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U.S. Economy Navigates Choppy Waters | GDP Misses Mark, Inflation Climbs (Weekly Cheat Sheet)
| From | Irving Wilkinson <[email protected]> |
| Subject | U.S. Economy Navigates Choppy Waters | GDP Misses Mark, Inflation Climbs (Weekly Cheat Sheet) |
| Date | May 6, 2024 1:36 PM |
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Good morning,
As the legendary investor Warren Buffett once said, _“The stock market is a device for transferring money from the impatient to the patient.”_
This week, patience seemed to be the key as the major indices settled with gains despite mixed earnings news and market-moving economic releases. The Russell 2000 even turned positive for the year following a 1.7% gain since last Friday.
Have a great week!
Irving Wilkinson, Editor
[AlphaBetaStock.com]([link removed])
**Table of Content**
* **[US Market Highlights]([link removed])**
* **[Global Highlights]([link removed])**
* **[Investor Takeaways]([link removed])**
* **[Commodities]([link removed])**
* **[Energy]([link removed])**
* **[Metals]([link removed])**
* **[Calendar & Movers]([link removed])**
View image: ([link removed])
Follow image link: ([link removed])
Caption:
## Missed out on Ring and Nest? Don’t let RYSE slip away!
**Ring** 一 Acquired by Amazon for **$1.2B**
**Nest **一 Acquired by Google for **$3.2B**
If you missed out on these spectacular early investments in the Smart Home space, here’s your chance to grab hold of the next one.
[RYSE]([link removed]) is a tech firm poised to dominate the Smart Shades market (growing at an astonishing 55% annually), and their[ public offering of shares priced at just $1.50]([link removed]) has opened.
They have generated[ over 20X growth in share price]([link removed]) for early shareholders, with significant upside remaining as they just launched in over **100 Best Buy stores**.
Retail distribution was the main driver behind the acquisitions of both **Ring** and **Nest**, and their exclusive deal with Best Buy puts them in pole position to dominate this burgeoning industry.
[Secure your stake before the offer closes.]([link removed])
----------
## **LAST WEEK’S MARKET OVERVIEW**
----------View image: ([link removed])
Caption:
I noticed that gains in the mega cap space had an outsized influence on index performance this week. The **Vanguard Mega Cap Growth ETF (MGK)** logged a 1.3% gain versus a 0.6% in the market-cap weighted **S&P 500**.
Meanwhile, the equal-weighted S&P 500 registered a mere 0.2% gain. Standout winners in the mega cap space included **Apple (AAPL)** and **[Amazon.com]([link removed])**** (AMZN)**, which gained 8.3% and 3.7% respectively following pleasing earnings and outlooks.
View image: ([link removed])
Caption:
Market participants also digested mixed economic releases, including the Employment Cost Index for Q1, which reflected a 1.2% increase in compensation costs versus expectations for a 1.0% increase. This report piled onto emerging worries about sticky inflation and the Fed pushing back its rate cut timeline.
However, **Fed Chair Powell** calmed some of those fears during his press conference, stating that it was “unlikely that the next policy rate move will be a hike.”
## **US Market Highlights**
* The **FOMC** held interest rates at a 23-year high, noting a ‘lack of further progress’ on inflation. They did slow the pace of quantitative tightening by reducing Treasury runoff from $60 billion to $25 billion per month.
* U.S. services and manufacturing activity both contracted last month, with ISM’s manufacturing PMI slipping to 49.2% and services PMI falling to 49.4%.
* U.S. payrolls increased just 175,000 in April as the unemployment rate rose to 3.9%. Average hourly earnings increased less than expected, an encouraging sign for inflation.
* **Boeing** tapped debt markets to raise $10 billion as it burned nearly $4 billion in free cash flow last quarter amid its 737 MAX 9 crisis.
* **Peloton** announced layoffs for 15% of staff and CEO stepping down after just two years. $PTON shares are down 98% from their peak.
## **Global Highlights**
* **Turkey** halted all trade with **Israel** over the ongoing conflict in the Middle East. Trade between the two countries was worth $6.8 billion in 2023.
* **Bank of Japan** intervened in forex markets to prop up the Yen against the U.S. Dollar, likely spending ¥3.5 trillion ($22.5 billion).
* **G7** eyes new $50 billion funding for **Ukraine** in a plan that would use profits from frozen Russian assets to repay the aid.
* Inflation in **Europe** held steady at 2.4% in April, keeping the June rate cut on the table. Eurozone economy returned to growth, speeding out of recession as GDP rose faster than expected at 0.3%.
* **China’s** factory activity expanded at the fastest pace in 14 months as the Caixin manufacturing PMI rose to 51.4 in April. China also hinted at property support and rate cuts as part of a new plan to rekindle growth.
## **Investor Takeaways**
Despite the somewhat mixed action, I believe there are reasons for optimism.** The weak April employment report reduced concerns about a potential rate hike while not inviting worries about the state of the labor market. **Treasury yields settled lower in response, acting as support for equities.
As we move forward, I’ll be keeping a close eye on the** S&P 500 and Nasdaq Composite as they approach their respective 50-day moving averages.** Technical indicators like these can provide valuable insights into market sentiment and potential turning points.
----------
## **Commodities**
----------### **Energy**
View image: ([link removed])
Caption:
**Oil prices took a significant step backward this week, with North Sea Brent trading at around $84 a barrel and US WTI at $79 a barrel.** The risk premium linked to geopolitical friction is diminishing, and the latest US inventory data weighed on the trend.
### **Metals**
View image: ([link removed])
Caption:
**Copper** is catching its breath after hitting the $10,000 a tonne mark in London. Like oil, copper and industrial metals prices depend on the Federal Reserve’s monetary policy.
**Gold** is down for the second week, running at $2300, but short-term price weakness masks central banks' appetite, which continue to buy gold.
----------
## **Calendar & Movers**
----------Looking ahead to next week, Wall Street can expect a slight reprieve as both the economic calendar and the first-quarter earnings season lighten up somewhat. However, there are still a few key events and reports to keep an eye on.
* **Monday:** The Federal Reserve will release its senior loan officer opinion survey, providing valuable insights into credit conditions in the economy.
* **Tuesday:**
* Tech giant **Apple (AAPL)** is scheduled to hold a special event showcasing new iPad products and hardware accessories. This event could generate buzz and potentially impact the company’s stock performance.
* The **Consumer Credit** report for April will be released, offering insights into consumer borrowing and spending patterns.
* **Thursday:** The weekly **Initial Jobless Claims** data will be published, providing a timely gauge of the labor market’s health.
* **Friday:** The University of Michigan will release its preliminary consumer sentiment data for May, offering a gauge of consumer confidence and economic expectations.
On the earnings front, while many major companies, including the “Magnificent 7,” have already reported their results, there are still a few notable names on tap for next week:
* **Disney (DIS)**, the theme park and entertainment giant, will report its earnings. Investors will be keen to see how the company’s various business segments, such as streaming and theme parks, have performed.
* **Tyson Foods (TSN)**, a major meat processor, will also release its results, providing insights into the food industry and consumer demand trends.
* **Uber (UBER)**, the ride-hailing behemoth, is another company to watch as it reports its earnings. The company’s performance could shed light on the state of the gig economy and consumer spending patterns.
As always, I recommend staying attuned to these upcoming events and reports, as they can provide valuable information for making informed investment decisions. However, it’s crucial to maintain a long-term perspective and not overreact to short-term market movements.
———————————————————————————
Share AlphaBetaStock.com Market Cheat Sheet
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Or copy and paste this link to others: [link removed]
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You are reading a plain text version of this post. For the best experience, copy and paste this link in your browser to view the post online:
[link removed]
Follow image link: ([link removed])
Caption:
Good morning,
As the legendary investor Warren Buffett once said, _“The stock market is a device for transferring money from the impatient to the patient.”_
This week, patience seemed to be the key as the major indices settled with gains despite mixed earnings news and market-moving economic releases. The Russell 2000 even turned positive for the year following a 1.7% gain since last Friday.
Have a great week!
Irving Wilkinson, Editor
[AlphaBetaStock.com]([link removed])
**Table of Content**
* **[US Market Highlights]([link removed])**
* **[Global Highlights]([link removed])**
* **[Investor Takeaways]([link removed])**
* **[Commodities]([link removed])**
* **[Energy]([link removed])**
* **[Metals]([link removed])**
* **[Calendar & Movers]([link removed])**
View image: ([link removed])
Follow image link: ([link removed])
Caption:
## Missed out on Ring and Nest? Don’t let RYSE slip away!
**Ring** 一 Acquired by Amazon for **$1.2B**
**Nest **一 Acquired by Google for **$3.2B**
If you missed out on these spectacular early investments in the Smart Home space, here’s your chance to grab hold of the next one.
[RYSE]([link removed]) is a tech firm poised to dominate the Smart Shades market (growing at an astonishing 55% annually), and their[ public offering of shares priced at just $1.50]([link removed]) has opened.
They have generated[ over 20X growth in share price]([link removed]) for early shareholders, with significant upside remaining as they just launched in over **100 Best Buy stores**.
Retail distribution was the main driver behind the acquisitions of both **Ring** and **Nest**, and their exclusive deal with Best Buy puts them in pole position to dominate this burgeoning industry.
[Secure your stake before the offer closes.]([link removed])
----------
## **LAST WEEK’S MARKET OVERVIEW**
----------View image: ([link removed])
Caption:
I noticed that gains in the mega cap space had an outsized influence on index performance this week. The **Vanguard Mega Cap Growth ETF (MGK)** logged a 1.3% gain versus a 0.6% in the market-cap weighted **S&P 500**.
Meanwhile, the equal-weighted S&P 500 registered a mere 0.2% gain. Standout winners in the mega cap space included **Apple (AAPL)** and **[Amazon.com]([link removed])**** (AMZN)**, which gained 8.3% and 3.7% respectively following pleasing earnings and outlooks.
View image: ([link removed])
Caption:
Market participants also digested mixed economic releases, including the Employment Cost Index for Q1, which reflected a 1.2% increase in compensation costs versus expectations for a 1.0% increase. This report piled onto emerging worries about sticky inflation and the Fed pushing back its rate cut timeline.
However, **Fed Chair Powell** calmed some of those fears during his press conference, stating that it was “unlikely that the next policy rate move will be a hike.”
## **US Market Highlights**
* The **FOMC** held interest rates at a 23-year high, noting a ‘lack of further progress’ on inflation. They did slow the pace of quantitative tightening by reducing Treasury runoff from $60 billion to $25 billion per month.
* U.S. services and manufacturing activity both contracted last month, with ISM’s manufacturing PMI slipping to 49.2% and services PMI falling to 49.4%.
* U.S. payrolls increased just 175,000 in April as the unemployment rate rose to 3.9%. Average hourly earnings increased less than expected, an encouraging sign for inflation.
* **Boeing** tapped debt markets to raise $10 billion as it burned nearly $4 billion in free cash flow last quarter amid its 737 MAX 9 crisis.
* **Peloton** announced layoffs for 15% of staff and CEO stepping down after just two years. $PTON shares are down 98% from their peak.
## **Global Highlights**
* **Turkey** halted all trade with **Israel** over the ongoing conflict in the Middle East. Trade between the two countries was worth $6.8 billion in 2023.
* **Bank of Japan** intervened in forex markets to prop up the Yen against the U.S. Dollar, likely spending ¥3.5 trillion ($22.5 billion).
* **G7** eyes new $50 billion funding for **Ukraine** in a plan that would use profits from frozen Russian assets to repay the aid.
* Inflation in **Europe** held steady at 2.4% in April, keeping the June rate cut on the table. Eurozone economy returned to growth, speeding out of recession as GDP rose faster than expected at 0.3%.
* **China’s** factory activity expanded at the fastest pace in 14 months as the Caixin manufacturing PMI rose to 51.4 in April. China also hinted at property support and rate cuts as part of a new plan to rekindle growth.
## **Investor Takeaways**
Despite the somewhat mixed action, I believe there are reasons for optimism.** The weak April employment report reduced concerns about a potential rate hike while not inviting worries about the state of the labor market. **Treasury yields settled lower in response, acting as support for equities.
As we move forward, I’ll be keeping a close eye on the** S&P 500 and Nasdaq Composite as they approach their respective 50-day moving averages.** Technical indicators like these can provide valuable insights into market sentiment and potential turning points.
----------
## **Commodities**
----------### **Energy**
View image: ([link removed])
Caption:
**Oil prices took a significant step backward this week, with North Sea Brent trading at around $84 a barrel and US WTI at $79 a barrel.** The risk premium linked to geopolitical friction is diminishing, and the latest US inventory data weighed on the trend.
### **Metals**
View image: ([link removed])
Caption:
**Copper** is catching its breath after hitting the $10,000 a tonne mark in London. Like oil, copper and industrial metals prices depend on the Federal Reserve’s monetary policy.
**Gold** is down for the second week, running at $2300, but short-term price weakness masks central banks' appetite, which continue to buy gold.
----------
## **Calendar & Movers**
----------Looking ahead to next week, Wall Street can expect a slight reprieve as both the economic calendar and the first-quarter earnings season lighten up somewhat. However, there are still a few key events and reports to keep an eye on.
* **Monday:** The Federal Reserve will release its senior loan officer opinion survey, providing valuable insights into credit conditions in the economy.
* **Tuesday:**
* Tech giant **Apple (AAPL)** is scheduled to hold a special event showcasing new iPad products and hardware accessories. This event could generate buzz and potentially impact the company’s stock performance.
* The **Consumer Credit** report for April will be released, offering insights into consumer borrowing and spending patterns.
* **Thursday:** The weekly **Initial Jobless Claims** data will be published, providing a timely gauge of the labor market’s health.
* **Friday:** The University of Michigan will release its preliminary consumer sentiment data for May, offering a gauge of consumer confidence and economic expectations.
On the earnings front, while many major companies, including the “Magnificent 7,” have already reported their results, there are still a few notable names on tap for next week:
* **Disney (DIS)**, the theme park and entertainment giant, will report its earnings. Investors will be keen to see how the company’s various business segments, such as streaming and theme parks, have performed.
* **Tyson Foods (TSN)**, a major meat processor, will also release its results, providing insights into the food industry and consumer demand trends.
* **Uber (UBER)**, the ride-hailing behemoth, is another company to watch as it reports its earnings. The company’s performance could shed light on the state of the gig economy and consumer spending patterns.
As always, I recommend staying attuned to these upcoming events and reports, as they can provide valuable information for making informed investment decisions. However, it’s crucial to maintain a long-term perspective and not overreact to short-term market movements.
———————————————————————————
Share AlphaBetaStock.com Market Cheat Sheet
You currently have <strong>0</strong> referrals.
Or copy and paste this link to others: [link removed]
———————————————————————————
———
You are reading a plain text version of this post. For the best experience, copy and paste this link in your browser to view the post online:
[link removed]
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