Morning Reads


Todays Open Interest Change




Inflation update

April's consumer price index, to be released at 8:30 AM ET, will give economists and policymakers fresh data on whether the Fed is succeeding in bringing down the rate of inflation toward its 2% goal. March's CPI showed inflation receding for nine straight months, "after the Federal Reserve awoke to the reality of high prices and began hiking rates in March of last year," said Bankrate Senior Economist Mark Hamrick. Also see why SA Investing Group Leader Danil Sereda expects that the consensus estimates for April CPI may be too optimistic, and could lead to the repricing of forwarding fund rates.

By the numbers: With core CPI rising 5.6% Y/Y in March, inflation has ebbed from its peak of 9.1% last summer, but remains well above the Fed's 2% goal. The April number is expected to show little if any progress, with economists expecting the headline CPI number to rise 0.4% in April, up from the 0.1% increase in March (on a Y/Y basis, that comes to a 5.0% rate, unchanged from the prior month's rate). Core CPI, which excludes the volatile food and energy sectors, is also expected to increase 0.4%, unchanged from the March M/M increase (with a rise of 5.5% Y/Y vs. the March print of 5.6%).

As the Fed shifts to a meeting-by-meeting approach for its rate decisions, and insists that the data will inform those choices, each economic data point could spark market volatility, wrote Mott Capital Management's Michael Kramer. "The CPI swaps market forecasts a significant drop in inflation between now and June, with the year-over-year rate of change falling to around 3%, and remaining between 3%-3.5% until the end of 2023. This makes the April number somewhat crucial, as the swaps market has generally been repricing inflation rates higher throughout the year."

Outlook: Another big Fed consideration is the renewed volatility hitting the banking industry. Regional bank stocks continued their whipsaw action on Tuesday as concerns about deposits continued to unnerve the financial sector. Lots of fingers have been pointed at short sellers putting regional banks under undo pressure since the collapse of SVB, and has even prompted talk about whether the SEC should halt the short selling of regional bank shares. The regulator banned short selling on more than 1,000 banking stocks in 2008, but is such a drastic move likely in this scenario? (96 comments)

Belt gets tighter

It has been a controversial investment pact ever since the deal was signed in 2019, but Italy is reportedly ready to pull out of China's Belt and Road Initiative. The country is the only G7 nation part of what President Xi Jinping refers to as the "project of the century," or what critics call a "debt trap" designed to create political goodwill and cement Chinese influence on the world stage. Like much of Europe, especially after Russia's invasion of Ukraine, Italy has found itself caught in escalating tensions between the U.S. and China - with regard to trade, investment, infrastructure and sensitive technologies. The potential move would have profound effects on some of Italy's largest companies, as well as other investment decisions, like using executive power to limit the influence of a major Chinese shareholder Sinochem on tire maker Pirelli (OTC:PRLLY). (2 comments)

Going after everything

Industry rivals are watching as Twitter continues to take steps toward becoming an "everything app." Elon Musk has revealed that new features like "voice and video chat" will be coming to the service, as well as encrypted direct messages, bringing the platform in line with other social media offerings like Instagram, WhatsApp and Facebook (NASDAQ:META). In a quest towards becoming a super app, Twitter recently inked a partnership with eToro that'll let users trade stocks and crypto, though the bigger fish range from payments and shopping to financial services and entertainment. Speaking of the latter, ousted Fox News (NASDAQ:FOX) host Tucker Carlson just announced he would relaunch his show on Twitter, which will help boost the platform's content creator community via subscription revenue and advertising. (7 comments)

Sohn Investment Conference

While he's not predicting one, hedge fund investor Stan Druckenmiller sees the potential for a 2008-like recession or worse. A hard landing likely includes a 20%+ decline in corporate profits, unemployment going to above 5%, and increases in bankruptcies, he explained at the 2023 Sohn Investment Conference. "It's naive not to be open-minded to something really, really bad happening. Again, it is not my forecast, but as a risk manager it has been part of my matrix and my equation thinking about it." Regarding stock picks at the conference, Greenlight Capital's David Einhorn pitched German auto part supplier Vitesco Technologies (OTCPK:VTSCY), while more recognizable names included Sony (SONY), Mirati Therapeutics (MRTXand others. (74 comments)

Today's Markets

In Asia, Japan -0.4%. Hong Kong -0.5%. China -1.2%. India +0.3%.
In Europe, at midday, London -0.2%. Paris -0.2%. Frankfurt -0.3%.
Futures at 6:30, Dow -0.1%. S&P -0.2%. Nasdaq -0.2%. Crude -1.3% to $72.79. Gold -0.3% to $2037. Bitcoin flat at $27,608.
Ten-year Treasury Yield -2 bps to 3.50%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $35B, 10-Year Note Auction
2:00 PM Treasury Statement

Companies reporting earnings today »

What else is happening...

Biden says debt meeting 'productive,' McCarthy doesn't see 'movement.'

Survey results on whether emergency procedures may resolve debt crisis.

Paramount (PARA) to cut 25% of workforce across entertainment units.

IBM (IBM) unveils Watsonx, a new generative AI platform.

Airbnb (ABNB) slides 12% after Q2 outlook disappoints.

Sale of Manchester United (MANU) gets closer to conclusion.

Rivian (RIVN) on track to produce 50K vehicles in 2023.

Twilio (TWLO) plunges as sales forecast falls short of expectations.

Free shipping? AMZNFDX and UPS continue to tighten delivery options.

Retire comfortably: Leo Nelissen flags two 7% yielding dividend gems.

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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