Stock indexes close out the first losing month of 2024.

Wall Street is extremely nervous ahead of the Federal Reserve’s monetary policy update today, which is due out at 1 p.m. CST. The Fed is expected to leave its benchmark interest rate "unchanged" at the current target range of 5.25%-5.5%. Some on Wall Street expect the Fed may announce that it will soon begin reducing the level at which it’s running down its balance sheet - aka “quantitative tightening.”

The larger focus today will be Fed Chair Jerome Powell’s follow up press conference at 1:30 p.m. CST. Powell and his central bank colleagues over the past few weeks have driven home the message that they want to “see more evidence” that inflation is moving toward their +2.0% target. They’ve also said that recent data has not provided that confidence and that the start of interest rate cuts will likely take longer than anticipated.

Most expect Powell will basically repeat this same message. However, there are concerns that the Fed Chief could deliver a “hawkish” surprise of some kind, such as expressing alarm about the recent signs of inflation reigniting or casting doubt on the possibility for rate cuts this year.

Bulls hope Powell keeps it short and sticks to the script, in turn not providing any new talking points for the bears or leaving too much open to interpretation. Bulls still expect inflation in the months ahead will pullback significantly thanks to the recent slide in oil prices and a slowdown in shelter cost increases.

It’s worth noting that shelter and gasoline accounted for more than half of the monthly headline CPI increase in March. Bears argue that while gasoline prices might be pulling back recently, tensions in the Middle East are far from settled. A cease-fire deal between Israel and Hamas remains uncertain and Israel also is still saying it plans to attack the Gaza city of Rafah, which could put any potential deal in jeopardy and possibly lead to a wider regional conflict.

Investors today are also anxious to see updated jobs data from ADP’s private payroll report. Wall Street expects a gain of +175,000 jobs for April versus +184,000 in March and estimates for the official April jobs report on Friday of +243,000.

Keep in mind, the Labor Departments official number has exceeded Wall Street expectations for five months in a row now, which has contributed to concerns that the inflation decline has stalled.

ISM Manufacturing will also be under the microscope today with investors keen to see how the “prices paid” component is trending following some big jumps since the start of the year.

Other data today includes the Job Openings and Labor Turnover Survey (JOLTS) and Construction Spending. On the earnings front, today’s highlights include Aflac, AIG, Airbus, Allstate, Carlyle Group, Carvana, Corteva , CVS, DoorDash, DuPont, eBay, Garmin, Johnson Controls, KKR, Kraft Heinz, Marriott International, Mastercard, MetLife, MGM Resorts, Pfizer,  and Yum Brands.

I should mention that Amazon reported impressive earnings after the market close yesterday. The company witnessed a +17% revenue spike in its all-important cloud services division, AWS, which it credited to customers “increasingly embracing artificial intelligence.” However, Amazon disappointed on forward guidance and failed to announce a much anticipated dividend. Today is all about the Fed comments.

Electric Vehicle Fast Chargers Are Catching Up to Gas Stations in California: There's now 1 fast charger for every five gas stations. There are now 105,000 public or shared private electric charging stations in California and 500,000 at-home chargers. California has also approved a $1.9 billion investment plan to help deploy 40,000 additional EV chargers across the state. This should help California reach its plan to phase out the sale of new gasoline-only cars by 2035. The process will start in 2026, with a new mandate that requires 35% of all new cars sold to be electric or plug-in hybrid cars. Source Gizmodo

Walmart Betting Big on Grocery Business!  Well over half of Walmarts U.S. sales came from their grocery business last year, and yesterday, the company announced they wanted to expand their food empire. Interestingly, it thinks gluten-free muffin mix and oat milk ice cream hold the key. Already the country’s largest grocer, the company is introducing a line of premium food called Bettergoods this year, aiming to attract new, often higher income shoppers more frequently and to encourage current shoppers to spend more. The new brand took years to develop and the company plans to add more than 300 Bettergoods items to shelves this year—many of which will cost $5 or less. It is a big strategic bet for the retailer as it competes for customers with Costco Wholesale, Trader Joe’s and’s Whole Foods, which also have extensive store brands. It is likely to rankle food manufacturers already fighting for space on Walmart’s shelves. And it is part of Walmart’s efforts to keep bringing people to its stores even when they aren’t on the hunt for inexpensive necessities. Walmart is cutting back investment elsewhere. On Tuesday, the company said it will shut all 51 of the health clinics it has opened over the past five years as it tried to build a bigger healthcare business. Source WSJ

DEA May Reclassify Marijuana as Lower-Risk Drug: The Biden administration will take a historic step toward easing federal restrictions on cannabis, with plans to announce an interim rule soon reclassifying the drug for the first time since the Controlled Substances Act was enacted more than 50 years ago, four sources with knowledge of the decision tell NBC News. The Drug Enforcement Administration is expected to approve an opinion by the Department of Health and Human Services that marijuana should be reclassified from the most strict Schedule I to the less stringent Schedule III, marking the first time that the U.S. government would acknowledge its potential medical benefits and begin studying them in earnest. By rescheduling cannabis, the drug would now be studied and researched to identify concrete medical benefits, opening the door for pharmaceutical companies to get involved with the sale and distribution of medical marijuana in states where it is legal. For the $34 billion cannabis industry, the move would also eliminate significant tax burdens for businesses in states where the drug is legal, notably getting rid of the Internal Revenue Services code Section 280E which currently prohibits legal cannabis companies from deducting what would otherwise be ordinary business expenses. The Department of Justice’s rescheduling decision could also help shrink the black market which has thrived despite legalization in states like New York and California and has undercut legal markets that are fiercely regulated and highly taxed. President Joe Biden directed the Department of Health and Human Services in October of 2022 to review marijuana’s classification. Federal scientists concluded that there is credible evidence that cannabis provides medical benefits and that it poses lower health risks than other controlled substances. Source NBC News

Welcome to the White Collar Recession: The economy is adding hundreds of thousands of jobs each month. Wages are growing faster than inflation. By all the standard measures, the job market is doing just fine. So why are so many job seekers telling a different story? One interesting way to view the current state of the labor market is via Vanguard, the investment-management company. By looking at the enrollment and contribution rates of its 401(k) retirement plans, Vanguard is able to calculate a national hiring rate broken down by income level. And what the numbers show is a two-tier job market — one divided between a blue-collar boom and a white-collar recession. Among Vanguard's lowest earners — those who make less than $55,000 — the hiring rate has held up well. At 1.5%, it's still above pre-pandemic levels. But among those who make more than $96,000? It's pretty depressing. Hiring has slowed to a dismal 0.5%, less than half the peak it reached in mid-2022. Excluding the dip in the early months of the pandemic, that's the worst it's been since 2014. If you make a six-figure salary, it really is a bad time to be looking for a job. Source Business Insider

Impossible Foods Secures Retail Deal with Whole Foods: Impossible Foods and Whole Foods Markets are partnering to launch the plant-based pioneer’s chicken products, the company announced Tuesday. The retail deal has been “highly anticipated” since Impossible launched on retail shelves in 2019. The pioneering plant-based food company Impossible has been selling its products via food service channels since 2016. “We were late to retail,” said CEO Peter McGuiness in an interview with Food Dive. Now the company is looking to expand distribution points to “make the food more accessible and more available.” Impossible’s Chicken Nugget and Chicken Patty products will be available at select U.S. Whole Foods locations starting next month. Source Fooddrive

FTC Warns ‘Junk Patents’ Could Make Drugs Like Ozempic Pricier: The Federal Trade Commission is challenging hundreds of alleged “junk” patent listings filed by several pharmaceutical companies, which regulators claim could increase prices for medications like Novo Nordisk’s diabetes drug Ozempic by making it harder to produce generic drugs. Some patents filed by these companies are “bogus” because they aren’t related to the drug they sell, like the injection “button” for Novo Nordisk’s diabetes drug Victoza or the “injection device with torsion spring and rotatable display” for Ozempic, according to the FTC. If “improper or inaccurate” patents appear in the Food and Drug Administration’s Orange Book, which lists patents for brand name drugs, cheaper generic alternatives for these drugs are delayed from entering the market, the FTC said, making brand name drug prices remain “artificially high.” Five companies have rejected the FTC’s claim that alleged “junk patents” stifle competition or prevent generic drug alternatives. AstraZeneca responded to the FTC in February, arguing some of the patents challenged by the agency allowed generic drugmakers to better “understand the intellectual property landscape they will need to navigate” when creating alternative medications. Source Forbes

AI is Transforming Weather Forecasting: Spire Global, a firm that utilizes data from its satellites and leverages artificial intelligence to generate weather forecasts, is turning to the financial sector for customers. The firm on Monday announced a deal with an unnamed financial firm that it says is priced in the multimillion-dollar range. It signals how quickly new technology is reshaping a critical industry. According to a statement, Spire will provide the firm with its high-resolution weather forecast model, which utilizes data gathered from space while also developing an AI-powered model for long-range forecasting. The company is one of multiple weather and climate companies to enter into partnerships with Nvidia to develop a computer modeling platform, as well as train and run AI-based weather models. Source Axios

Dave & Buster’s to Allow Customers to Bet on Arcade Games: Arcade giant Dave & Buster’s is taking its games to a new level by offering social wagering on its app. Customers can soon make a friendly $5 wager on a Hot Shots basketball game, a bet on a Skee-Ball competition or on another arcade game. The betting function, expected to launch in the next few months, will work through the company’s app. Dave & Buster’s, started in 1982, now has more than 222 venues in North America, offering everything from bowling to laser tag, plus virtual reality. The company says it has five million loyalty members and 30 million unique visitors to its locations each year. The company’s stock is up more than 50% over the past year. As a boom in betting increases engagement among sports fans, digital gamification could have a similar effect within Dave & Buster’s customer base by allowing loyalty members to compete with one another and earn rewards. Ultimately, it could mean people spend more time and money at the venues. Source CNBC

Economics Tip Scales in Favor of Cats Over Dogs: Four years after “pandemic pets” offered lockdown companionship and drained animal shelters of cats and dogs, data suggest that more economical cats are gaining on dogs at a time when pet-food prices remain stubbornly high, rents are still rising and housing supply is tight. Taken together, these forces could be tipping the scales in the longstanding debate on whether cats or dogs make better pets, some pet-industry experts say. “Adoption rates for dogs are the big issue. They are slowing down considerably,” said Maggie Lynch, senior director of research and development at Austin Pets Alive, a nonprofit shelter that also helps pet owners find alternatives to surrendering their animal to a shelter. Cats, on the other hand, appear to be in hot demand. They are cheaper to feed and easier to house — and they’re outpacing dogs in shelter adoptions. People adopted 2.6 million cats from U.S. shelters last year, according to the nonprofit data collector Shelter Animals Count — a +14% rise from 2019 cat-adoption levels. Meanwhile, 2.2 million dogs were adopted from shelters, a -5% decline from 2019. Source MarketWatch

Americans Still Listen to Far More Radio than Podcasts: As the audio horizon expands, the ways audiences are tuning in is shifting. A quarterly report from Neilsen, “The Record”, finds Americans spend more than four hours with audio every day.  Consumers give nearly 70% of their daily ad-supported audio time to radio, 20% to podcasts and the rest to streaming audio (music services) or satellite radio (select channels). The Record tracks the share of daily time spent with ad-supported audio, which represents the most important part of the audio landscape to advertisers. While Americans use radio throughout their day in many different settings, most listening happens outside of the home during daylight hours. And in the car, more than 80% of ad-supported audio time goes to radio. Source Nielson


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