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Investors have a short week ahead thanks to the Good Friday holiday that will keep US stock, bond, and commodities markets closed on Friday.
Interestingly, one of the more closely followed US economic reports, the PCE Prices Index, will be released on Friday (Federal government agencies are not closed on Good Friday). Economists expect a slight uptick in year-over-year headline PCE Prices and no change to the “core” (strips out food and energy) rate.
This week’s release covers February, which other inflation gauges have already shown was running ahead of expectations. Meaning the report is basically delivering “old” news so it won’t likely impact Wall Street sentiment.
Investors are also unlikely to get nervous ahead of the report as the Federal Reserve in its latest communications has not raised alarms about the last two months of data showing the inflation cool down is not happening as fast as expected.
What’s more important now is March data and Wall Street won’t get another dose of that until next week. That could actually be a problem for the bulls this week as they look for the next catalyst. Many Wall Street insiders remain concerned about sky high valuations, particularly in the tech sector, where some believe an “AI bubble” is in the works. Bears are warning that investors are overlooking the increasing regulatory scrutiny of big tech, both in the US and Europe, which they warn could have big implications for some of the largest companies in the world.
Apple last week was sued by the DOJ over antitrust claims, which follows an antitrust case brought against Google that goes to trial later this year. Bulls argue that these cases typically take years and that it is way too early to know how or even if they will have any material impact on the companies currently under fire.
Bulls believe stocks have plenty room to keep climbing with most pointing to the key driver of stock prices - earnings. As bulls see it, so long as the US labor market and consumer spending remain healthy, there is nothing standing in the way of higher profits ahead.
Additionally, bulls point out that corporate profits stand to benefit further when the Fed starts cutting rates, which most on Wall Street still expect will begin in June. And of course tech bulls continue talking up the expected productivity gains that AI will deliver, which would be an additional profit booster.
The earnings calendar this week remains very light with just GameStop and McCormick on Tuesday, and Carnival and Cintas on Wednesday.
There are no earnings due out today.
Today’s economic data highlight is New Home Sales.
Is Flying Getting More Dangerous? It has been 15 years since the last fatal crash of a U.S. airliner, but you would never know that by reading about a torrent of flight problems in the last three months.There was a time when things like cracked windshields and minor engine problems didn’t turn up very often in the news. That changed in January, when a panel plugging the space reserved for an unused emergency door blew off an Alaska Airlines jetliner 16,000 feet above Oregon. Pilots landed the Boeing 737 Max safely, but in the United States, media coverage of the flight quickly overshadowed a deadly runway crash in Tokyo three days earlier. And concern about air safety — especially with Boeing planes — has not let up.Is flying getting more dangerous? By the simplest measurement, the answer is no. The last deadly crash involving a U.S. airliner occurred in February 2009, an unprecedented streak of safety. There were +9.6 million flights last year! The National Safety Council estimates that Americans have a 1-in-93 chance of dying in a motor-vehicle crash, while deaths on airplanes are too rare to calculate the odds. Figures from the U.S. Department of Transportation tell a similar story. “This is the safest form of transportation ever created, whereas every day on the nation’s roads about a 737 full of people dies,” Richard Aboulafia, a longtime aerospace analyst and consultant, said. The safety council estimates more +44,000 people died in U.S. vehicle crashes in 2023. Source APS News
Why the Price of Gasoline Still Has Room to Move Higher: As of March 22, the national average gas price stood at $3.53 per gallon, +$0.26 higher than a month ago, according to AAA data. Gasoline prices have been steadily climbing higher, increasing by nearly +$0.10 in the last week as higher oil prices and falling inventories put upward pressure on fuel costs. Drivers could see sharper increases in the weeks ahead as this is the time of year we normally see pump prices start to rise, said Andrew Gross, a AAA spokesperson. He added that while prices have been rather pokey so far, they should begin to accelerate and move higher very soon. GasBuddy head of petroleum analysis Patrick De Haan told Yahoo Finance Live in late February he sees gas prices rising another +$0.20 to +$0.50 per gallon by Memorial Day as seasonal ups and downs come into view. The national average is now more expensive than a year ago for the first time since December, putting hopes of a $3 average well out of reach. Gas prices had been declining between September 2023 and January of this year to a one-year low of $3.07 before snapping that streak. The last time the national average gas price fell below $3 was in May 2021. Source YahooFinance
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Magnificent Seven Now More Like the Blazing Two and Tepid Five: For more than a decade, the stock market has been supercharged by a handful of technology behemoths that have offered the promise of hypergrowth. You know them: household names such as Google parent Alphabet, Amazon.com, Apple, Facebook parent Meta, Microsoft and Tesla. Grouped under various acronyms that played off their corporate monikers—FANG, FAANG, MAMAA—these companies became a staple of just about everyone’s portfolio. Then last year, a newcomer joined the crowd: Nvidia Corp., the leading chipmaker for artificial intelligence technology. With its stock up more than sixfold since the start of 2023, portfolio advisers soon began talking about an investment strategy built around a new grouping, the “Magnificent Seven.” But this year, the Magnificent Seven has looked more like the Magnificent Two, the Middling Two and the Meh Three. As investors have come to focus on the importance of AI, Nvidia and Meta have surged ahead, Microsoft and Amazon have done reasonably well, and the other three have trailed the S&P 500 index. “No matter how good it is, if it doesn’t have that AI component, you’re not going to drive investors’ attention right now,” says Kim Forrest, chief investment officer at Bokeh Capital Partners. Source Bloomberg |
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Surgeons Transplant Pig Kidney Into Living Human: A surgical team said last week it has conducted the world's first genetically edited pig kidney transplant into a living human. During a four-hour procedure earlier this month, surgeons at Massachusetts General Hospital connected the pig kidney's blood vessels and ureter -- the duct that carries urine from the kidney to the bladder -- with those of 62-year-old Richard Slayman, a man living with end-stage kidney disease. He continues to recover well, the hospital says. Massachusetts General said the procedure marks a "major milestone" in the pursuit of having organs more readily available for patients in need. The kidney was provided by eGenesis, a pharmaceutical company based in Cambridge, from a pig donor genetically-edited using CRISPR-Cas9 technology. Last year, researchers at NYU Langone Health in New York City conducted a two-month study of a genetically engineered pig kidney that had been transplanted into a 58-year-old man who had been declared brain dead, with his family's consent. The team observed only mild rejection that required intensifying immunosuppression medication to reverse it. Source ABC
FTC Calls for Further Investigation Into Pandemic Grocery Profits: The US Federal Trade Commission (FTC) has demanded further assessment of national food and drink retailers’ profits during the Covid-19 pandemic in a new report. Its findings, published in the Feeding America in a Time of Crisis study, looked at the supply chain shocks seen in the US during the pandemic and their effect on grocery retailer competition. Nine companies in total were investigated as part of the study which was launched in 2021. These included three retailers Kroger, Amazon and Walmart, US food and beverage giant Kraft Heinz, and meats processing major Tyson Foods, as well as non-food consumer goods company Procter & Gamble. Three grocery wholesalers, C&S Wholesale Grocers, McLane Company, and Associated Wholesale Grocers, were also assessed in the report. Looking into data on grocery retail patterns during Covid, the FTC found that profits of grocery retailers “rose and remain elevated” overall, with food and drink retailers’ revenue being more than 6% higher than total costs in 2021. The regulators also found these profits were higher again in the first three quarters of 2023, with revenue sitting 7% higher than total costs for the year. The profits “warrant further consideration by the Commission and policymakers”, said the FTC, specifically as the data analyzed could not show whether companies boosted prices of products “by more or less than their input cost increases”. Source Just Food
Meet the Boston Billionaire Building a Construction Robot Army: A 63-year-old construction industry lifer, John Fish made a fortune building high-rises from Massachusetts to California. He’s worth $2.3 billion, thanks to his 100% stake in $6 billion (revenue) Suffolk, the Boston-based construction firm which in the last 20 years has built more than 150 million square feet of commercial real estate in the U.S. Now he’s looking to disrupt the $2.1 trillion industry that made him so successful. His Suffolk Technologies division is building new construction-focused software products, some of which it’s spinning off into separate ventures, while his venture investing arm has taken stakes in dozens of ambitious construction tech startups. “Our industry is the only industry in the world where productivity has gone down in the last 50 years as opposed to going up,” Fish told Forbes. here were more construction job openings in 2022 than any previous year in the 23 years that the Associated Builders and Contractors (ABC) has been keeping track. One reason: Many in the industry want nothing to do with robotics or AI. The general contractors, subcontractors, unions and multi¬billion-dollar management firms that run construction sites have “entrenched analog ways of working,” according to a report from McKinsey. And it’s long struggled to attract enough laborers. There were more construction job openings in 2022 than any previous year in the 23 years that the Associated Builders and Contractors (ABC) has been keeping track. Source Forbes
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