Morning Reads


Todays Open Interest Change




It's only 20 days until the next FOMC meeting, and a little over a week before the latest Fed blackout period kicks in, meaning any data or commentary that can provide a clearer view of what may happen is going under the microscope. Bets are increasing that the central bank will go for another 25 basis points on May 3, bringing the Fed Funds Rate above 5% for the first time since the lead up to the Global Financial Crisis. Equity traders don't seem to be panicked this time around, with the S&P 500 (SP500) up nearly 7% YTD (and it's only April), as they see the hike as a finale to an aggressive rate hiking cycle that has rocked markets for much of the past year.

Snapshot: A key measure of U.S. inflation published yesterday showed signs of moderating in March, with the Consumer Price Index climbing 5% compared to last year, slowing from an annual pace of 6% seen in February. However, core CPI, which excludes volatile food and energy prices, rose 5.6% Y/Y, in-line with expectations and higher than the 5.5% increase seen the previous month. Fed staff also projected a "mild recession" starting later this year, but many are still sizing up whether the CPI metric accurately reflects underlying inflation that is being driven by demand, rather than other disruptions and distortions.

"In short, our national inflation nightmare is over," writes SA contributor Calafia Beach Pundit, citing the Owners' Equivalent Rent component that makes up about one-third of the CPI and growth in the M2 money supply. "To paraphrase Wayne Gretsky, the Fed should be focused on where CPI is going, not on where it has been." Commenters like Ray West are in agreement, saying that "so many are oblivious of this, not even mentioning high inflation months rolling off the YoY figures in the coming months."

Outlook from the Fed: "While the full impact of this policy tightening is still making its way through the system, the strength of the economy and the elevated readings on inflation suggest that there is more work to do," San Francisco Fed President Mary Daly said during a speech yesterday in Salt Lake City. While she's not a voting member this year on the FOMC committee, New York Fed President John Williams (who is) said raising rates only one more time would be a "reasonable starting place" and is the "median we saw from my colleagues." Meanwhile, new FOMC voting member, Chicago Fed President Austan Goolsbee, is encouraging patience on raising rates further, citing a need to assess the "potential impact of financial stress (i.e. the recent banking crisis) on the real economy." (441 comments)


There were three avenues towards monetization that Elon Musk outlined when taking the reins of Twitter last October, and the company seems to be making progress on all the fronts. In an interview this week with the BBC, Musk declared that "almost all" of the advertisers who abandoned Twitter after his $44B acquisition have returned, while the messaging app has doubled down on paid subscriptions from Twitter Blue and could even become profitable as soon as this quarter. The bigger trophy is turning Twitter into an "everything app," which would handle everything from messaging and payments to shopping and financial services. Steps are being taken in that direction with Twitter Inc. officially merging into X Corp., while a partnership was just inked with eToro to let users trade stocks and crypto. Brokerages are watching or might explore dealmaking of their own, while others are eyeing a list of potential candidates that might replace Musk as head of Twitter. (5 comments)

Granholm speaks

WTI crude prices have popped above $83/bbl after Secretary of Energy Jennifer Granholm said the U.S. government could begin buying oil later this year to replenish the Strategic Petroleum Reserve "if it is advantageous to taxpayers." The comments at an energy conference in New York contrasted with her remarks to Congress last month, when she said it would be "difficult for us to take advantage of this low price." The U.S. Energy Information Administration still forecasts that global crude supply will top demand over the next two years despite a surprise cut from OPEC+, which some said was motivated in part by Granholm's initial comments. Helping to trim oil demand might be a set of new ambitious vehicle emissions standards from the EPA that could provide a boost for electric vehicles. (58 comments)

Whale watch

Alibaba (BABA) was already under pressure from Beijing's AI control proposals, but the sentiment was dented further as SoftBank (OTCPK:SFTBY) continues to sell down its stake in the e-commerce giant. A newly surfaced analysis of regulatory filings and prepaid forward contracts reveals that SoftBank intends to slash its Alibaba holdings to just 3.8% as it continues to pare down its exposure to China and limit its tech investment. Softbank had amassed a whopping 34% stake in Alibaba after its U.S. IPO in 2014 - which accounted for nearly 60% of its assets - but its Alibaba ownership slipped to 25% by the end of 2019, and fell to 14.6% as of last year. The "defensive" move follows plans by Alibaba to split into six units, and comes before an expected Nasdaq listing deal for its chip design unit ARM Holdings (ARMHF). (12 comments)

Today's Markets

In Asia, Japan +0.3%. Hong Kong +0.2%. China -0.3%. India +0.1%.
In Europe, at midday, London flat. Paris +0.9%. Frankfurt -0.1%.
Futures at 6:30, Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude flat to $83.26. Gold +0.8% to $2040.60. Bitcoin +0.7% to $30,244.
Ten-year Treasury Yield +2 bps to 3.44%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Producer Price Index
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

Top 10 high dividend yielding stocks, as ranked by SA Quant Ratings.

Every weekday: JPMorgan (JPM) orders managing directors back to the office.

China reports world's first human death due to H3N8 bird flu.

IBM (IBM) explores sale of weather business in streamlining push.

Cirrus Logic (CRUS) plunges 12% on Apple (AAPLiPhone worries.

In automation boost, Emerson Electric (EMR) to buy NI (NATIfor $8.2B.

Permian Basin has not hit peak oil production - Occidental (OXY).

So long, HBO name: Warner Bros. Discovery (WBD) goes for 'Max' power.

Bankrupt crypto exchange FTX recovers $7.3B in assets.

Underage vaping: Philip Morris (PM)-backed Juul pays $462M settlement.

Appeals court permits limited access to abortion pill, blocks part of Texas ruling.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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