Traders Market Weekly: The Fed’s Fight Against Inflation

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    British Prime Minister Johnson survived his no-confidence vote by 32 votes.
    European Central Bank policymaker Muller said that a drop in energy and food prices should not be expected.
    Italy’s stats agency lowered Italy’s growth forecast for 2022 to 2.8% from 4.7%.


    Target (TGT 144.82, -14.85, -9.3%): lowers Q2 operating margin guidance to ~2% (prior 5.3%) in conjunction with plan to focus on inventory optimization; reaffirms FY23 revenue growth in low-to-mid-single digit range

    Walmart (WMT 120.46, -4.41, -3.5%): trading lower in response to the warning from Target

    Kohl’s (KSS 46.00, +3.88, +9.2%): enters into three-week exclusive negotiations with Franchise Group for possible acquisition of company for $60.00 per share

    J.M. Smucker (SJM 122.00, -1.26, -1.0%): beats by $0.34, beats on revs; guides FY23 EPS below consensus, revs above consensus
    Tractor Supply Co. (TSCO 196.52, -2.57, -1.3%): guides Q2 EPS and revenue slightly above consensus; sees comparable store sales growth of 5%


    $BAH, $DVN, $LDOS, $OXY


    The S&P 500 futures are 0.9% below fair value; the Nasdaq 100 futures are 1.2% below fair value; and the DJIA futures are 0.7% below fair value

    Key factors driving the futures market:

    Reserve Bank of Australia raises its cash rate by a larger-than-expected 50 basis points to 0.85%, stoking worries about a growth slowdown
    Target (TGT) slumps 7% after cutting its Q2 operating margin rate guidance to ~2% (from 5.3%) in conjunction with plan to clear excess inventory
    Focus on rising energy costs: national average gasoline price is record $4.92/gallon and nat gas futures up another 1.6% to $9.47/mmbtu
    SEC looking at proposals to improve market efficiency, including possible ban on payment for order flow, according to The Wall Street Journal
    UK Prime Minister Boris Johnson survives confidence vote by smaller-than-expected majority (211-148)
    German April factory orders weaker than expected
    Cryptocurrencies under selling pressure; Bitcoin (-6.0%) back below $30,000
    Kohl’s (KSS) in three-week exclusive negotiations with Franchise Group for possible sale at $60.00 per share
    J.M. Smucker (SJM) down 1.0% after topping fiscal Q4 earnings expectations and issuing below-consensus FY23 EPS guidance


    Good early afternoon 🙂 I was so busy yesterday I didn’t get a chance to acknowledge D-DAY
    It was one of most important events of WW II & made a difference in early end to war.
    The greatest generation was born that day & became a turning point to eventually end the war


    Dow 33,180.14 264.36 0.80%
    S&P 500 4,160.68 39.25 0.95%
    Nasdaq 12,175.23 113.86 0.94%
    GlobalDow 3,909.79 12.11 0.31%
    Gold 1,856.10 12.40 0.67%
    Oil 120.04 1.54 1.30%


    S&P Futures vs Fair Value: -15.0

    10 yr Note: 3.010%
    USD/JPY: 133.69 +1.09
    EUR/USD: 1.0683 -0.0024
    Europe: FTSE: -0.1% DAX: -0.2% CAC: -0.3%
    Asia: Hang Seng: +2.2% Shanghai: +0.7% Nikkei: +1.0%
    Gold (1850.10 -2.00) Silver (22.00 -0.18) Crude (120.10 +0.69)


    The global equity markets are mixed. S&P Futures are down about 14 points to trade around the 4145 area. The market has slipped back after peaking out at 4158.25 in an early attempt to extend Tuesday’s rally. The range was just over 23 points which culminated with a low at 4135.00.

    In Asia, both China and Japan advanced. The Shanghai Composite witnessed back and forth action. Early strength yielded only to see buyers step in after the lunch break to close the index near the session high. In Japan, the Nikkei’s gains were spurred by an upward revision to the nation’s first quarter GDP which fell less than originally estimated. Despite the benchmark’s rise, semiconductors lagged with Tokyo Electron and Advantest falling back by 1-2%.

    In Europe, the major bourse are trading lower. Germany saw April Industrial Production miss expectations, leading to the markets’ stumble out of the gate. Financials are among the weakest sectors on Wednesday. Credit Suisse fell 6% after providing a second quarter trading update that highlighted challenging conditions. This has led to weakness in banking peers with Deutsche Bank and Standard Chartered reeling by 2%.


    Good analysis found:

    The market has been chopping sideways in a narrow range for 6-7 days. At this point, I would assume that may continue into the CPI number on Friday. Patience is more important than ever for top-down/index traders right now.

    Outside of equities, the yen continues to get slaughtered, and oil continues to look unstoppable.

    How inflation isn’t sky high in Japan right now is one of the world’s great mysteries. Japan imports everything underlying its economy. It’s paying for all of that with a crashing currency. And everything has become much, much more expensive, even in dollar terms, to import when it comes to raw goods.

    One piece of analysis I came across suggests that companies in Japan deal with squeezed margins from rising input costs by actually cutting worker wages rather than passing those costs through in the form of higher prices for end goods. But that can’t work forever, which suggests there could come a point where we see a qualitative shift and an abrupt pivot from the BoJ.


    Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note.

    Taiwan Semiconductor Manufacturing Company expects to spend up to $40 bln on capital expenditures in 2023. Australia’s Prime Minister Albanese said that the recent rate hike is a blow for families and that new policies to deal with inflation will be considered. Australia will also look to expand trade with Indonesia and India. The Reserve Bank of India raised its policy repurchase rate by 50 bps to 4.90% against expectations for a 40-bps hike.

    —Equity Markets—

    Japan’s Nikkei: +1.0%
    Hong Kong’s Hang Seng: +2.2%
    China’s Shanghai Composite: +0.7%
    India’s Sensex: -0.4%
    South Korea’s Kospi: UNCH
    Australia’s ASX All Ordinaries: +0.4%


    Japan’s Q1 GDP -0.1% qtr/qtr (expected -0.3%; last -0.2%); -0.5% yr/yr (expected -1.0%; last -1.0%). Q1 GDP Capital Expenditure -0.7% qtr/qtr (expected 0.3%; last 0.5%). May Bank Lending 0.7% yr/yr (last 0.9%) and May Economy Watchers Current Index 54.0 (last 50.4). April adjusted Current Account surplus JPY510 bln (last surplus of JPY1.56 trln)
    South Korea’s Q1 GDP 0.6% qtr/qtr (last 1.2%); 3.0% yr/yr (last 4.2%)


    Major European indices trade on a lower note while Spain’s IBEX (-0.2%) outperforms slightly.

    There are growing concerns over the recent rise in Greek and Italian yields relative to Germany’s yields. British Prime Minister Johnson is reportedly facing pressure from members of his party to lower taxes. French Finance Minister Le Maire repeated that he expects inflation to begin easing early next year. The European Central Bank will release its latest policy statement tomorrow.

    —Equity Markets—

    STOXX Europe 600: -0.9%
    Germany’s DAX: -0.7%
    U.K.’s FTSE 100: -0.6%
    France’s CAC 40: -1.0%
    Italy’s FTSE MIB: -0.6%
    Spain’s IBEX 35: -0.2%


    Eurozone’s Q1 GDP 0.6% qtr/qtr (expected 0.3%; last 0.2%); 5.4% yr/yr (expected 5.1%; last 4.7%). Q1 Employment Change 0.6% qtr/qtr (expected 0.5%; last 0.4%); 2.9% yr/yr (expected 2.6%; last 2.1%)
    Germany’s April Industrial Production 0.7% m/m (expected 1.0%; last -3.7%)
    U.K.’s May Construction PMI 56.4 (expected 56.6; last 58.2). May Halifax House Price Index 1.0% m/m (expected 0.8%; last 1.2%); 10.5% yr/yr (last 10.8%)
    France’s April trade deficit EUR12.20 bln, as expected (last deficit of EUR12.70 bln)
    Italy’s April Retail Sales 0.0% m/m (last -0.6%); 8.4% yr/yr (last 5.6%)
    Swiss May Unemployment Rate 2.2%, as expected (last 2.2%)


    Affirm (AFRM 23.30, -1.05, -4.3%): Wedbush initiates with Underperform rating; price target $15
    Spirit Airlines (SAVE 22.35, -0.32, -1.4%): postpones special meeting of stockholders related to Frontier (ULCC) buyout proposal until June 30 as company wants to continue discussions with stockholders, Frontier, and JetBlue (JBLU)
    Credit Suisse (CS 6.55, -0.39, -5.6%): warns that it will likely post a loss in the second quarter
    Novavax (NVAX 52.45, +4.91, +10.3%): receives positive vote from US FDA advisory committee recommending emergency use authorization of its COVID-19 vaccine for people 18 years and older
    Thor Industries (THO 81.60, +5.37, +7.0%): beats by $1.47, beats on revs
    DocuSign (DOCU 91.74, +4.00, +4.6%): expands its strategic partnership with Microsoft (MSFT) to accelerate anywhere work
    Ollie’s Bargain Outlet (OLLI 47.21, -3.78, -7.4%): misses by $0.11, misses on revs; guides Q2 EPS in-line, revs above consensus; guides FY23 EPS below consensus, revs below consensus
    Scotts Miracle-Gro (SMG 88.69, -13.49, -13.2%): Sees FY22 (Sep) EPS of $4.50-5.00, which is well below the current consensus estimate


    ^^^^^ +1s for excellent posts above as I learn from these daily
    With gas @ $4.92 + inflation – markets try to hold high priced Dutch Tulip bulbs before PONZI scheme ends 😉
    And like in year 1637, I’m BEARISH & can’t see markets returning until we get better times on MAIN STREET 🙂

    T-storms are in SW Virginia — this classic from 1970 has among most talented & one of best all time (at 9 min. mark — Jim Gordon’s drum solo may be 1 of best all-time)

    Derek and the Dominos was an English–American blues-rock band formed in the spring of 1970 by guitarist and singer Eric Clapton, keyboardist and singer Bobby Whitlock, bassist Carl Radle and drummer Jim Gordon.

Viewing 15 posts - 31 through 45 (of 69 total)
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