Stock traders are in the process of digesting their first full week of Q1 corporate earnings. Wall Street insiders expect S&P 500 companies will report a Q1 earnings decline of more than -6%. However, many bulls think results will wind up better than feared due to widespread cost cutting measures, improved supply chains, a loosening labor market, China's reopening, and a weaker US dollar.

Overnight, China reported that its GDP grew +4.5% year-on-year in the first quarter, exceeding analysts' expectations, as strong growth in exports and infrastructure investment as well as a rebound in property prices drove a recovery in the world’s second-largest economy.

Bulls are also feeling more optimistic as some better-than-expected bank results back up beliefs that turmoil in the sector is fairly limited and remains contained. Bulls additionally expect an end to Fed rate hikes to provide an upward tailwind for stocks, with many thinking a 25 basis-point hike at the upcoming May policy meeting to be the last in this hiking cycle.

There is also still a strong belief that the Fed will be back to cutting rates before the end of the year, which bulls expect will boost stocks even further. Bears continue to warn that markets have been too quick to dismiss the risk of recession and the possibility that the Federal Reserve won't be rushing in to shore up the economy this time with inflation still more than double its target rate. They also warn that better-than-expected bank results could be a double edged sword. Meaning that if banks aren't as worried about liquidity, they may not tighten lending standards as much as some - including the Fed - are anticipating.

Keep in mind, many Fed officials have said that tighter financial conditions brought on by the bank turmoil could help cool the economy in a way that central bank policy has failed to do, in turn reducing the need for Fed intervention to ease inflation.

It's worth mentioning that Empire State Manufacturing for April showed a very strong rebound to +10.8 from nearly -25 in March, suggesting that the factory sector is revving up again after declining for 5 straight months.

Many manufacturing insiders are tying the surge to the ongoing reopening of China's economy. The only economic data on the calendar today is Housing Starts and Permits.

On the earnings front, investors are anxious to see results from Bank of America, Goldman Sachs, and Bank of New York Mellon before markets open today. Netflix, which reports after the close, is also a top highlight with some traders considering it a sort of preview of what the wider tech sector might deliver this earnings season. Johnson & Johnson, Lockheed Martin, and United Airlines also report today.

Apple Offers Savings Account That Earns +4.15% - Apple Card credit-card holders can now open a savings account with a +4.15% annual percentage yield. The new accounts, created in partnership with Goldman Sachs, are available in conjunction with the "Apple Card". The savings accounts require no minimum deposit and are protected by the Federal Deposit Insurance Corp. There is a maximum balance of $250,000.

Mcdonald's Improving its Burger: McDonald's is improving its hamburger, cheeseburger, double cheeseburger, McDouble burger and Big Mac, the company said Monday. Improvements include softer sandwich buns, which are toasted golden brown, "perfectly melted cheese," and a "juicier, caramelized flavor from adding white onions to the patties while they’re still on the grill," the company said. Big Macs will also be served with more sauce. Some West Coast cities will be getting the new burgers this week and as the changes are rolled out across the U.S., cities will see new commercials and other promos that bring back the Hamburgaler. Source USA Today

New Drake x The Weeknd Song Blows Up - but It's an AI Fake! A song featuring the voices of Drake and The Weeknd called “Heart On My Sleeve” has amassed over 10 million views on TikTok. But the two renowned musicians had nothing to do with the song — an artist going by the name “Ghostwriter” generated the song using AI technology. Copyright law is not technologically advanced enough to have specific guidelines regarding generative AI. But in the legal code’s existing state, transformative parody is permissible. However, these laws are very much open to interpretation, since the idea of what makes work “transformative” is subjective, and there is little case law to set precedent. The mystery account behind the AI song left no clues about how the imitative track was brought into being, or what information was fed into programs to create it. But in two minutes and 16 seconds, “Heart on My Sleeve” consists of two distinct verses and a chorus sung by voices distinctly resembling the two stars. The Ghostwriter account vowed: “This is just the beginning.” There are a lot of unknowns still, including whether the song is really AI-generated. It could be exactly what its apparent creator says it is: The first true AI-generated hit. It could also be a real song by the two superstars, released as “AI” as a marketing stunt. Source TechCrunch

Travel Demand is High Despite Being "Off the Charts" Expensive": Some aspects of travel are pricier than ever amid pent-up demand. “The big cities and the popular [international] destinations — Paris, Rome, Madrid, Lisbon, Milan — those are off the charts,” Sofia Markovich, a travel advisor and founder of Sofia’s Travel, said of trip cost. A round-trip airline ticket to Europe is now about $1,000 — +20% more expensive relative to this time in 2019 and +32% more costly than last year. A round-trip flight to Asia costs $1,600 — about +60% pricier than a 2019 ticket. These are record high prices, according to Hayley Berg, lead economist at Hopper, a travel app. It’s an especially notable shift considering that prices had generally been falling for international travel before the pandemic. This summer is expected to be the busiest on record for international travel. Source CNBC

Lithium in China May Be Bottoming as Low Margins Hit Producers: The sharp decline in China’s lithium market is showing signs of bottoming out. Smaller producers are looking to stem losses after the price of the key battery material collapsed by over two-thirds in just five months. Thin stockpiles and improved prospects for battery storage and electric vehicle sales suggest that demand may be about to recover. For firms without their own mines or long-term supply deals, prices have already fallen to the cost of production, according to Huaan Securities Co. The declines came as companies across the battery supply chain avoided high prices by drawing on inventory rather than buying afresh, while the end to Chinese subsidies on EVs and a price war among automakers curtailed demand. Although the slump has offered some relief to downstream customers, the mineral is still over four times more expensive than the low hit in 2020. Source Bloomberg

Tensions Rise as West Coast Labor Contract Talks Stall: It has been 10 months since more than 22,000 International Longshore and Warehouse Union dockworkers have been without a contract and negotiations have pretty much stalled. The main sticking point is ports continue to push for more automation and the union is concerned automation will eliminate jobs. On Feb. 23, 2023, the ILWU and PMA announced in a joint statement that, "We continue to negotiate and remain hopeful of reaching a deal soon. The parties have agreed not to discuss negotiations in the media as collective bargaining continues." Since that statement, talks have stalled, tensions are rising and slowdowns have occurred. Some cargo has been diverted to the East and Gulf Coast ports as shippers worry about another shutdown like the one that took place on Thursday evening, April 6, and Friday morning, April 7, in the ports of Los Angeles and Long Beach. There has been talk in the industry since the beginning of 2023 that it is time for the White House to intervene before things get worse. On March 24, a coalition of 238 national, state and local trade associations, including the American Trucking Associations (ATA), wrote to President Joe Biden urging the administration to take a more active role in the West Coast port labor negotiations. Source DTN

Only 10 Electric Vehicles Now Qualify for Full $7,500 US Tax Credit: Only 10 electric and plug-in hybrid vehicles will qualify for $7,500 federal tax credits in the US after stricter battery-sourcing rules take effect and render most plug-in models ineligible. General Motors Co., Tesla Inc. and Ford Motor Co. all have at least one EV that will qualify, while Ford and Stellantis NV each have one eligible plug-in hybrid model. No other automakers will have a vehicle for sale that fully meets the criteria that were finalized last month and will kick in today, according to the Treasury Department. The list released Monday makes official what many manufacturers feared: that consumers will miss out on federal incentives for their EVs because not enough of their battery components or raw materials are sourced from North America or countries with US free-trade agreements. Volkswagen AG, Hyundai Motor Co., Nissan Motor Co., BMW AG, Volvo Car AB and Rivian Automotive Inc. each have had vehicles eligible for at least partial credits early this year that are no longer listed as eligible on a US Energy Department website. And several EVs — including Ford’s Mustang Mach-E sport utility vehicle and the Standard Range version of Tesla’s Model 3 sedan — will see their credits shrink to $3,750 from $7,500. Source Bloomberg

Convenience Store Industry Scrambles as Inflation Catches Up: Shopper have cut back on purchases at convenience stores. By the end of 2022, consumers purchased -10.3% fewer items each time they visited a convenience store, while dollar sales declined a marginal -0.3%, indicating that the same budget now buys far fewer products. That’s a potential catastrophe for an industry built on small impulse purchases made across thousands of stores: a candy bar here, a bag of chips there, a soda just because. To make matters worse, the average price of convenience store staples like candy and salty snacks has risen +16.7% and +14.4% this year, respectively, according to Circana data. That’s more than double the current rate of 6% inflation. Source Fortune

Most Americans Are Not Completely Sold on Electric Vehicles: While ownership of electric vehicles is on the rise in the U.S., the percentage of Americans who say they own one remains limited at 4%, with 12% saying they are seriously considering purchasing one. Another 43% of U.S. adults say they might consider buying an electric vehicle in the future, while 41% unequivocally say they would not. Though they are often promoted as a key way to reduce carbon dioxide emissions and address the effects of climate change, the public remains largely unconvinced that the use of EVs accomplishes this aim. While about four in 10 U.S. adults think using EVs helps address climate change “a great deal” (12%) or “a fair amount” (27%), roughly six in 10 believe it helps “only a little” (35%) or “not at all” (26%). Previous Gallup polling has found that Americans aren’t always the best judge of their future behavior when it comes to technology. For example, as recently as 2000, a quarter of Americans thought they’d never own a smartphone. Source Gallup

We have alternatives that are low in correlation to traditional stock & bond portfolios. They are liquid and transparent. Minimums and fee structures vary and some are performance based only. Returns we can share are NET of Fees.

If you want to learn more, just let me know what works to learn more about your needs.

Schedule A Call Now

Futures trading is speculative and involves the potential loss of investment. Past results are not necessarily indicative of future results. Futures trading is not suitable for all investors.

Nell Sloane, Capital Trading Group, LLLP is not affiliated with nor do they endorse, sponsor, or recommend any product or service advertised herein, unless otherwise specifically noted.

CTG Daily Commentary is published by Capital Trading Group, LLLP and Nell Sloane is the editor of this publication. The information contained herein was taken from financial information sources deemed to be reliable and accurate at the time it was published, but changes in the marketplace may cause this information to become out dated and obsolete.

It should be noted that Capital Trading Group, LLLP nor Nell Sloane has verified the completeness of the information contained herein. Statements of opinion and recommendations, will be introduced as such, and generally reflect the judgment and opinions of Nell Sloane, these opinions may change at any time without written notice, and Capital Trading Group, LLLP assumes no duty or responsibility to update you regarding any changes. Market opinions contained herein are intended as general observations and are not intended as specific investment advice.

Any references to products offered by Capital Trading Group, LLLP are not a solicitation for any investment. Readers are urged to contact your account representative for more information about the unique risks associated with futures trading and we encourage you to review all disclosures before making any decision to invest. This electronic newsletter does not constitute an offer of sales of any securities. Nell Sloane, Capital Trading Group, LLP and their officers, directors, and/or employees may or may not have investments in markets or programs mentioned herein.