Stocks had a mixed close yesterday as tech shares continued their epic rise, leaving value shares in the dark, cold shadows. The latest GDP estimate for last quarter was revised upward leaving many wondering if a late-year recession is really in the offing.
Time to make the donuts.
At one point, I thought I am doing a lot of research, so I may as well start sharing my thoughts in a daily market note. After performing all of my pre-market routines, it actually helps to formulate a reduced-down theme for the session ahead. Forcing myself to take pen in hand and put that theme on paper helps me further reduce the theme or thoughts into a running dialogue, which I ultimately hope to have with you, MY FAITHFUL READERS. Reality prohibits me from speaking with each of you every day, but technology allows me to connect with all of you in my morning note, crafted by my own hand (no ChatGPT) just for you. If you do read it every day, you will not have to wake up in the dark and rummage through all the mounds of information necessary to really know what is going on. You will only have to give it 10 minutes, tops… plus maybe a few minutes to think about what I wrote. I can assure you, after reading my note, you will know as much as any Wall Street hotshot sitting in the biggest corner office in the tallest, shiniest building in New York City.
As you might guess, there are mornings where I can easily just write “same <INSERT YOUR FAVORITE EXPLETIVE HERE> as yesterday,” but the reality is that markets are so dynamic these days, there is always something to report to you. Earlier this week, I was telling you about a pending recession and yesterday a GDP revision came in stronger than expected… it is good to know that. The entire week featured on again off again progress, “speed bumps”, stalemates, etc. in debt ceiling negotiations, with each one having major implications on your portfolio. At the start of the week, there was little chance of further rate hikes (according to futures) and by today there is a good probability of another rate hike in late July. Chips were down on Tuesday and Wednesday and NVIDEA rocketed them into the stratosphere yesterday elevating everything else AI-related as well. Last week, we thought that the Treasury had enough money to get to mid-June and earlier in the week we learned June 1st is a real deadline, while today, WHILE YOU SLEPT, we learned that the Treasury has less than $50 billion left in its checking account, making the situation even more critical. Crude oil has rebounded overnight after expectations are growing for further OPEC+ supply cuts. Yesterday, we learned that wheat fields in Illinois are in great shape, which is in sharp contrast to Kansas, whose yields are suffering due to severe drought conditions. Both states have ramped up their plantings to fill in the gap caused by the war in Ukraine. Why is that important? According to the last PCE Deflator (the Fed’s favorite inflation gauge), Cereals and Bakery Products were +13.1% higher than a year ago due to rising commodity costs. We are due to get the latest PCE Deflator this morning. The Fed is watching that, so it will certainly affect the markets today. You can find out more about that in the “NEXT UP” section below. Yeah, there are a few stocks on the move this morning as well. I will highlight at least 2 of them in the next section, but there are plenty more.
That all said, there is always plenty of information that I am happy to share with you each and every day… except holidays. Finally, if I manage to get you to smile sometimes, that is intended as well – a bit of levity is necessary to be successful at investing which can get the best of your human emotions sometimes. At the end of the day… or I should say, at the beginning of the day, it takes lots of discipline to be successful at investing. Thank you for being part of my highly disciplined routine, my regular, cherished readers.
WHAT’S SHAKIN’ THIS MORNIN’ ☀🌥🌧
Ford Motor Co (F) shares are higher by +2.02% in the premarket after the company announced that it entered an agreement with Tesla to allow Ford EV owners to access Tesla’s 12,000+ superchargers as soon as spring 2024. The markets think that is a good idea, for now. Dividend yield: 5.27%. Potential average analyst target upside: +22.3%.
Ulta Beauty Inc (ULTA) shares are lower by -9.09% in the premarket after it announced a beat on both EPS and Revenues but lowered its full year guidance on margins. The company blamed increased theft for the decline in profitability 😕. Potential average analyst target upside: +10.4%.
YESTERDAY’S MARKETS 📈📉
Stocks had a mixed close yesterday as a semiconductor-led rally levitated stocks despite economic data to support further potential hikes. The S&P500 gained +0.88%, the Dow Jones Industrial Average slipped -0.11%, the Nasdaq Composite Index jumped by +1.17%, and the Russell 2000 Index declined by -0.70%. Bonds fell and 10-Year treasury Note yields climbed by +7 basis points to 3.81%. Cryptos added +0.69% and Bitcoin gained +0.33%.
NEXT UP 👓
- Personal Income (April) is expected to have risen by +0.4% while Personal Spending is expected to have gained +0.5% with both measures coming in at +0.4% and flat in their prior releases.
- PCE Deflator (April) may have increased to +4.3% and +4.2% while the Core Deflator is expected to come in unchanged at +4.6%.
- Durable Goods Orders (April) is expected to come in with a -1.0% decline after gaining +3.2% in the month before.
- Next week: US Markets are closed on Monday in observance of Memorial Day. Later in the week we will get more housing numbers, Consumer Confidence, JOLTS Job Openings, ISM PMIs, and the monthly employment numbers. Check back in on Tuesday for calendars and details.
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