Morning Briefing
April 25, 2024 | Daily JAM, Mid Term, Morning Briefing |
How views on interest rates have changed since the start of 2024. Then, in January, the consensus view called for as many as six interest rate cuts from the Federal Reserve in 2024 for a total of 150 basis points in cuts to the Fed’s benchmark interest rate. Today, after a dip in first quarter GDP below a 2% annual rate and an uptick in core PCE inflation, the markets are pricing in just 33 basis points in rate cuts and quite possibly no cut until the Fed’s December 18 meeting.
April 25, 2024 | Daily JAM, Morning Briefing, Short Term |
U.S. economic growth slowed in the first three months of the year, the Bureau of Economic Analysis reported today. Gross Domestic Product (GSP) grew at an annualized rate of just 1.6%. That’s a big retreat from the 3.4% annual rate in the fourth quarter of 2023. Just as important as the drop in the growth rate itself is the reason for the decline.
April 24, 2024 | Daily JAM, Morning Briefing |
One down and billions more to go.
Yesterday’s big auction of 2-Year Treasury notes saw rock solid demand that let the day pass without a big, destabilizing drop in prices and a jump in yields. Today, in Round #2, the Treasury is set to auction off $70 billion in five-year notes. So far, at least, the sale looks like it will see solid demand again. Though, can I say, You ain’t seen nothing yet? Treasury is likely to increase its monthly issuance of the seven main notes and bonds (not including TIPS) by nearly 60% in 2024 to $354 billion in August 2024, from the $222 billon it issued in July 2023, according to “Neutral Issuance” scenario in the presentation by the Treasury Borrowing Advisory Committee.
April 22, 2024 | Daily JAM, GLD, GOLD, Jubak Picks, Morning Briefing, NEM, Short Term |
Gold futures for June delivery closed down 2.92% on the Comex today. The metal closed at $2343.40 an ounce. The drop came on a lessening of fears that the exchange of attacks between Israel and Iran would quickly lead to a wider Middle East war. And on growing sentiment that the Federal Reserve isn’t likely to cut interest rates soon. The drop in the gold contract for June delivery was the largest since February 3, 2023 when it fell 2.8%.
April 21, 2024 | Daily JAM, Morning Briefing, Short Term |
I’m sure you’ve noticed. The technology sector, which led the stock market rally in 2023 and in the early days of 2024, is in a slump. The Technology Select Sector SPDR ETF (XLK) tumbled 6.27% last week and is down 7.16% in the last month. For 2024 to date, as of the close on April 19, the sector is at break even with gain of 0.19%. Quite a turnabout for a sector that is still up 30% for the last 12 months. This week brings a raft of tech earnings that could turn the sector’s trend around. Or not.
April 16, 2024 | Daily JAM, Mid Term, Morning Briefing |
China reported faster-than-expected economic growth in the first quarter–but… Although Gross Domestic Product climbed 5.3% in the quarter–a faster rate of growth than in the first quarter of 2023 and above economist estimates, most of the good news came from the first two months of the quarter. In March growth in retail sales slumped and industrial output fell short of forecasts. That doesn’t bode well for the rest of 2024.
April 15, 2024 | AAPL, Daily JAM, Morning Briefing, Top 50 Stocks |
Apple has lost its spot as the world’s biggest mobile phone seller, IDC reported today, April 15. A steep drop in sales in China for Apple let South Korean rival Samsung retake the lead in global market share. Samsung had been the biggest seller of mobile phones for 12 years until the end of 2023, when sales of Apple’s iPhone models overtook it. Global smartphone shipments increased by 8% to 289.4m units during January-March, according to IDC. Samsung has a 20.8% market share. That beat Apple’s 17.3% share
April 12, 2024 | Daily JAM, Morning Briefing, Short Term |
West Texas Intermediate rose to its October 2023 highs, before pulling back, on fears that an Iranian retaliation for an Israeli attack on an Iranian consulate would lead to a wider war in the Middle East. International benchmark Brent crude surged as much as 2.7% to top $92 a barrel before retreating to close at $90.26 a barrel, up 0.58% on the day. West Texas Intermediate, the U.S. benchmark, is now up 19% in 2024. Bloomberg reports that Western intelligence assessments are looking for an Iranian attack in the next 48 hours. No one wanted to hold U.S. equities ahead of the weekend.
April 11, 2024 | Daily JAM, Mid Term, Morning Briefing |
So why was this so important today? Important enough to send the yield on the 10-year Treasury up another 3 basis points to 4.58%.The Producer Price Index for final demand rose 0.2 percent in March, seasonally adjusted, the Bureau of Labor Statistics reported today. Final demand prices moved up 0.6% in February and 0.4% in January. On an unadjusted basis, the index for final demand increased 2.1% for the 12 months ended in March, the largest advance since rising 2.3% for the 12 months ended April 2023..The March increase in the index for final demand is attributable to a 0.3% rise in prices for final demand services. In contrast, the index for final demand goods edged down 0.1%. Look at the last set of numbers.
April 10, 2024 | Daily JAM, Morning Briefing |
If, as the too hot April 10 CPI inflation argues, we’re not going to see a June 12 interest rate cut… And if investors are looking at two cuts in 2024 (at the most) instead of three… And if there’s a possibility that we won’t see the first rate cut until the November 7 Fed meeting… Then what will keep this rally from turning into a correction? Earnings look like they will have to do the job .Problem is that this quarter’s earnings look likely to disappoint. There are quarters with better earning growth forecast ahead. Will investors wait for them?
April 10, 2024 | Daily JAM, Morning Briefing, Short Term |
In March the Consumer Price Index inflation rate rose more than expected by economists for a third straight month, the Bureau of Labor Statistics reported this morning. That looks to the market today, and to me, like it takes an initial interest rate cut off the table for the Fed’s June 12 meeting. The all-items inflation rate rose by 0.4% in March from February. The 12-month all-items inflation rate rose at a 3.5% rate in March. The core CPI, the inflation rate more important to the Federal Reserve, rose 0.4% month-over-month in March. And at a 3.8% annual rate.
April 9, 2024 | AMD, Daily JAM, GOOG, Morning Briefing, NVDA |
Nvidia (NVDA) doesn’t report earnings until May 22. But the report is already shaping up as critical for the stock. Analysts see the company reporting earnings of $5.13 a share for the quarter, up from just 88 cents a share in the same quarter of 2023.
But the short-term earnings numbers aren’t what’s most importance right now. Nvidia has roughly 90% share in the market for AI-accelator chips. That’s put a big target on the company’s back. No one expects Nvidia is maintain that 90% share–which is okay since the market is growing so fast. Last month, analysts at Bank of America said the market could reach anywhere between $250 billion and $500 billion over the next three to five years. That was a big jump from their earlier estimate of less than $250 billion. The question is How fast all the efforts to compete with Nvidia will eat into that market share.
