Morning Reads
- Anti-War Tycoons
- China Leaders Surprised by Pace of Economy’s Rebound
- Fewer American Companies See China as a Top Investment Priority
- Where Digital Payments, Even for a 10-Cent Chai, Are Colossal in Scale
- Finance Is Failing the World’s Best Defense Against Climate Change
- World’s Rich Snap Up Commercial Property Like Never Before
- U.S. Mortgage Interest Rates Remain at Highest Level Since November
- Car Debt Is Piling Up as More Americans Owe Thousands More Than Vehicles Are Worth
- Long-Robust U.S. Labor Market Shows Signs of Cooling
- Fed’s Soft Landing Hinges on a Wage Inflation ‘Head Scratcher’
- Biden Is Betting on Government Aid to Change Corporate Behavior
- ‘Sometimes Things Break’: Twitter Outages Are on the Rise
- Elon Musk Aims to Rally Tesla Shareholders Around Long-Term Vision at Investor Day
- As Dollar Stores Proliferate, Some Communities Say No
- Rivian Posts Mixed Quarterly Results, Issues New Recall
- Lowe’s Stock Slips as Q4 Sales Lag Expectations
- McDonald’s Cardi B and Offset Promotion Draws Pushback From Some Restaurant Owners
- The 15-Minute City: Where Urban Planning Meets Conspiracy Theories
- Net Widens to Catch Russia’s Middle East Shipping Company
- China’s Coal Build-Out Is a Dirty, Costly Backup Plan
- Banks Need Even Bigger Low-Carbon Pivot to Avert Climate Crisis
- Nuclear Power’s Revival Reaches the Home of the Last Meltdown
- Biden’s Semiconductor Plan Flexes the Power of the Federal Government
- Pentagon to Reap Rewards From $53 Billion Chips Act
- Powell’s Debt-Limit Alarm Echoes Stealth Lobbying Effort in 2011
- Citi Strategists Say Traders Are Piling Up Short Bets on Stocks
- The SPAC Fad Is Ending in a Pile of Bankruptcies and Fire Sales
- More US Homebuyers Are Paying in Cash
- Restaurant Chains Make It Cost More to Be Loyal
- Zoom Revenue Up on Growth From Big Customers
- Target Tempers Strong Fourth Quarter With Cautious Forecast
- Apple Suppliers Are Racing to Exit China, AirPods Maker Says
- Student-Loan Forgiveness Case at Supreme Court Hinges on ‘Harm’
- Elon Musk is the Richest Person in the World Again
- What You Get for Being Loyal to Elon Musk
- TD Bank Agrees to Pay $1.2 Billion to Settle Ponzi Scheme Case
Todays Open Interest Change
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PREPPER
SoFi Technologies (NASDAQ:SOFI) rose as much as 4% in afternoon trading on Tuesday following reports that conservative justices were skeptically questioning President Biden's plan to forgive billions of dollars of student debt. SoFi is a known player for refinancing student loans, with SA contributors like Data Driven Investing recently pointing out that growth at its lending arm should accelerate again when the student loan moratorium expires in the back half of the year. Other related stocks were less affected by the opening arguments at SCOTUS, such as Navient (NASDAQ:NAVI), Nelnet (NYSE:NNI) and SLM Corp. (NASDAQ:SLM), which closed the session around the flatline.
Snapshot: Chief Justice John Roberts led the conservative justices, who comprise a majority of the court, in examining whether the Biden administration has the authority to cancel federal student loans as a result of the COVID-19 emergency. Roberts, in his questioning of the White House's top Supreme Court lawyer, suggested that the administration had exceeded its authority. Roberts also contended that a program as large as Biden's student loan forgiveness plan, which is estimated to cost $430B over three decades, should be something that casual observers would expect Congress to take up. "If you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on," he said.
In addition to the debate over whether the Biden administration has the authority to forgive the debt, the court also must decide on whether the states and two individuals suing the government have the legal right, or standing, to sue (parties generally have to prove that they would suffer financial harm from the action). The administration has said it's acting in accordance with the Heroes Act, a 2003 law that allows the Secretary of Education to waive or modify terms of federal student loans in connection with a national emergency. The law was primarily intended to protect service members from financial harm while they were serving in wars in Afghanistan and Iraq.
Outlook: The concept of student debt cancellation, even if it would pass through Congress, has divided the country. Some say it would benefit borrowers at a time of high inflation, or lead to financial stability and economic security. Others have flagged it as another contributor to higher prices, or an unfair measure for those that chose not to go to college because of the cost, don't have loans or already paid them off. The Federal Reserve estimated that Americans owed $1.76T in student loans in the fourth quarter of 2022, with the average student loan debt around $40,000 per borrower. (125 comments)
Hedge funds and mutual funds are warming up to stocks after last year’s selloff, but exposure to equities is still historically low, according to Goldman’s latest analysis. The firm looked at 758 hedge funds with $2.3T of gross equity positions, as well as 543 mutual funds with $2.4T in assets under management at the start of 2023. Among the stocks they saw favored were Fiserv (FISV), Humana (HUM) and Wells Fargo (WFC), and among those out of favor - and even shorted - were Dow components Caterpillar (CAT), Walmart (WMT) and Disney (DIS). See the full list here. Looking at Wall Street market calls this week, J.P. Morgan’s global team remains bearish on U.S. stocks and Nomura recommends getting “back to cash.” (28 comments)
Pay attention to Tesla (TSLA) shares after the bell as the EV leader holds its Investor Day at 4 p.m. ET. The third edition of Tesla's Master Plan (following Part 1 in 2006 and Part 2 in 2016) will be a major part of the event, which will likely detail the company's long-term expansion plans and a new Gigafactory in Mexico. Other announcements could touch on Project Juniper, the Cybertruck, autonomous driving, energy storage initiatives, charging network revenue potential and the Tesla Bot. In other recent news, Tesla paused its FSD Beta rollout until a software update is available, though the stock's monster 90% YTD rally restored Elon Musk's status as the world's richest person. (130 comments)
Another high-profile investor day took place on Tuesday. Goldman Sachs (GS) CEO David Solomon took the podium, but ended up getting some flak over the Wall Street stalwart's foray into the consumer arena. The business has resulted in billions of dollars in losses over the past few years, and Goldman is now exploring strategic alternatives for its Platform Solutions unit. It's also in the process of selling some loans in its Marcus consumer bank portfolio, as well as evaluating the sale of installment lending platform GreenSky. Solomon had sought to diversify Goldman's revenue stream away from traditional businesses like investment banking, but his lack of answers saw the stock dive 4% by the end of his presentation. (5 comments)
Today's Markets
In Asia, Japan +0.3%. Hong Kong +4.2%. China +1%. India +0.8%.
In Europe, at midday, London +0.8%. Paris +0.7%. Frankfurt +0.6%.
Futures at 6:30, Dow +0.2%. S&P +0.3%. Nasdaq +0.5%. Crude -1% to $76.27. Gold +0.2% to $1841.10. Bitcoin +1.8% to $23,784.
Ten-year Treasury Yield +1 bps to 3.92%
Today's Economic Calendar
7:00 MBA Mortgage Applications
9:00 Fed’s Kashkari Speech
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
Companies reporting earnings today »
What else is happening...
10 trades to get 10%+ yields from S&P 500 stocks without market exposure.
Target (TGT) sets cautious tone as investors eye rocky retail setup.
With earnings on tap, Salesforce (CRM) hears from another activist investor.
Uranium particles enriched to 83.7% found in Iran - IAEA.
China's factory activity expands at fastest pace in over a decade.
Paramount (PARA) said to turn down $3B offer for Showtime.
Virgin Galactic (SPCE) confirms launch date of commercial spaceflight service.
Widening losses and weak forecast seen at Norwegian Cruise Line (NCLH).
Rivian Automotive (RIVN) slumps after production guidance disappoints.
General Motors (GM) cuts jobs despite pledges to the contrary.