Morning Briefing
May 30, 2022 | Daily JAM, Morning Briefing |
Federal Reserve Governor Christopher Waller said today, May 30, that he wants to keep raising interest rates in half-percentage point steps until inflation is easing back toward the central bank’s goal of 2%. “I support tightening policy by another 50 basis points for several meetings,” he said. “In particular, I am not taking 50 basis-point hikes off the table until I see inflation coming down closer to our 2% target.” Waller is the first Fed official to speak on interest rate policy after last week’s rally and ahead of the quiet period that begins Saturday and runs through the Fed meeting on June 15. On Sunday I posted that the tenor of Fed comments this week would go a long way to demonstrating whether the Powell Put–the Fed’s de facto policy of propping up stocks on a decline–was still in effect or if it had been replaced by a policy of subtly encouraging orderly (of course) market retreats as an aid to fighting inflation.
May 26, 2022 | Daily JAM, Morning Briefing |
On Tuesday, Snap (SNAP) fell 43.08% as the company lowered guidance for the remainder of 2022. Today, the shares were up 4.59%. At today’s close of $14.81 they’re still trading well below the 50-day moving average of $29.86. Should you chase them here? Macy’s (M) picked up 19.31% today on an earnings beat and higher guidance. Should you chase the shares higher? Or how about Nvidia (NVDA), which gained 5.16% on the day after an earnings beat and some positive statements about future products and product sales after the close yesterday. Should you buy the shares at today’s close of $178.51? That’s quite a bargain from the $333.76 that the stock sold for on November 29, 2021. A day like today when the market looks set to break a seven-week losing streak is tempting. Time to put some cash to work, no? Look at all the bargains? And the bear market is over–at least for a while, right? Bear markets are typically punctuated by days like today and a rally inside a bear market can go on for a while. This one, for example, could easily run into June or even July. And that means repeated temptation to jump back in. And repeated episodes of hard to suffer pain as stocks that you’ve sold for sound reasons climb well above your selling price. Bear market rallies are, I just want to remind you, exactly what make bear markets so damaging. Investors and trades face the losses from the overall market drop plus extra losses generated by buying into what looks like a rally off a bottom that turns out to be just a temporary step to even lower prices.
May 25, 2022 | Daily JAM, Morning Briefing |
Minutes from the Federal Reserve’s May 4 meeting shows central bank officials in agreement on the ned for 50-basis-point interest rate increases at the June and July meetings. And then, the minutes say, the Fed would respond to developments in the economy either with more interest rate increases or a pause to let the economy recover. That’s essentially in line with market sentiment–although Wall Street may be more convinced of the need for a September interest rate increase. That agreement was reassuring to the stock market today.
May 19, 2022 | Daily JAM, Morning Briefing |
Initial claims for unemployment moved up to 218,000 last week . That was the highest level since the week that ended on January 22. And an increase of 21,000 from the revised total of 197,000 the week before. But even though the official report is only a week old, it’s not capturing what seems to be an upward trend in the announcement of layoffs.
May 18, 2022 | COST, Daily JAM, Jubak Picks, Morning Briefing, WMT |
As of 3:30 p.m. Wednesday May 18 shares of Target (TGT) were down 25% for the day after the company reported a big earnings miss for the first quarter. Let’s be clear. The sales picture at Target was very positive for the quarter. Same store sales were up 3.3% in the quarter. That was about three times higher than Wall Street analysts had expected. Revenue was up 4%. Here again Target’s $25.2 billion in revenue beat expectations for $24.3 billion in revenue. But earnings were terrible at $2.19 a share versus forecasts for $3.05 a share.
May 17, 2022 | Daily JAM, Morning Briefing |
Retail sales rose in April by 0.9%, the Commerce Department reported today. Sales rose in nine of 13 retail categories, including for discretionary items such as apparel, electronics and furniture. Further buttressing the case for continued consumer spending strength, Walmart (WMT) reported stronger than expected same store sales for the first quarter with an increase of 5.6%. Revenue came in at $141.57 billion for the quarter, above Wall Street projections of $138.8 billion. Walmart shares are down today, however, since higher costs pushed Walmart earnings down o $1.30 a share, below Wall Street projections of $1.48 a share. As of 1 p.m. today, May 17, the Standard & Poor’s 500 was up 1.54% and the Dow Jones Industrial Average had gained 101%. The NASDAQ Com polite was higher by 1.94% and the NASDAQ 100 was ahead 1.79%. The small cap Russell 2000, always very sensitive to trends in the economic news, was up 2.53%. But…
May 15, 2022 | Daily JAM, Morning Briefing |
On Monday I’m looking for a test of key market narratives. After Friday’s big bounce, we could see the return of the “buy on the dip” narrative. Or the FOMO, fear of missing out, narrative. Or the market has bottomed narrative. Or the “it was just a bounce; let the selling resume” narratives. These narratives are important because money follows each story line.
May 13, 2022 | Daily JAM, Morning Briefing, Short Term, You Might Have Missed |
It’s easier to explain why stocks, especially technology stocks, staged a huge rally today, Friday May 13, than to predict whether or not the BIG BOUNCE will continue on Monday. But here’s my take and my recommendation for what to do on Monday.
May 11, 2022 | Daily JAM, Morning Briefing, You Might Have Missed |
Inflation, as measured by the Consumer Price Index, fell in April to a year over year rate of 8.3%. That was down from an 8.5% rate in March, raising hopes that the economy had seen the inflation peak. But economists had been projecting a drop to 8.0% in April.. Which left financial markets considering the possibility that while inflation was falling, the pace of the decline would be disappointingly slow. Also worrisome was an unexpected gain in core inflation, which strips out volatile food and energy prices. Core CPI inflation was up 0.6% in April from March after a 0.3% month to month increase in March.
May 9, 2022 | Daily JAM, Morning Briefing |
Normally, a report of 8% year over year inflation wouldn’t be considered good news for the financial markets. But in case you haven’t noticed, these aren’t normal times. Which means a report of 8% year over year inflation in April in the Consumer Price Index due Wednesday is likely to be seen as good news by financial markets that have been pounded in 2022. A report of 8% inflation isn’t guaranteed by any means but it is “likely” according to economists at Bloomberg. That would make March’s 8.5% year over year CPI inflation the high for the current cycle
May 6, 2022 | Daily JAM, Morning Briefing |
The U.S. economy aded 428,000 jobs in April, the Labor Department reported today, May 6. That matched the jobs gains in M arch and was above e the 380,000 jobs expected by economists surveyed by Bloomberg. The official unemployment rate remained at 3.6%. Economists had expected a drop to 3.4%. So why did the stock market decide this was bad news?
May 4, 2022 | Daily JAM, Morning Briefing |
Today the Federal Reserve’s Open Market Committee announced that the central bank would raise its benchmark interest rate by 50 basis points. Stocks rallied strongly after Federal Reserve chair seemed to take off the table the 75 basis point increase in June and July that financial markets were convinced was in the cards.
