The more important read is average hourly earnings as the Federal Reserve continues to reiterate the need for wage gains to moderate in order to cool inflation.
Economists expect wages to remain flat at +4.2% year-over-year. Markets may not be moved much by the April report if it comes in as expected. That's because May jobs data is due out on June 2, just ahead of the Fed's policy meeting on June 13-14, so it will hold more meaning for the central bank's next moves. However, if the numbers overshoot consensus by any significant amount it could spark new worries about further Fed rate hikes.
On the earnings front, bulls are hoping Apple's better-than-expected results after the market closed yesterday might provide a tailwind and help stocks recover some of the recent losses. Apple beat on both revenue and profit estimates partially thanks to rebounding iPhone sales. But let's keep in mind, this is Apple's second straight quarter of declining revenue and just the third time in a decade that the iPhone maker has posted back-to-back quarters of falling revenue.
The tech giant’s revenue for the three months ended April 1 was $94.8 billion, down -3% from the year-earlier period. Net income dropped -3% year-over-year to $24.2 billion. A main drag on stock indexes this week has been regional bank stocks which are still getting hammered, though Wall Street is divided as to "why". Some believe it's driven by fears that the same troubles that led to the collapse of three banks since March could spread further.
Others blame short sellers that have been piling up bets against banks like PacWest, Zions Bancorp, and other regional players. Interestingly, some Wall Street insiders have attributed the plunge in bank stocks to an investor "temper tantrum" playing out in reaction to the Federal Reserve's 25 basis-point rate hike earlier this week.
For what it's worth, outstanding emergency loans made by the US Fed to financial institutions shrunk to $81.1 billion last week from $155.2 billion previously, the lowest since early March when the bank turmoil began. This is overall considered a positive sign that bank finances are stabilizing.
Looking to next week, Q1 earnings will continue though at a slower pace than the past two weeks. Results to watch next week include BioNTech, KKR, PayPal, and Tyson on Monday; Airbnb, Duke Energy, Electronic Arts, GlobalFoundries, Occidental Petroleum , and Rivian on Tuesday; Disney, Nutrien, and Roblox on Wednesday; and Dillard's and YETI on Thursday.
Economic data next week is fairly light too but does include several key reports, including the April Consumer Price Index (CPI) on Wednesday, the Producer Price Index (PPI) on Thursday, and Consumer Sentiment on Friday.
With earnings and economic data both slowing down next week, Washington's ongoing battle over the debt ceiling may attract more investor attention, unfortunately, it might be ugly before it gets better.
The deadline for Congress to lift the limit or extend the current deal and avoid a potential default of US debt could be as soon as early June, according to the US Treasury. President Biden is scheduled to meet with lawmakers to discuss the debt ceiling next Tuesday.
First Commercial Smart Gun Launches: Colorado native and Biofire Technologies CEO and founder Kai Kloepfer has created the first commercial biometric gun with fingerprint and facial recognition. Kloepfer started working on smart guns nearly 11 years ago as a science fair project, in the wake of the Aurora theater shooting. The Biofire Smart Gun has been crafted with home defense in mind. I’ve never talked to a gun owner that wanted their kid to find their gun, Kloepfer said, if we can provide them better tools that ensure that there’s no possibility for mistakes, that their kid will never have access to that firearm, I think that’s really important. The smart gun is basically a firearm that it’s always locked by default, but it’s still instantly accessible for the owner, according to Kloepfer, so, if a kid finds it, if maybe an assailant takes it away from somebody, it’s going to be unusable. We’ve chosen to use both fingerprints and facial recognition where either the fingerprint or the face can be used to unlock the gun because it makes it a lot more reliable. Source The Hill
Carl’s Jr. and Hardee’s Using "Presto’s A.I. Drive-Thru Ordering" Carl’s Jr. and Hardee’s locations will roll out automated drive-thru ordering nationwide using artificial intelligence software. CKE Restaurants, the parent of Carl’s Jr. and Hardee’s, has partnered with Presto and OpenCity. Additionally, Valyant AI has a deal with CKE to use its voice-ordering tech at 32 locations, with the ability to expand to another 21 restaurants in the coming months. The technology usually runs on its own, but workers can still hear customers’ orders through their headsets while they make drinks, accept payment and talk to customers at the window. Customers spend less time in the drive-thru line, while employees aren’t overwhelmed by too many tasks. Artificial intelligence is also better at “relentlessly upselling” customers, according to Presto President Dan Mosher. Adding fries or a large drink to the order means more sales for restaurants. I suspect this could be a win-win for all involved. I know customer service at the drive-thru window certainly has room for improvement. Together, Carl’s Jr. and Hardee’s have about 2,800 restaurants across 44 U.S. states. Source CNBC
New Home Listings Plunge -21%... Sellers Stay on the Sidelines: The biggest complaint in today’s housing market might not be the high prices or even rising mortgage interest rates. It’s that there aren’t enough homes for sale, a situation that appears to only be getting worse. While potential buyers have been sidelined by daunting borrowing costs, sellers are also sitting out the spring season. The number of new listings in April was down -21% compared to last year and plunged -31% compared to 2019, according to Realtor.com. So why aren’t sellers selling? Their top concern is putting their current residence on the market before finding a new one to purchase, according to a recent Realtor.com® survey. About a third of sellers in February were worried about finding a new home they can afford. “Sellers may not want to buy first, but in reality, they may need to sell first to get the cash for their next purchase. They may need a larger down payment to control the size of their mortgage, because mortgage rates are so high,” says Jiayi Xu, an economist at Realtor.com. The more money they put down, the lower their mortgage payments will be. Many homeowners who would have traded up into larger, nicer homes or downsized into smaller ones have also been reluctant to let go of their record-low mortgage rates. That’s resulted in about a fifth fewer new home listings in April than there were a year earlier, worsening the housing shortage, according to the latest Realtor.com data. Source Realtor.com.
US Officials Assessing Possible "Manipulation" on Banking Shares: US federal and state officials are assessing the possibility of "market manipulation" behind big moves in banking share prices in recent days, a source familiar with the matter said on Thursday, as the White House vowed to monitor "short-selling pressures on healthy banks." Shares of regional banks resumed their slide this week after the collapse of First Republic Bank , the third US mid-sized lender to fail in two months. Short sellers raked in $378.9 million in paper profits on Thursday alone from betting against certain regional banks, according to analytics firm Ortex. Increased short-selling activity and volatility in shares have drawn increasing scrutiny by federal and state officials and regulators in recent days, given strong fundamentals in the sector and sufficient capital levels, said the source, who was not authorized to speak publicly. The S&P 600 bank index dropped over -3% on Thursday. PacWest Bancorp shares tumbled over -50% after it confirmed it was exploring strategic options. Western Alliance closed down -38.52% as the Financial Times reported it is exploring a potential sale. Western Alliance in a statement called the report "categorically false in all respects." The increased short-selling activity has triggered some calls for a temporary ban, but an SEC official told Reuters on Wednesday the agency was "not currently contemplating" such a move Source Reuters
Google Unveils First Foldable Phone: After months of rumors and leaks, Google has confirmed the Pixel Fold's existence. It showed off the foldable in an official capacity for the first time in a video posted on Twitter and YouTube. The company was expected to reveal the Pixel Fold at Google I/O next week. However, as has often been the case over the last few years, Google has offered an early peek at an upcoming device before a splashier launch event. As revealed in various leaks, Google's first foldable phone has a vertical hinge that opens up to reveal a tablet-like display, in a similar fashion to Samsung's Galaxy Fold devices. When the Pixel Fold is closed, you can use a smaller touchscreen that's on one side of the exterior. Reports have suggested that the Pixel Fold will start at $1,700 and it could be available as soon as next month (the video and a Google Store page simply note that it's "coming soon") Source Engadget
Fentanyl Overdose Deaths Nearly Quadrupled from 2016 to 2021: The U.S. overdose death rate involving fentanyl nearly quadrupled between 2016 and 2021, according to a report from the Centers for Disease Control and Prevention (CDC). Rhe sheer scale of the opioid epidemic and how it's evolved into one defined by fentanyl-laced counterfeit pills makes addressing the crisis especially difficult. Adding to those challenges: the system for coding overdose deaths involving synthetic opioids does not distinguish between specific drugs, making it harder to monitor trends. The CDC report, however, parses out data for the five opioid and stimulant drugs — fentanyl, methamphetamine, cocaine, heroin, and oxycodone — that most frequently contribute to an average of 100,000 overdose deaths per year. The CDC report found overdose death rates involving oxycodone — an early driver of the opioid epidemic — continued to decline as the death rate from methamphetamine, cocaine and fentanyl increased. Source Axios
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