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

The indexes were once again plagued with uncertainty and chop as we waited for the TSLA report that came in with a 20% decline in revenue and earnings from one year ago despite topping lowered estimates.  Today we have Jobless Claims, Philly Fed, and Existing Home Sales along with a busy day of earnings to keep traders guessing and price volatility high while the VIX indicates complacency is on the rise.  With tech giant reports and a pending FOMC rate decision around the corner plan for just about anything over the next couple of weeks.

Asian markets closed mixed overnight with modest gains and losses in reaction to earnings results.  European markets that tried to shrug off yesterday’s U.K. inflation surprise trade decidedly bearish this morning.  U.S. futures also suggest a bearish open but as the earnings and economic data roll out the actual open is anyone’s guess.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include ALK, AN, AXP, BX, BJRI, T, CSX, DHI, FITB, GPC, HTLD, HBAN, KEY, KNX, MMC, NOK, NUE, PM, POOL, PPG, RAD< STX, TSM, TFC, UNP, WSO, & XRX.

News & Technicals’

IBM issued stronger-than-expected first-quarter earnings on Wednesday even as the technology and consulting company reported disappointing revenue. IBM’s revenue increased 0.4% from a year earlier in the quarter, according to a statement. Net income rose 26% to $927 million, or $1.02 a share, for continuing operations. Profit rose faster than revenue as IBM’s total expenses and other income declined 4% to $6.45 billion, with reductions coming in research, development, and engineering.

Twitter CEO Elon Musk threatened Microsoft with a potential lawsuit on Wednesday, claiming the software giant used his company’s data to train its AI. “They trained illegally using Twitter data,” Musk tweeted. “Lawsuit time.” The threat came after Mashable and other publications reported that Microsoft would drop Twitter from its advertising platform.

Tesla’s Q1 2023 revenues and profits were close to expectations according to a survey of analysts from Refinitiv. However, the company’s net income and earnings dropped more than 20% from 2022. Tesla attributed the drop in earnings to “underutilization of new factories” which stressed margins, along with higher raw material, commodity, logistics, and warranty costs, and lower revenue from environmental credits.

Equity markets closed modestly lower on Wednesday as Treasury yields climbed higher on another day highlighted by uncertainty and chop. March CPI inflation rose by 10.1% YoY in the UK, above estimates of 9.8%. The S&P 500 overall is up about 8.0% in 2023, still driven largely by growth sectors like technology and communication services. Treasury yields have moved higher with the 2-year U.S. Treasury yield above its recent lows of 3.76%, up now to 4.25%. The VIX volatility index, continued to drift lower, now down over 12% for April.  With a big round of earnings data ahead of today plan for the challenging price action to continue.

Trade Wisely,

Doug

Tuesday proved to be a day of frustrating low-volume chop as the market waited for NFLX earnings after GS dampened early bullishness missing expectations.  Bond yields rose yesterday and look to extend higher this morning with the U.K. reporting a 10.1% inflation rate above estimates.  Today we have a light day on the economic calendar but we ramp up the earnings data with MS this morning and TSLA this afternoon we should expect another day of challenging price action.

Asian markets finished the day mixed but mainly lower worried about rate hikes and possible recession.  The surprise U.K. inflation rate and uncertainty of the Fed’s next rate decision have European markets seeing red across all indexes this morning.  As investors digest earnings miss from GS and NFLX, the U.S. point to bearish open as we ramp up the number of reports with confidence in the results slightly fading.  Be watchful for big-point intraday whipsaw or full-on reversals as traders react to the data.

Economic Calendar

Earnings Calendar

Notable earnings for Wednesday include ABT, AA, ALLY, ASML, BKR, CNS, CCI, DFS, EFX, FFIV, IBM, KMI, LRCX, LVS, MS, NDAQ, EDU, REXR, SLG, STLD, SYF, TRV, TSLA, USB, &ZION.

News & Technicals’

According to the Office for National Statistics, the consumer price index rose by an annual 10.1% in March 2023 in the UK. This is above a consensus projection of 9.8% in a Reuters poll of economists. The inflation rate remained in double digits as households continued to grapple with soaring food and energy bills. This is a slight dip from the unexpected jump to 10.4% in February, which broke three consecutive months of declines since October’s 41-year high of 11.1%.

Netflix released its first-quarter 2023 financial results on April 18th, 2023. The company outperformed expectations for the first quarter financial results, delivering a 16% positive surprise in earnings per share ($0.94 vs. $0.80 anticipated) and a 5% positive surprise in revenues ($26.39 billion vs. $25.19 billion). Netflix said it was pushing back the broad rollout of its password-sharing crackdown. Originally, Netflix wanted the rollout to take place late in the first quarter, but on Tuesday it said it would do it in the second quarter. The company said it saw its subscriber growth impacted in the international markets where it has already rolled out such initiatives.

On Wednesday, U.S. Treasury yields climbed after another sticky inflation report in the U.K. raised concerns global central banks would need to stay the course with their tightening campaigns. The yield on the 10-year Treasury was up by over 6 basis points to .63%. The yield on the 2-year Treasury was last trading at 4.28% after rising by 8 basis points.

Equity markets were mixed on Tuesday, as the S&P 500 closed higher after a frustrating day of low-volume chop.  Forecasts still call for -6.5% earnings growth year-over-year in the first quarter. The S&P 500 overall is up about 8.0% in 2023, still driven largely by growth sectors like technology and communication services. More recently, we have seen better performance from defensive sectors, like consumer staples and health care, and cyclical sectors, including energy and materials. This comes as Treasury yields have moved higher, with the 2-year U.S. Treasury yield up by nearly 0.46% since its recent lows to 4.22% 1. The VIX volatility index has also moved lower, down about 9% in April thus far.  Index technicals remain bullish but once again over-extended according to the T2122 indicator.

Trade Wisely,

Doug

Despite the last-minute surge the SP-500 finished the day little changed in an overall choppy low-volume session as we waited on the market-moving reports from BAC and GS Tuesday morning with NFLX coming after the bell.  We will also get a reading on the health of the housing sector with a starts and permits report before the opening of trading.  Bond prices continue to be problematic but interestingly the market seems happy to ignore it as the VIX continues to fall and the T2122 indicator presses back into the overbought region.  The morning session could be wild so watch for some big gaps and possible big point whipsaws as the investors react.

Overnight Asian markets closed mixed even as China beat first-quarter GDP expectations.  However, European markets see nothing but green with earnings data on the horizon and the ECB signaling a possible 50 basis point rate increase.  As we wait on big bank reports the U.S. futures push for a gap up open that could move dramatically as results come into the light.

Economic Calendar

Earnings Calendar

Earnings begin to pick up today through Thursday then get really busy next week.  BAC, BK, ERIC, FHN, FULT, GS, IBKR, ISRG, JNJ, LMT, NFLX, OMC, PLD, UAL, & WAL.

News & Technicals’

Apple opened its first store in India, called Apple BKC, in Mumbai. The company is also opening another store in Delhi. Apple CEO Tim Cook has long held a bullish view on India and now the company is ramping up sales and manufacturing of its flagship iPhone in the country. This highlights the importance of the Indian market to Apple’s future.

House Speaker Kevin McCarthy spoke at the New York Stock Exchange. He opened a new phase in the debt ceiling fight by saying House Republicans would pass their stand-alone debt ceiling hike with spending cuts and stricter work requirements. However, such a bill would be dead on arrival in the Democratic-controlled Senate and in Democratic President Joe Biden’s White House.

The S&P 500 was little changed after an up week that pushed it near the year’s highs. Small-caps outperformed. Earnings remain the area of focus, with 60 S&P 500 companies scheduled to report this week, including Charles Schwab and State Street today. Bank of America, Goldman Sachs, Netflix, and Tesla are due to deliver results later this week. House Speaker McCarthy is expected to outline Republican demands for spending cuts and other concessions regarding the debt ceiling. Treasury yields were higher as investors are starting to rethink the likelihood of the Fed cutting rates later this year.

Trade Wisely,

Doug

Bank stocks led the gains on Friday while overall the indexes struggled as rising bond yields and worries about tightening credit weighed on investors’ minds.  Today we will hear from Schwab which has been challenged by substantial capital outflows in the recent banking scare.  The results could be market-moving with the warnings from Jamie Dimon and Warren Buffet of more bank failures to come.  Also ahead will be the Empire State MFG and Housing Market Index reports which have shown a weakness in the sectors. 

Asian market closed Monday trading with modest gains despite the surge in Hong Kong up 1.68%.  European markets also trade with modest gains hoping to shake off recession worries as earnings ramp up.  As I write this report U.S. futures point to modest gains as bond yields rise ahead of earnings and economic reports that could bring more bullish inspiration or embolden the bears.  Plan for just about anything as the market reacts.

Economic Calendar

Earnings Calendar

Notable reports for Monday include SCHW, ELS, JBHT, MTB, PNFP, & STT.

News & Technicals’

Google CEO Sundar Pichai has warned that society is not prepared for the rapid advancement of AI. In an interview with CBS’ “60 Minutes” that aired Sunday, he said that laws that guardrail AI advancements are “not for a company to decide” alone. He also warned of consequences, saying that AI will impact “every product of every company.”

U.S. Treasury Secretary Janet Yellen has said that banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures. This could negate the need for further Federal Reserve interest rate hikes. “Banks are likely to become somewhat more cautious in this environment,” Yellen said in the interview, which is scheduled to air on Sunday. “We already saw some tightening of lending standards in the banking system prior to that episode, and there may be some more to come.” She said that would lead to a restriction in credit in the economy that “could be a substitute for further interest rate hikes that the Fed needs to make.”

Indexes struggled to finished slightly lower Friday after Thursday’s sharp rally that helped push global indexes to their highest close in 10 weeks while rising bond yields and tightening credit worried investors. Bank stocks led the gains, with shares of JPMorgan jumping after the company reported strong earnings results. Government bonds yields rose after the Fed’s Waller urged more monetary-policy tightening to reduce still high inflation, pressuring some of the rate-sensitive sectors. Elsewhere, oil prices rose after the International Energy Agency (IEA) said it expected global demand to rise this year on the back of a recovery in Chinese consumption and warned that output cuts announced by OPEC+ producers could exacerbate an oil-supply deficit. As earnings ramp up plan for price volatility to remain challenging in the days and weeks ahead.

Trade Wisely,

Doug

The bull ran hard Thursday on better-than-expected economic data surging through resistance with no regard to the uncertainty that lies before the market today.  It would seem that the market has full confidence that the big banks will report strong enough to support current prices and that the pending economic data will also be rosy.  If they are correct look for more upside but watch for possible whipsaws from this short-term extended condition.  However, if the data disappoints be prepared for a substantial bear attack that could quickly change market sentiment.  Anything is possible so plan carefully.

Asian markets closed green across the board overnight responding to the bullish U.S. prices surge on better-than-expected inflation data.  European markets trade with modest gains this morning as they wait and hope for bullish bank reports to support current market pricing.  However, after yesterday’s buying spree the U.S. futures point to a slightly bearish open but that could all change as investors react to all the market-moving data ahead.

Economic Calendar

Earnings Calendar

The day the market has been waiting for is here, the kick-off of 2^nd quarter earnings begins today.  Notable reports for Friday include JPM, BLK, C, PNC, WFC, & UNH.

News & Technicals’

The health of Europe’s commercial real estate market is causing concerns among investors. Some are questioning whether it could be the next sector to blow. Following March’s banking crises, fears have arisen of a so-called “doom loop,” in which a potential bank run could trigger a property sector downturn. According to Morningstar Direct data, European funds invested directly in real estate recorded outflows of £172 million ($215.4 million) in February. Some analysts now see real estate stocks falling by 20%-40% by next year. However, it’s important to note that the situation is not the same across all countries in Europe. Some countries are doing better than others. For example, according to a report by Savills, the UK commercial property market is expected to grow by 3% in 2023. It’s also worth noting that the real estate market is cyclical and downturns are not uncommon. However, these downturns are usually followed by periods of growth.

Chinese President Xi Jinping’s signature foreign policy idea, the Belt and Road Project, was announced in 2013. The ambitious plan aimed to build infrastructure trade links across Eurasia and beyond. However, observers say that a decade after the project’s rollout, it is losing steam. Xi reportedly invited President Vladimir Putin to travel to China for the third Belt and Road Forum this year in an attempt to inject new momentum into the massive endeavor.

The bull ran hard on Thursday as producer price index (PPI) inflation data surprised to the downside. The PPI came in at 2.7% YoY for March, well below last month’s 4.9% reading. This comes after headline U.S. consumer price index (CPI) inflation in March also moved lower for the ninth consecutive month. In addition, jobless claims inched higher this week, up to 239,000, another sign that the labor market may be starting to soften. Markets are still pricing in about a 70% probability of a 0.25% Fed rate hike at its May meeting, although they expect a pivot to rate cuts by the second half of the year*. In our view, the Fed likely has one additional rate hike ahead of it, followed potentially by a longer pause in its rate-hiking cycle. However, today is a big day of data that could keep the bullish party going or dramatically shift sentiment.  Prepare for a wild morning of price gyrations and watch out for big point whipsaws from these short-term overbought conditions.

Trade Wisely,

Doug