD, HAY, HTZ, HGV, HON, HUBG, INTC, IP, JKS, KDP, LHX, LEA, LIN, MA, MRK, MHK, MDLZ, NOC, OLN, OSTK, BTU, PINS, ROK, SPGI, SNY, SGEN, SIRI, SKK, SNAP, SO, LUV, STM, SKT, TMUS, TSCO, X, VLO, WDC, WY, WTW, & XEL.

News & Technicals’

Meta, the social media giant formerly known as Facebook, surprised investors with a strong earnings report for the first quarter of 2023. The company reported an unexpected increase in revenue of 12% year-over-year, after three consecutive quarters of declines due to regulatory pressures and user backlash. Meta also raised its guidance for the second quarter, projecting revenue growth of 15% to 18%, well above analysts’ estimates. The stock jumped 8% in after-hours trading, extending its 2023 rally of 35%. Meta attributed its performance to the growth of its virtual reality and augmented reality products, as well as its e-commerce and advertising businesses.

Samsung, the world’s largest maker of memory chips and smartphones, suffered a sharp drop in profit in the first quarter of 2023 due to the persistent slump in the chip market and weak demand. The company reported an operating profit of 640 billion Korean won (roughly $478.55 million), a 95% decline from 14.12 trillion won a year earlier, marking its worst quarterly result since the first quarter of 2009. Samsung’s memory chip business, which accounts for more than half of its revenue, saw its profit plunge by 71% as prices for DRAM and NAND chips continued to fall amid oversupply and sluggish demand from data center and smartphone customers. Samsung’s mobile division, however, posted a 40% increase in profit thanks to the launch of its latest flagship smartphone, the S23 series, which feature improved cameras and battery life.

Investors are facing a huge amount of confusion as they grapple with the conflicting signals of recession risk and inflation fears, according to a strategist. Bob Parker, senior advisor at International Capital Markets Association, said the market was struggling to reconcile the possibility of a global economic slowdown in 2023 with the rising prices of commodities and consumer goods. “I think the big theme in markets at the moment is confusion,” Parker told CNBC’s “Squawk Box Europe” on Thursday. He added that investors were unsure whether to buy cyclical stocks that benefit from economic growth or defensive stocks that offer protection in a downturn. Giles Keating, director at Bitcoin Suisse, echoed Parker’s sentiment and said there was a general pessimism about the outlook for the world economy.

The U.S. stock market ended the day mixed as regional bank woes offset the positive impact of strong earnings from tech giants. The Dow and the S&P 500 moved lower with their 50-day average support near, while the Nasdaq gained ground boosted by earnings estimate beats. First Republic’s stock plunged nearly 30% following reports that the Fed may limit its borrowing capacity due to its shrinking deposits. The bank had reported a 40% drop in deposits in the first quarter a day earlier. Today we have a huge day of earnings that includes AMZN after the bell as well as market-moving GDP, Jobless Claims, and Pending Home Sales economic reports.  Watch for pops, drops, and whipsaws, and don’t rule out the possibility of a SPY and DIA 50-day morning average test particularly if banking concerns persist.

Trade Wisely,

Doug

As we waited on big tech reports worries of regional bank failures reemerged creating a cautious mood on Tuesday.  However, after the bell bullish earnings results from the tech giants generated big after-market gains in the sector with NASDAQ futures pointing to a huge gap up this morning. This bull/bear battle could provide significant price volatility today as we toss in another huge round of earnings and economic events to keep investors guessing.  Watch for the potential of intraday whipsaws particularly if the regional bank rout continues today.

Surprisingly even after strong tech earnings Asian markets closed mostly lower as banking worries overshadow earnings results.  European markets also trade red across the board this morning favoring the regional banking woes over the tech bullish results.  However, U.S. futures are going a different route, celebrating the tech reports suggesting a bullish gap up and shrugging off financial sector concerns. 

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ALGN, AB, AMT, AWK, NLY, ADP, AVP, BA, FFIV, CHRW, CP, CHDN, CME, DOV, EBAY, EW, ETR, EQT, ETD, GD, GGG, HELE, HP, HESS, HLT, HUM, KLAC, LC, MAS, MAT, MSFT, MTH, MOH, NSC, ODFL, ORLY, OTIS, QC, PAG, PTEN PPC, PXD, RJF, ROKU, R, NOW, SLAB, SAVE, SHOO, STAG, SUI, TEL, TDOC, TER, TMO, UMC, URI, WM, & WH.

News & Technicals’

The U.S. economy is facing a challenge from the banking sector, which has been hit by a crisis since the beginning of the year. The crisis has mainly affected small banks, which are the main source of credit for small businesses and households. As these banks reduce their lending, the impact will be felt by the average Americans who rely on them. However, the economy is still expected to show positive growth in the first quarter, thanks to the strong consumer spending that drives most of the economic activity. The future outlook will depend on how well the consumers can cope with the credit crunch.

First Republic is on the brink of collapse and needs a lifeline from its big bank peers. CNBC has learned that the bank’s advisors are trying to persuade other U.S. banks to buy its bonds at inflated prices, even if it means taking a hit of billions of dollars. The alternative is worse: If First Republic goes under, the other banks will have to pay about $30 billion in fees to the Federal Deposit Insurance Corporation (FDIC). The advisors hope that by shoring up First Republic’s balance sheet, they can attract new investors who are willing to buy its stock.

The quarterly earnings season brought good news for three big companies on Tuesday. Microsoft delivered strong results on both the top and bottom lines, driven by the robust growth of its cloud services, especially Azure. The company also provided positive guidance for the next quarter. Alphabet, which owns Google, also beat the estimates on revenue and earnings and revealed a huge $70 billion share repurchase plan. The company was able to reduce its expenses and increase its online ad revenue in a tough market. Chipotle also impressed investors with its earnings and revenue, which were higher than what Wall Street expected. The restaurant chain achieved high growth in same-store sales, even though it hiked its menu prices by around 10% from a year ago.

Investors were in a cautious mood on Tuesday, as FRC plunged nearly 50% leading many regional banks lower, and raising worries of a remerging crisis in the sector.  However, the earnings reports of some of the biggest technology companies, such as Microsoft and Alphabet, beat estimates lifting bullish hopes in that sector as futures surge heading toward the Wednesday open.  The VIX rallied and the T2122 pulled back sharply finally reliving some of the overbought pressure in the indexes.  Today we have another huge round of earnings events with META after the bell as well as the market-moving economic report Durable Goods, International Trade and Petroleum Status.  Expect considerable volatility as bank worries and slowing economic growth battles the bullish reaction to better-than-expected tech results.

Trade Wisely,

Doug

Indexes remained stuck in the recent trading range as equities lacked momentum as investors worry how the slowing economic conditions may affect the pending tech giant’s earnings.   The reports Tuesday afternoon from MSFT and GOOG may well inspire to finally break this frustrating chop zone.  However, the question remains will it be a bullish or bearish inspiration? Plan for more chop as traders ponder the outcome with several market-moving economic reports tossed in for added uncertainty. 

Asian market primarily declined during the night as lackluster economic growth and geopolitical concerns weigh on investors’ minds.  European markets trade flat to slightly lower this morning as bond yields and pending earnings cloud the path forward.  U.S. futures also indicate a slightly bearish open as we wait to see if the big rally in the tech giants can be justified by the pending earnings.  Plan for some big price moves once the data is reviled but until then expect more choppy uncertain price action.

Economic Calendar

Earnings Calendar

Notable reports for Monday include AGNC, ARE, BOH, CDNS, CLF, CO, CR, FRC, PKG, PHG, PCH, RRC, WSBC, & WHR.

News & Technicals’

More and more countries are calling for trade to be carried out in other currencies besides the U.S. dollar. For instance, Brazil and Argentina have discussed the creation of a common currency for the two largest economies in South America. In a conference in Singapore in January, multiple former Southeast Asian officials spoke about de-dollarization efforts underway. The UAE and India are in talks to use rupees to trade non-oil commodities in a shift away from the dollar. Saudi Arabia said that the oil-rich nation is open to trading in currencies besides the U.S. dollar. However, it’s worth noting that despite these efforts, the U.S. dollar remains dominant in global forex reserves even though its share in central banks’ foreign exchange reserves has dropped from more than 70% in 1999.

Bed Bath & Beyond has filed for bankruptcy protection and has begun a “limited sale and marketing process for some or all of its assets”. The company’s 360 Bed Bath & Beyond and 120 buybuy BABY stores will remain open for the time being as it works to liquidate assets. The struggling home goods retailer has been warning of a potential bankruptcy since early January.

Swiss authorities brokered a controversial 3 billion Swiss franc deal over the course of a weekend in late March between UBS Group AG and Credit Suisse. The acquisition is expected to be consummated by the end of this year. However, the full absorption of Credit Suisse’s business into UBS Group is expected to take around three to four years.

On Friday, equities lacked momentum with the S&P 500 closing up about 0.1% and the Dow adding 22 points. The focus remained on incoming earnings results, as worries of slowing economic conditions and how that may affect the pending earnings of the tech giants. The bond market also saw modest moves on the day, with 10-year Treasury yields ticking slightly higher, remaining just below the 3.6% mark. The consumer staples, health care, and utility sectors were among the leaders of the day, while financials, technology, and commodity-related sectors were laggards.  Today could see more directionless chop as we wait for MSFT and GOOG reports Tuesday after the bell which may finally break the indexes from this frustrating trading range.

Trade Wisely,

Doug