Traders Market Weekly: The Fed’s Fight Against Inflation

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    Another week! Thank you for all the input through the week!

    inflation again next week with the latest read on consumer prices due to arrive on June 10.

    Economists anticipate that headline inflation will be 8.2% Y/Y for May vs. 8.3% in April and see core CPI after backing out food and energy costs trickling down to 5.9% from 6.2%. Some analysts are holding open the possibility of a relief rally if there is no upside CPI surprise.


    Dividend watch:

    It is a light week of anticipated dividend boosts with the earnings season winding down.

    Dividend payout boosts are anticipated from UnitedHealth (UNH) to $1.65 from $1.45, Caterpillar (CAT) to $1.20 from $1.11, Essential Properties () to $0.27 from $0.26, and Clorox (NYSE:CLX) to $1.20 from $1.16.

    Credit Suisse came out this week with an intriguing list of its favorite dividend aristocrats for investors to chew on.

    The firm’s list of Outperform-rated U.S. stocks that offer investors healthy dividend yields backed by a history of growing dividends per share includes IBM (IBM), Chevron (CVX), Coca-Cola (KO), Emerson Electric (EMR), Stanley Black Decker (SWK), Nextera Energy (NEE), Colgate-Palmolive (CL), Sysco (SYY), McDonald’s (MCD) and Caterpillar (CAT).


    Corporate events:

    Pear Therapeutics (PEAR) will host the company’s first investor day event in its history on June 6. Hyzon Motors (NASDAQ:HYZN) will host an Investor Day event on June 7 that includes a strategy update and tour of the Groningen, Netherlands facilities. MongoDB World 2022 is also scheduled for June 7 with keynote presentations due from MongoDB’s (MDB) top execs. Spotify Technology S.A. (SPOT) will host an Investor Day event on June 8 to highlight the company’s current roadmap and future growth opportunities.

    Investor day events are scheduled on June 9 for AMD (AMD), Verint Systems (NASDAQ:VRNT), Wendy’s (WEN), PPL Corporation (PPL), Nutrien (NTR), and DigitalOcean Holdings (DOCN). Spirit Airlines (SAVE) shareholders will vote on the proposed merger with Frontier Group (ULCC) on June 10. R


    Conference schedule:

    The conference schedule heats up with the earnings season grinding to a halt.

    Nareit’s REITweek 2022 Investor Conference might be the headliner with STORE Capital (NYSE:STOR), Macerich (MAC), Public Storage (PSA), and Tanger Factory Outlet Centers (SKT) some of the notables due to appear virtually.

    Goldman Sachs Travel and Leisure Conference, the William Blair Growth Stock Conference, the Baird Global Consumer, Technology and Services Conference, the KBW US Regional Banking Growth Conference, the Goldman Sachs Global Semiconductor Virtual Conference, the Needham Virtual Automotive Technology Conference, the Bank of America 2022 Global Technology Conference, the Stifel 2022 Cross Sector Insight Conference, and the Jefferies Healthcare Conference.


    Hasbro (NASDAQ:HAS) will hold its annual meeting on June 8.

    Activist investor Alta Fox is pushing Hasbro to sell a profitable division and wants board representation. The firm has also has criticized how the company allocates its capital. Proxy firm ISS has recommended that shareholders withhold votes from Ted Philip, who has served on Hasbro’s board for 20 years, while Glass Lewis backed all of Hasbro’s board nominees.

    In front of the meeting, Hasbro has stated that capital allocation, including strategic investments and returning excess cash to shareholders is a priority as the company also stays on a path to grow and pay down debt. Shares of Hasbro (HAS) are down 12% on a year-to-date basis.


    Apple WWDC preview:

    Apple (AAPL) will hold its Worlwide Developers Conference to expectations that updates to iOS/iPad OS, macOS, tvOS, and watchOS, and other software reveals will be made. Ahead of WWDC, the company teased an update to the Swift open-source programming language. Analysts think there is a chance of a “one more thing” hardware surprise, as well as a potential announcement of a NFL Sunday Ticket contract win.

    Looking ahead, Wedbush Securities analyst Dan Ives believes the tech giant is gearing up to bid on a number of upcoming sports packages besides the NFL that are coming up for contract/renewals in future years. Also of high interest, Morgan Stanley said there is the potential for Apple to tease its entrance into the mixed-reality headset market. What does WWDC mean for Apple shares? Over the last 10 years Apple has underperformed the S&P 500 by a median of 100 bps in the week after the event, but outperformed the S&P by 70 bps in the one month following the event.


    Annual meetings: Companies with annual meetings set for next week include

    Shopify (NYSE:SHOP), Penn National Gaming (PENN), eBay (EBAY), Target (TGT), TJX Companies (TJX), CarGurus (CARG), Best Buy (BBY), and Urban Outfitters (URBN). Shareholders with Shopify (SHOP) will vote on a proposal to furnish CEO Tobias Lütke with extra voting rights to preserve his voting power. Meanwhile, Hasbro (HAS) is fighting off a activist investor in a boardroom battle.


    Barron’s mentions:

    The cover story delves into the boom in weddings in the U.S. and if that is an indicator that the U.S. fertility rate has bottomed out after a 12-year decline.

    Some of the stock mentioned as potential beneficiaries from the surge in new couples are AvalonBay Communities (AVB), Equity Residential (EQR), and Target (TGT).

    Eaton (ETN) is also singled out this week by the publication as a stock that could jump 30% as the company takes advantage of red-hot demand for its products in the electrical segment. The shift to electrical vehicles is seen keeping demand buzzing for an extended period of time. Shares of Eaton are noted to now trade at 17.5X forward earnings, which is in line with the broader market but marks a discount to rivals such as Quanta Services (PWR) and ABB (ABB).


    Good morning … Stock futures are up (DOW +300) but so is GAS to record 4.86 & OIL almost $120
    ALEX is moving out to sea after soaking Florida & will graze Bermuda
    These are tough times esp. for poor & senior citizens on fixed income
    and we must do best we can each day & stay “+” & hopeful the tide will turn to better days each day 🙂


    S&P Futures vs Fair Value: +40.0
    10 yr Note: 2.963%
    USD/JPY: 130.74 -0.09
    EUR/USD: 1.0749 +0.0030
    Europe: FTSE: 1.3% DAX: +1.1% CAC: +1.2%
    Asia: Hang Seng: +2.7% Shanghai: +1.3% Nikkei: +0.6%
    Gold (1854.00 +3.80) Silver (22.28 +0.37) Crude (119.29 +0.36)


    The global equity markets are off to a strong start to the week. S&P Futures are up about 40 points to trade around the 4148 area. The market has seen a steady bid throughout the overnight session. The low was established early at 4104.50. Spoos have just recently come off the high of 4156.50.

    In Asia, both China and Japan advanced on Monday. The Shanghai Composite took flight after Beijing loosened COVID-19 lockdowns and chatter emerged of possible tariff cuts with the US. In Japan, the Nikkei was supported by reports that the government was mulling a restart to its “Go To Travel” program. This helped names such as ANA Holdings, West Japan Railway and East Japan Railway gins 3-5%.

    In Europe, the major bourse are trading higher by over 1%. Financials are among the leaders this morning with lenders such as Commerzbank, Deutsche Bank and Societe Generale up 3-4%. With Covid restrictions lifting in China, luxury retailers such as LVMH and Kering are advancing by 1-2%.


    S&P 500 futures are 1.1% above fair value; Nasdaq 100 futures are 1.6% above fair value; and DJIA futures are 0.9% above fair value

    Key factors driving the futures market:

    A 2.6% increase in Tesla (TSLA) after Elon Musk noted in tweet that total headcount at Tesla will increase while salaried positions remain fairly flat
    Reports indicate COVID restrictions are being rolled back in China’s largest cities
    Strength in mega-cap stocks; Apple (AAPL) up 1.4% in front of Worldwide Developers Conference
    Rally in many Chinese-listed ADRs after report suggests Chinese regulators are ending their probe of Didi (DIDI), which is up 60%


    Brokerage research calls of note:

    Upgrades: AXP, CRWD, LULU, RMD, R, SPOT
    Downgrades: DNB, EIX, FSTR


    UK Prime Minister Boris Johnson faces leadership vote today
    US is expected to pause solar import tariffs for two years, according to The Wall Street Journal
    Saudi Arabia said to be boosting oil prices for Asia buyers on strong demand
    JetBlue (JBLU) raised its offer to acquire Spirit Airlines (SAVE) to $31.50/sh cash (AMZN) 20-for-1 stock split takes effect today


    Twitter (TWTR 37.67, -2.49, -6.1%) is trading down 5.7% after Elon Musk indicated that Twitter is still not complying with his request to provide data on fake accounts and has noted that this lack of compliance could ultimately create a right to terminate the merger agreement.

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