Stock bulls have been happy to see better than expected earnings this week and data that indicates the economy may be pulling back enough to make a dent in inflation. Amazon after the close yesterday announced better-than-expected results across the board, but later disappointed in the earnings call after telling investors that AWS growth was starting to slow. Amazon also reported that they were seeing “cautious” consumer spending, with a shift to lower-priced items. Apple will round-out the "mega cap" tech earnings next Thursday, May 4. Chevron, ColgatePalmolive, and Exxon Mobil are the key earnings releases today.

Investors are also anxious to see the PCE Prices Index which is expected to show headline inflation slowed to an annual rate of +4.2% in March, versus +5% previously.

The "core" rate, which strips out food and energy and is one of the Fed's preferred inflation gauges, is pegged at +4.5%, down slightly from last month's read of +4.6%.

Investors are worried that a read much higher than expected could lessen the odds of the Fed pausing its rate hiking campaign in June.

Bulls yesterday were boosted by a slowdown in Q1 GDP, which showed the US economy grew at a +1.1% annual rate in the first quarter, down from 2.6% in Q4 2022. Again, bulls are thinking "bad news" further dents the Fed's hawkishness and brings about rate-cuts sooner than later.

However, bears are quick to point out that, excluding the change in inventory investment, GDP grew at an annual rate of +2.9%. While that is not "strong" growth, it's faster than the previous quarter and they can argue the economy is not slowing down and that the Fed might need to hike rates even further. Bears believe this will cause some concern among Fed officials that want to see a slowdown in consumer spending in order to help cool inflation.

The Federal Reserve's next policy meeting is next Tuesday-Wednesday (May 2-3). Most on Wall Street expect an interest rate hike of 25 basis-points but the outlook for June is less clear.

Traders are giving odds of around 66% that the Fed pauses in June and nearly 25% odds that it will hike by +25 basis-points. The other top economic highlight next week is the April Employment Report due out on Friday.

Other key data next week includes Construction Spending and the ISM Manufacturing Index on Monday; Factory Orders and the Job Openings and Labor Turnover Survey on Tuesday; ADP's Employment Change and ISM Services on Wednesday; Productivity & Costs on Thursday; and Consumer Credit on Friday.

Next week is busy on the earnings front as well with key results due from Diamondback Energy, KBR, and Stryker on Monday; Advanced Micro Devices, Clorox, Ford, Marathon Petroleum, Molson Coors, Pfizer, Prudential Financial, Starbucks, T. Rowe Price, and Uber on Tuesday; Allstate, Corteva, CVS, Etsy, Kraft Heinz, Marathon Oil, Mosaic, Phillips 66, Qualcomm, and Yum Brands on Wednesday; AnheuserBusch InBev, ConocoPhillips, Coinbase, DoorDash, DraftKings, Hyatt Hotels, Kellogg's, Live Nation, Moderna, Rocket Companies, Royal Caribbean, Shell, Shopify, and Zoetis on Thursday; and Berkshire Hathaway, Cigna, Dominion Energy, Johnson Controls, Novo Nordisk, and Warner Bros. Discovery on Friday.

Lots of big headlines next week with Fed in play, along with the monthly Employment Report, and a big wave of Q1 earnings.

Shades of $100K - A six-figure salary goes the furthest in Memphis, Tennessee. After accounting for taxes, someone earning $100K is left with $86K in buying power relative to the average cost of living in the US. El Paso, Texas and Oklahoma City, Oklahoma round out the top 3. Notably, Texas accounts for 7 of the top 10 cities where $100K goes the furthest. In New York City, on the other hand, a $100K earner gains the equivalent of just $36K in buying power. Source CB Insights

American Businesses Face Increasingly Risky Environment in China: Chinese authorities questioned Shanghai workers at consulting firm Bain & Co., underlining the mounting uncertainties facing foreign executives and businesses operating in China after a series of detentions and investigations. The Boston-based company said Wednesday U.S. time that it was cooperating with authorities and declined to comment further. The episode underscores the increasingly risky environment for businesses operating in the world’s second-largest economy amid worsening ties between Beijing and Washington. It also comes as China brings a potentially wider array of business activities under an expanded anti-espionage law that was updated this week. The law placed tighter state control over a wider swath of data and digital activities. Foreign executives said they worry the new law, and its extended definition of what could constitute espionage, could effectively criminalize an array of normal business activities such as gathering intelligence on local markets and business partners. Source WSJ

Americans' Retirement Confidence Plunges: The certainty Americans feel in having enough money for a comfortable retirement has taken the biggest dive in 15 years, according to a new survey. Just 64% of workers are very or somewhat confident they’ll have enough money to live comfortably in retirement, down markedly from 73% in 2022, according to a survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research. Less than three-quarters (73%) of retirees were confident, down from 77% last year. “The most significant finding is the drop in retirement confidence that hasn’t happened since 2007 to 2008 and 2008 to 2009 when the economy was in a recession,” Craig Copeland, director of Wealth Benefits Research at EBRI. “Americans are having the same reaction as what they did during a recession,” he added. Inflation in the past year has clearly affected Americans’ retirement swagger. About 1 in 3 workers (29%) and 42% of retirees said this is the culprit for their lack of confidence in their ability to have a comfortable retirement, according to the EBRI research. Hand-in-hand with that angst: 4 in 10 workers are not confident that down the road their savings will be able to keep up with inflation when they’re retired. Meanwhile, a hefty three-quarters of workers are concerned their salary will not be able to keep up with inflation, according to the EBRI report Source YahooFinance

Tyson Lays off 10% of Corporate Employees: Tyson Foods will eliminate 10% of its corporate roles and 15% of its senior leadership positions, according to a letter to employees Wednesday from CEO Donnie King that was shared with Food Dive. Tyson did not specify how many positions the layoffs will impact. The affected employees will be notified this week, the letter said. The meat company also is reorganizing its workforce. Automation operations will move to Tyson’s engineering team and sales activities will be placed under its “businesses and growth” team. Tyson said the decision is the latest step by the meat processing giant to boost efficiency. It has struggled with its production in recent years amid fluctuating supply and demand. In its most recent earnings announced in February, Tyson posted a -70% year-over-year decline in earnings per share as beef and pork sales fell. Tyson employed approximately 124,000 workers in the U.S., with roughly 6,000 of them corporate employees, according to an SEC filing from October Source Fooddrive

DraftKings Plans Streaming Video Service With Sports Podcasts: DraftKings Inc. is planning to launch its own streaming video service, the latest evidence that sports betting and media are converging. The service is expected to be free and supported by advertising, people with knowledge of the matter said. The shows will be videos of podcasts the company sponsors and are expected to debut in coming weeks, according to the people, who asked not to be identified. Boston-based DraftKings is in fierce competition with FanDuel, a division of Flutter Entertainment Plc, to attract bettors in the more than 30 US states that have legalized online sports gambling. With its own streaming service, DraftKings could reach a new audience or attract new brands that are more comfortable buying online video ads. FanDuel has also been expanding into video Source Bloomberg

Airlines Braced for Busy Summer Travel Season: Airlines say that travel demand is picking up heading into the critical summer travel season, fueling their expectations for profits after what was in some cases a more lackluster winter. American, Southwest, and other airlines are projecting profits this spring and strong demand this summer. Carriers say demand for flights remains resilient despite recession fears, layoffs and lingering inflation, and airlines stand to benefit from lower fuel costs in the second quarter. Carriers remain hemmed in by shortages of pilots and planes. The constraints have been a double-edged sword, limiting growth but helping to bolster fares against the backdrop of strong demand. Travelers have faced higher levels of delays and cancellations the last two summers, as airlines struggled to spool their operations up quickly enough to match resurgent travel appetite. The Federal Aviation Administration has already warned of an air-traffic controller shortage that could cause trouble in the New York area. Source WSJ

Charting Big Tech's Cloud Growth Slowdown: Amazon shares spiked after hours following better-than-expected first-quarter sales for the company’s Amazon Web Services cloud unit and its online store. Sales were flat for AWS quarter-over-quarter, but they grew +16% year-over-year. However, that marks a big slowdown from Q1 2022 when AWS sales were up +37%. Microsoft recorded +27% growth at its Azure cloud division versus +46% growth in the same quarter last year, while Google Cloud's growth slowed to +28% compared to +44% last year. Deteriorating economic conditions, rising costs, and concerns around energy consumption prompted suggestions that the cloud market was entering a period of sluggish growth earlier this year. Compared to pandemic-era highs, all three companies are experiencing a slowdown to some extent, but they are still clocking double-digit gains. AWS and Google have both outlined plans on how they plan to capitalize on generative AI to support core product offerings, and cloud services are most certainly in the crosshairs. Microsoft attributed part of its Q1 growth to the ongoing hype surrounding the integration of generative AI products within its core service offerings. Source TechCentral

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.