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2022-05-11 22:10:52 Inflation Hasn’t Peaked. ‘The Fed Needs to Be Even More Hawkish.’

Wednesday was supposed to be the day investors got confirmation that inflation peaked last month, as many economists and strategists across Wall Street have been long predicting. At first glance, the “peak inflation” narrative might look to have been vindicated: for the first time in eight months, headline CPI decelerated on a year-over-year basis to a 8.3% pace from an 8.5% clip in March. That is a good thing, even if the slowdown was simply about math as we lap particularly high readings from a year ago that are starting to fall out of the year-over-year calculation. But it’s not enough, nor is it the right number on which to focus.

First, the slowdown in overall inflation fell short of expectations. Consider that gasoline prices hit a record high on Tuesday, with the national average price rising to $4.37 a gallon, according to AAA. Moreover, part of that slowdown was due to lower energy prices.

@TransAmericanFriendship Open / Comment

2022-05-10 20:08:37 Dow erases 500-point rise as stock-market bounce gives way

A sharp bounce for U.S. stocks after three days of heavy losses was erased Tuesday, with major indexes turning lower on the eve of a key inflation reading.

On Monday, the Dow fell 654 points, or 2%, while the S&P 500 declined 3.2%, to close below the 4,000 threshold and at its lowest since March 31, 2021. The Nasdaq Composite plummeted 4.3% to its lowest finish since November 2020.

Over the past three days, the S&P 500 has dropped 7.2% — the biggest three-day decline since March 20, 2020, when the world was confronted with the coronavirus pandemic.

The early rise may have given traders hope that a so-called Turnaround Tuesday may materialize. But those hopes were soon dashed, with indexes unable to hold on to early gains.

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2022-05-09 15:43:42 U.S. profit forecasts weaken as companies assess inflation risks

With first-quarter U.S. earnings in the final stretch, corporate growth expectations for the current quarter and 2022 mostly are declining as costs surge for oil and other supplies and interest rates rise.

With first-quarter U.S. earnings in the final stretch, corporate growth expectations for the current quarter and 2022 mostly are declining as costs surge for oil and other supplies and interest rates rise.

Sky-high oil has boosted forecasts for energy company earnings while feeding into concerns about profit margins for many other S&P 500 industries.

Disappointing outlooks from Amazon, Netflix and other major players have stood out among recent reports, even as the first quarter’s estimated year-over-year profit growth has risen to 10.4% from 6.4% at the start of April, according to IBES data from Refinitiv.

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2022-05-09 15:38:58 Dow futures slump over 500 points, signaling rough start to week for equities

After a volatile week, Wall Street is bracing for more losses as U.S. stock-index futures fell sharply on Monday.

What’s happening ?

Futures on the Dow Jones Industrial Average YM00, -1.33% fell 516 points, or 1.6%, to 32,293.
S&P 500 futures ES00, -1.73% dropped 78.75 points, or 1.9%, to 4,040.75.
Nasdaq-100 futures NQ00, -2.28% dropped 303.25 points, or 2.4%, to 12,392.50.

The Dow DJIA, -0.30% and S&P 500 SPX, -0.57% each slipped 0.2% last week, while the technology-heavy Nasdaq COMP, -1.40% fell 1.5%. The weekly declines came after wild swings for major indexes, surging on Wednesday and falling sharply on Thursday.

Cryptocurrencies fell over the weekend as well, with bitcoin BTCUSD, -4.91% dropping below the $35,000 level, down nearly half from its record high set in November.

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2022-05-07 20:25:05 Stock market selloff in ‘liquidation’ stage. Why it needs to get ‘hotter’ before it burns out.

This week’s violent U.S. stock-market turnabout may have left investors feeling shaken, but a liquidation phase that may finally be under way will probably need to “get hotter” before it burns itself out, a top Wall Street chart watcher warned on Friday.

A remarkable thing about the market’s wild two-day swing Wednesday and Thursday is that market internals — indicators measuring things related to the number of advancing stocks in an index versus declining stocks — were whipsawed, too even though they tend to be “less fickle” than prices.

The Dow Jones Industrial Average DJIA, -0.30% plunged over 1,000 points, or 3.1% on Thursday after a rise of more than 900 points on Wednesday, while the Nasdaq Composite COMP, -1.40% dropped 5%, the worst one-day performance for both indexes since 2020. The S&P 500 SPX, -0.57% fell 3.6% Thursday. Stocks ended lower on Friday.

@TransAmericanFriendship Open / Comment

2022-05-06 18:53:49 Euro Crisis 2.0? Debt burdens could return to 2011 levels if rates rise much further, Deutsche Bank strategist warns

As the European Central Bank gets ready to embark on a rate-hike campaign — one official now is saying liftoff could come in June — and as Italian bond yields TMBMKIT-10Y, 3.152% are now a full 2 percentage points higher than German bund yields TMBMKDE-10Y, 1.144%, Deutsche Bank strategist Maximilian Uleer decided to compare where the eurozone stood versus a decade ago.

Relative and absolute levels have increased since 2011. Even with debt relief, Greece’s debt-to-GDP ratio is lower, because its economy has shrunk. Only Germany and Ireland, where companies have relocated to take advantage of lower taxes, have seen their debt-to-GDP ratios fall.

“Debt burdens have come down and the ECB has room to increase rates and stop its buying program. But the ECB’s degrees of freedom are limited. If rates were to rise sharply for longer, we might well be facing Euro Crisis 2.0” Open / Comment

2022-05-04 15:07:51 Investor pessimism mounts as more Fed rate hikes loom

Stock market investors are heading into the US Federal Reserve’s rate-setting announcement particularly pessimistic, with fresh milestones for bond yields and worries about rocketing inflation weighing on sentiment as the central bank is expected to hike rates further.

The benchmark S&P 500 is down over 12% so far this year after posting its biggest monthly drop in April since the start of the pandemic. Meanwhile, the yield on the US Treasury note hit 3% for the first time in over three years on Monday, doubling since the end of 2021.

The higher yields on US government debt, which is viewed as virtually risk free, mean “you probably are starting to lose some of those folks who had maybe crowded into dividend-paying stocks and were maybe having to take a little bit more risk for that income,” said Sameer Samana, senior market strategist at Wells Fargo.

"The implication for equities is you start to lose demand for stocks relative to fixed income." Open / Comment

2022-05-04 15:02:49 China Faces COVID Troubles as the EU Nears Embargo on Russian Oil

China is the world’s second-largest consumer and the world’s top importer of crude oil. In the face of adversity, is its economy likely to slow down?

Crude oil prices ended slightly higher yesterday after a volatile session, caught between weakening demand in China and the prospect, closer than ever, of a European embargo on Russian oil imports.

Meanwhile, the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC) are going to meet to make any adjustments to their production.

The market does not expect much from this meeting, as the current target of 400k barrels per day should be sustained. It’s despite the cartel’s struggling to pump such volumes, notably given the current political crisis in Libya – the producing country endowed with the most abundant reserves in Africa – which has seen its oil infrastructure blocked, where oil operations have been stopped since mid-April.

@TransAmericanFriendship Open / Comment

2022-04-30 14:24:21 Tesla Loses $126 Billion Amid Musk Twitter Deal

During the Musk-Twitter deal Tesla lost $126 billion due to a difficult atmosphere shared by many technology-related stocks.

Tesla Inc lost $126 billion in value on Tuesday as investors feared that CEO Elon Musk would have to sell shares to fund his $21 billion equity contribution to Twitter Inc’s $44 billion takeover.

Concerns over Musk’s forthcoming stock sales, as well as the prospect that he is becoming distracted by Twitter, impacted on Tesla shares, according to Wedbush Securities analyst Daniel Ives. He said, “This (is) causing a bear festival on the name.”

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2022-04-29 20:35:32 How The Big-Tech Giants Make Their Billions?

In 2021, the Big Five tech giants - Apple, Amazon, Google (Alphabet), Meta, and Microsoft - generated a combined $1.4 trillion in revenue.

As the giant tech companies prepare to report earnings this week, it is useful to understand just what are the sources of this revenue, and how does it breakdown?

Apple, Microsoft, and Amazon fall into the first category—like most traditional businesses, these companies offer customers a physical (or digital) product in exchange for money. More than half of Apple’s revenue comes from iPhone sales, Azure cloud services generate almost a third of Microsoft’s total, and Amazon’s online stores account for nearly 50% of the company’s revenue.

On the other hand, Meta and Alphabet do things a bit differently. Rather than selling an actual product, these two tech giants make most of their money by selling their audience’s attention. Nearly 98% of Meta’s revenue comes from Facebook ads, and 81% of Google’s revenue comes from ads. Open / Comment