Short Term
June 22, 2023 | Daily JAM, GNRC, Short Term, Volatility |
I’ve got major questions about Generac’s (GNRC) long-term growth. The company, the dominant player in the market for residential backup electric generators (with about 4 times the market share–or about 75% of the market–of its nearest competitor) faces big questions, in my opinion, about its long-term strategy and its ability to grab significant revenue in the clean energy market where it faces competition from larger companies, more established in the market, such as SolarEdge (SEDG) and Enphase (ENPH). But in the short run? Say, the next two or maybe three (at the outside) months, I say this is a stock that will ride summer storms and heat waves to gains. Especially, if as I project, the company delivers lackluster quarterly earnings when it reports on August 2, but gives very positive guidance for the next quarter or two
June 20, 2023 | Daily JAM, Morning Briefing, Short Term |
I expect the end of the second quarter to be volatile as two contrary trends battle it out to set market direction.
May 26, 2023 | Daily JAM, Short Term |
If negotiators reach a deal on resolving the debt ceiling crisis that only begins a process fraught with nailing-biting delays built into the legislative process. And opposition to the deal from progressive Democrats and ultra-conservative Republicans. Today, the stock market finished strongly higher on hopes that a deal that avoids a U.S. debt default is within reach. And on continued hyper-enthusiasm about anything vaguely touched by artificial intelligence. Next week, isn’t likely to show a smooth continuation of the upward trend. I’d expect headlines about disappointment with the deal and on the possibility that there aren’t enough centrist Democratic and Republican votes to pass the deal. I expect the deal to pass, eventually, but that doesn’t mean the market won’t chew its fingernails with worry on any particular day.
May 24, 2023 | Daily JAM, Short Term |
Three numbers caught my eye today as indications of where the financial markets are headed in the short term. I’m looking at the moves in the Russell 2000 small-cap index. In the CBOE S&P 500 Volatility Index ( VIX). And in the odds on interest rate increases from the Federal Reserve on the CME FedWatch tool.
May 22, 2023 | Daily JAM, Morning Briefing, Short Term |
Last week Federal Reserve chair Jerome Powell said that the Fed could hold off on another interest rate increase at its June 14 meeting. That comment wz one reason that the CME FedWath tool showed the odds of no increase at the meeting jumping to 82.6% on Friday, May 19. But today, Federal Reserve Bank of St. Louis President James Bullard and Neel Kashkari, head of the Minneapolis Fed said, essentially, that “could” doesn’t mean will. Bullard backed two more 2023 interest-rate increases and Kashkari said if the central bank pauses next month it should signal tightening isn’t over.
May 20, 2023 | Daily JAM, Short Term |
I expect more posturing, more attempts to extract leverage, and more blaming–but, in my opinion, no debt ceiling deal this week. The big question: “When does the stock market start to take the possibility seriously–unthinkable as it might be–that the United States could default on its debt.
May 16, 2023 | Daily JAM, Mid Term, Morning Briefing, Short Term |
The typical pattern is for households to run up credit card balances for holiday shopping and then for consumers to pay down credit card balances in the first quarter. That’s what happens in a healthy economy where consumers are living within their means and aren’t seeing family budgets stretched by high inflation. But that isn’t what happened in the first quarter of 2023. For the first time in 20 years, consumers added to their debt loads in the first quarter rather than paying down some of their fourth-quarter spending.
May 11, 2023 | Daily JAM, Short Term |
Shares of California regional bank PacWest (PACW) closed down another 22.7% today, May 11 after the bank disclosed it lost 9.5% of deposits last week. That took down many regional banking peers. For example, Zions Bancorporation (ZION) finished the day down 4.51% and Comerica (CMA) was lower by 6.76%. The SDPR S&P Regional Banking ETF (KRE) was down 2.48%.
But not all regional banks fell.
May 9, 2023 | Daily JAM, Morning Briefing, Short Term |
Tomorrow, May 10, brings the key CPI inflation report for April. Economists surveyed by Bloomberg are projecting that headline inflation will rise at a 5% year-over-year rate. That would match the 5% headline rate for the Consumer Price Index in March. The headline rate would remain so elevated because of a rise in oil prices in April after OPEC+ announced a drop in crude production. Month-to-month headline CPI inflation is expected to have climbed by 0.4% in April after a 0.1% month-to-month increase in March. The Federal Reserve watches the core rate, which strips out the costs of food and energy. Here too economists are not expecting a significant drop in inflation. Core inflation is projected to have climbed at a 5.5% rate against the 54.6% rate projected in March.
May 4, 2023 | Daily JAM, Short Term |
For a few hours on Wednesday, stocks behaved as if the regional banking crisis was over and as if the Federal Reserve was about to not only end its interest rate increases but also begin cutting interest rates. Then Fed chair Jerome Powell reminded investors and traders that a pause in interest rate increases didn’t mean the Fed was about to pivot immediately to cutting interest rates. And investors and traders decided that the regional bank crisis might not be over if PacWest Bancorp (PACW) was exploring “alternatives” and if Western Alliance Bancorporation (WAL) might be looking for a deal. (The bank has denied that speculation.) Today, May 4, the fear is back.
May 4, 2023 | Daily JAM, Morning Briefing, Short Term |
Initial claims for unemployment rose by the most in six weeks while continuing claims fell in the week ended April 29, the Labor Department reported this morning. Initial unemployment claims rose by 13,000 to 242,000. Economists surveyed by Bloomberg were looking for 240,000 initial claims. Continuing claims, which include people who have received unemployment benefits for a week or more and are a good indicator of how hard it is for people to find work after losing their jobs, fell by 38,000 to 1.81 million in the week ended April 22. That marked the biggest drop since July. If you think that a rise in unemployment and a weakening of the labor market is a good thing, as the Federal Reserve does, because it sets the stage for a decline in inflation, then today’s data had its negative aspects too. A separate report out today showed U.S. worker productivity declined in the first quarter by more than forecast and labor costs accelerated. That’s a strong argument for higher inflation.
May 3, 2023 | Daily JAM, Short Term |
Immediately after the Federal Reserve’s decision to raise interest rates another 25 basis points today, stocks moved up on a reading of the Fed’s 2 p.m. statement released with the rate news that saw the Fed as saying it would begin to cut interest rates soon. At 2:26 p.m. New York time the Standard & Poor’s 500 was up 0.58%. In Wednesday’s statement, the Fed said, “In determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” In March, the central bank had said it “anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.” But stocks peaked for the day shortly after Fed chair Jerome Powell began his press conference at 2:30 p.m.
