Investors have all eyes on the April jobs report this morning. Wall Street is expecting a gain of around +240,000 jobs versus +303,000 in March with the unemployment rate holding steady at 3.8%.

Investors will also be closely watching average hourly earnings with most expecting a slight decline to an annual rate of +4.0% from +4.1% previously. If the numbers come in as expected, bulls will take it as a signal that the economic growth spurt experienced since the start of the year is cooling, in turn keeping alive hopes for interest rate cuts later in 2024.

Federal Reserve Chair Jerome Powell noted yesterday that wage pressure has eased this year as the US labor market has moved into better balance, indicating the Fed may be less worried about the strong job market fueling inflation at current levels. Still, most economists think wage growth needs to be closer to +3.5% to be compatible with the Fed’s +2% inflation target rate so a downward move would be welcome.

Also out today is the ISM Services Index. It’s worth noting that the ISM Manufacturing Index earlier this week showed a big jump in the “prices paid” component, likely fueled by higher commodity prices, particularly oil. This measure has proved to be a good leading indicator of looming inflation as persistent manufacturing cost increases tend to get passed on to consumers, though there is a lag of about six months or more.

The next key inflation read is the April Consumer Price Index (CPI), due out on May 15.

On the earnings front, Berkshire Hathaway and Hershey are today’s highlights.

Apple after the market close yesterday delivered a couple of positive surprises, including a $110 billion share buyback, the largest in US history. Apple also reported smaller-than-expected declines in both profit in revenue and increased its dividend. Importantly, executives said the company is making “significant investments” in the AI space, which CEO Tim Cook is expected to unveil at Apple’s annual Worldwide Developers Conference June 10 - 14. Apple’s stock was higher in after hours trading.

Turning to next week, things will be a lot quieter on both the economic data and earnings fronts. The data calendar is very light with just Consumer Credit on Tuesday, Wholesale Inventories on Wednesday, and Consumer Sentiment on Friday.

Earnings next week include Microchip Technology, Palantir, Simon Property, and Tyson on Monday; BP, Disney , Duke Energy, Electronic Arts, Global Foundries, Occidental Petroleum, Sempra Energy, and Suncor Energy on Tuesday; Airbnb, ARM Holdings, and Uber on Wednesday; Hyatt Hotels, Roblox, and Warner Music on Thursday; and Enbridge on Friday.

We are now just 185 from the 2024 Presidential election. I suspect the market is going to start paying greater attention and perhaps reacting to more of the political headlines.

Most all of the online betting sites and odds makers have the race at nearly a coin-toss depending on what site you look and what day you check the odds. I think things will continue to heat up as we get closer .

Has Apple Fallen from the Tree?  Apple’s revenue declined for the fifth time in the past six quarters, dragged down by ailing iPhone sales and new competition from smartphone rivals in China. Still, shares of Apple rose more than 7% in after-market trading as the company authorized $110 billion in stock buybacks and signaled that the current quarter is likely to see revenue growth. The company didn’t disclose over what period it would buy back the $110 billion in shares. For reference, Apple has repurchased around $20 billion in shares per quarter since 2018. For the quarter, Apple’s iPhone unit shipments slipped nearly -10% over the previous year, while the total smartphone market expanded about 8% annually. Apple had briefly become the number one smartphone vendor near the end of 2023. For the first three months of the year, Samsung reclaimed the number one spot for worldwide smartphone market share. In China, Huawei’s smartphone sales rocketed up nearly +70% from the previous year, while Apple’s sales fell -19%, according to Counterpoint Research. For the quarter, Apple's total sales revenue was reported at $90.75 billion, down -4.3% from the prior year, and profit fell 2.2% to $23.6 billion. Revenue from Apple’s services business, which includes App Store sales and subscription revenue from music, TV and other offerings, grew +14.2% to $23.87 billion. Earlier this year, Microsoft took the crown from Apple as the world’s largest company by market capitalization, and its lead has grown in the months since. Microsoft’s stock is trading up 5% from the beginning of the year, while Apple’s stock is down 10% in the same period.  Source WSJ

Delivery Drones Are Getting Bigger, Much Bigger: Next-gen aviation startup MightyFly says it's  the first company developing a large, autonomous electric vehicle takeoff and landing cargo drone that's been approved by the Federal Aviation Administration for a flight corridor, Axios is first to report. It's a big milestone for the emerging company and for the drone delivery world more broadly. The corridor, connecting California's New Jerusalem and Byron Airports, about 20 miles apart as the crow flies, will allow MightyFly to conduct a variety of flight tests with its latest drone, the 2024 Cento. The company also got the go-ahead to test the Cento beyond the operator's visual line of sight while using a chase plane. That's key, as beyond visual line of sight operations are essential for enabling large-scale drone logistics. The latest Cento variant is a hybrid drone about the size of a small single-seater aircraft, and can carry 100 lbs. of cargo up to 600 miles. Currently, the use case is B2B expedited logistics, says CEO and founder Manal Habib, an MIT and Stanford grad who formerly worked at drone delivery startup Zipline. Source Axios


How A Strong Greenback Might Hurt Earnings: The Federal Reserve might have just given the dollar more room to run. The US Dollar Index is up nearly +5% so far this year and isn’t far from a 52-week high. The greenback has surged against the euro, Japanese yen, and other major developed market currencies. Elevated interest rates could extend the dollar’s recent resurgence, and that could dent earnings for the big multinational firms that dominate the S&P 500. U.S. companies that do business overseas have to convert sales generated in foreign currencies back into dollars. But when those foreign currencies are weaker than the greenback, that can depress sales and profits—particularly for firms with a big chunk of their sales abroad. An estimated 40% of revenue for S&P 500 companies comes from outside the U.S., with many tech and materials firms having significant exposure. Big consumer products companies also will likely get hit by a rising dollar. Mondelez, Coca-Cola, Philip Morris International, and Kimberly-Clark all mentioned “currency headwinds” as an issue in their latest earnings conference calls. Conversely, the dollar’s strength is helping multinationals based outside the U.S. that do big business in America. Toyota said earlier this year that the weak yen was boosting results. Source Barrons

Americans Continue to Name Inflation as Top Financial Problem: For the third year in a row, the percentage of Americans naming inflation or the high cost of living as the most important financial problem facing their family has reached a new high. The 41% naming the issue this year is up from 35% a year ago and 32% in 2022. Before 2022, the highest percentage mentioning inflation was 18% in 2008. Inflation has been named by less than 10% in most other readings since the question was first asked in 2005. Gallup has asked Americans at least annually since 2005 to name, without prompting, the top financial problem facing their family. Inflation has topped the list for the past three years. The cost of owning or renting a home ranks second this year at 14%, a new high for that issue. Other significant problems Americans identify include having too much debt (8%), healthcare costs (7%), lack of money or low wages (7%), and energy costs or gas prices (6%). Over the past 19 years, healthcare costs and lack of money or low wages have frequently ranked near the top of the list, while the cost of energy or gas has done so at times of elevated gas prices, as in 2005, 2006 and 2008. Source Galoup

Bitcoin ATMS are Popping Up at Malls, Gas Stations: A different kind of ATM is setting up shop in your local convenience store. These machines look like traditional banking kiosks, but they allow customers to buy bitcoin in cash. Bitcoin ATMs, or BTMs, exploded in popularity between 2020 and mid-2022, at the height of the crypto craze. At their peak, BTMs totaled 34,000 across the U.S., according to Coin ATM Radar. More and more people are using bitcoin ATMs to send money at lightning speed. A study from Bitcoin Depot, the company with the largest share of BTMs across the U.S., found that two-thirds of their customers use the machines for remittances and online purchases. But these machines have also gained a reputation as a vehicle for crime. Scammers can send their victims to these kiosks to take advantage of the faster transaction speeds. Source CNBC

Domino’s Thinks it Has Answer for “Tipping Fatigue”: Americans are being asked to tip on digital screens for everything from a cup of coffee to self-checkout at grocery stores, and many are frustrated with the new tipping culture. Pizza chain Domino’s aims to tap into that exasperation. Not by eliminating tips, however. Instead, Domino’s is encouraging tipping even more. Domino’s launched a promotion that rewards customers with $3 off a future online delivery order for every $3 or more they tip a Domino’s delivery driver. Domino’s “You Tip, We Tip” deal runs through mid-September. “At Domino’s, we know there’s a lot of pressure to tip these days,” a narrator says in a cheeky new commercial showing people being asked to tip at the grocery store, gym and even a wedding. “Domino’s wants to say ‘thanks for the tip’ by tipping you back.” The ad serves not as a promotional tool geared toward consumers, but also a recruitment tool to attract drivers. Source CNN


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