Stock indexes continue to trade in the same narrow range they've been stuck in since early April. The S&P 500, which has been bound between roughly 4,050 and 4,200, briefly broke through that upper-level last week and is testing it again.

Technical bulls are looking for at least a short-term rally if the index can hold above that heavy resistance at 4,200, though there are potentially several fundamental roadblocks still standing in the way. The most immediate is the US debt ceiling, with the White House and Congressional Republicans still at an impasse. President Biden and House Speaker Kevin McCarthy met in person yesterday with both again saying they are optimistic about a deal being reached this week.

And it's critical the deal is made this week in order for Congress to have time to pass the legislation before June 1, which is when the Treasury has indicated the US will run out of cash to pay its bills.

The other possible roadblock right now is Fed's recent rhetoric, which seems a lot less certain after several Fed officials recently talked about hiking rates even further in the months ahead.

St. Louis Fed President James Bullard yesterday said he favors two more 25 basis-point hikes while Minneapolis Fed President Neel Kashkari warned that the Fed's benchmark rate may need to "go north of +6%." Officials also warned that even if the Fed does "pause" in June, they could reverse at a future meeting.

Bears also aren't so sure that an end to Fed rate hikes will do much to boost stocks in the long run particularly with most still expecting the economy to slip into recession later this year.

Bulls however point out that the market has been on "recession watch" since last year and it has still failed to materialize. What's more, some economists are now pushing out the long-anticipated downturn into early 2024 as US economic data continues to defy anything resembling recession.

The Richmond Fed Manufacturing Index will be closely scrutinized today after regional manufacturing reports last week delivered somewhat conflicting data. One showed a huge drop in activity while another showed a pretty sizable improvement, though both remain in contraction territory.

Today's Richmond Fed report could help clarify how the sector overall is trending.

New Home Sales are also due out today. Earnings today from retailers Auto Zone, BJ's Wholesale Club, and Lowe's should also shed more light on how consumers are holding up.

Results are also due from Intuit and Palo Alto Networks.

Don't forget, Nvidia is out with their earnings tomorrow. Nvidia stock tumbled down to below $115 per share back in mid-October now its up close to $315 per share. Wow, what a run considering the overall tone of the broader market! Think about this, Apple, Microsoft and Nvidia are all three now back within striking distance of their all-time highs.

Immigrants’ Share of US Labor Force Grows to a New High: Foreign-born workers’ share of the U.S. labor force rose last year to the highest level in 27 years of records, as labor demand surged and the pandemic faded. People born outside the U.S. made up 18.1% of the overall labor force, up from 17.4% the prior year and the highest level in data back to 1996, the Labor Department said in its annual report on foreign-born workers. The number of immigrants in the labor force—those working or actively looking for jobs—rose by 1.8 million, or 6.3%, to 29.8 million in 2022. More foreign-born people joined the labor force than native-born Americans, accounting for more than half of the 3.1 million overall gain last year, the report said. There were roughly 164 million workers age 16 or older in the U.S. labor force last year. Source WSJ

Container Shipping Has Cratered: Boxship owners are losing money on once-lucrative trans-Pacific routes from Asia as weaker demand for apparel, furniture and electronics cuts into ocean carriers’ earnings. It is an ominous sign as the shipping industry approaches its peak season. Demand normally rises during the summer and early autumn as retailers bring in higher levels of merchandise for crucial selling periods, such as the year-end holidays. Ship operators including A.P. Moller-Maersk and Hapag-Lloyd say they need freight rates to increase to cover their operating costs. For now, there are too many ships in the water bidding for cargo, resulting in heavy competition on prices. Average daily freight rates from Asia to the U.S. West Coast across the Pacific are at roughly $1,500 per 40-foot container, compared with more than $14,000 a year ago, according to the Freightos Baltic Index. The cost to send a box from Asia to Europe is at roughly $1,400, compared with nearly $11,000. You'll remember that box-ship operators were among the biggest pandemic winners as orders for imported goods began to climb in 2020 as consumer spending surged on demand for products as diverse as electronics and chairs. Supply-chain delays made slots on ships harder to get, helping push freight rates up to about $20,000 a box on some routes. Source WSJ

No ID, No Problem: Amazon to Let You Buy Beer by Scanning Palm: Showing ID to buy a beer could be a thing of the past soon — Amazon is launching a way for drinkers to buy alcohol with a simple swipe of their hand, eliminating the need for identification. After uploading their ID and a selfie and being verified as as being 21 by a third party, users will be able to buy alcohol at locations that use Amazon’s touchless payment device, Amazon One, by scanning their palm. Amazon launched its One contactless offering early in the coronavirus pandemic, in September 2020, when contactless options presented a safer alternative to handing over cash or a card. Use of contactless options continues be widespread after the pandemic thanks to the speed and convenience offered. The “frictionless” alcohol purchases will launch first at Coors Field in Denver, Colorado, the home of the Colorado Rockies Major League Baseball team. Amazon said it will be rolled out wider “in the coming months.” Source Bloomberg

Retailers Near Restocking as Inventory Paring Winds Down: Big retailers are signaling they are nearly done paring back their excess inventories and are preparing to fill their shelves with new merchandise this fall, potentially brightening prospects for freight carriers looking for revived restocking to drive a shipping rebound. U.S. consumers had boosted their purchases of goods during the Covid-19 pandemic as restrictions on many activities limited services spending. But a sharp pivot back toward services began last spring as those restrictions ended, leaving merchants’ warehouses overstuffed, and retailers pulled back on orders from overseas suppliers while they burned off excess inventory. Inventories at U.S. general merchandise stores expanded +1.2% in March, according to Census Bureau figures, after pulling back over several months from a record high last August. Still, retailers so far remain cautious without clearer signs from shoppers. U.S. consumer spending rose +0.4% in April after two straight monthly declines. Source WSJ

Americans Spending Less on Just About Everything, Inflation Persists: Despite a strong start to the year, consumers continue to pull back on spending amid high prices and economic uncertainty. Morning Consult’s measure of total spending continued its downward trend last month: Real spending decreased by -1.3% in April following a sharp decline in March and a slowing of momentum in February. Spending for services, durable goods, and nondurable goods have all seen monthly declines in Morning Consult’s data, which is often directionally indicative of what to expect from the Bureau of Economic Analysis’ (BEA) Personal Consumption Expenditures report. Notably, as inflation continues to grow at an elevated rate for services, consumers are pulling back on spending on most services categories. Spending on pandemic-affected sectors like restaurants, hotels, and airfare seems to be running out of steam, with two consecutive months of large year-over-year declines. Morning Consult’s data also shows a dip in savings, with 49.9% of adults having money left over to save in April, -5.5 percentage points less than this time last year and down -12.6 points from 2021. Source Morning Consult

Exxon Tiptoes Into EV Future with Lithium Deal: Exxon Mobil spent about $100 million buying land in the Smackover formation of southern Arkansas from an exploration company called Galvanic Energy. The move, on one level, looks like an acknowledgment that the future of cars is battery-powered—not gasoline-powered—and most hybrid and all-electric vehicles run on lithium-ion batteries. The Arkansas land might have as much as four million tons of so-called lithium carbonate equivalent, or LCE. Lithium carbonate is a component in lithium-ion batteries. Four million sounds like a lot, but that amount of lithium carbonate is worth roughly $120 billion at today’s market prices. And only a portion of that would be mined, and processed, each year. Comparatively speaking, Exxon is projected to generate 2023 sales of about $373 billion. Lithium production, according to car industry estimates, is expected to expand fivefold to seven fold from now to 2030. Even projecting higher lithium prices, global LCE sales should amount to roughly $150 billion by the next decade. Global sales of crude oil topped $2 trillion in 2022, according to data from BP. Source Barrons

Meta Ordered to Suspend Facebook EU Data Flows: Meta, the company formerly known as Facebook, has been hit with a formal suspension order requiring it to stop exporting European Union user data to the U.S. for processing. This comes as the European Data Protection Board (EDPB) announced that Meta has been fined €1.2 billion (close to $1.3 billion) — which the Board confirmed is the largest fine ever issued under the bloc’s General Data Protection Regulation (GDPR). Meta’s sanction is for breaching conditions set out in the pan-EU regulation governing transfers of personal data to so-called third countries (in this case the US) without ensuring adequate protections for people’s information. Meta quickly put out a blog post with its response to the suspension order in which it confirmed it will appeal — dubbing the fine “unjustified and unnecessary”. It also sought to blame the issue on a conflict between EU and U.S. law, rather than its own privacy practices. Source Techcrunch

Southwest States Strike Landmark Deal to Conserve Colorado River Water: The Biden administration on Monday announced that it’s reached an agreement with states reliant on the Colorado River to temporarily reduce their water usage in exchange for $1.2 billion in federal funding, a deal that comes after months of negotiations and some missed deadlines to protect the drought-stricken river. Under the agreement, California, Arizona and Nevada will voluntarily conserve 3 million acre-feet of water until 2026, amounting to about 13% of those states’ total allocation from the river. The Biden administration will compensate cities, water districts, Native American tribes and farm operators for 2.3 million acre-feet of savings using funding from the Inflation Reduction Act. Source CNBC

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