Morning Reads


Todays Open Interest Change




Down to the border

It has been called a humanitarian crisis, an economic crisis and a national security crisis, as the border policy known as Title 42 comes to an end today. President Biden has even warned that the border will probably be "chaotic for a while," and has sent an additional 1,500 active-duty troops there to help with the fallout. A significant surge in migration and illegal border crossings is expected, while lengthier processing times may result in dangerous overcrowding inside Border Patrol stations.

Backdrop: Title 42 is part of the Public Health Service Act, which was enacted by FDR in 1942. The measure was intended to suspend entries and imports from designated places to prevent the spread of communicable diseases, like tuberculosis, which was a big health concern at the time. It was later invoked in 2020 during the coronavirus pandemic, and essentially suspended immigration at U.S. land borders, by expelling many migrants who crossed the border illegally with the intention to ask for asylum or without proper documentation.

Publicly-traded operators of illegal immigration detention centers, CoreCivic (NYSE:CXW) and GEO Group (NYSE:GEO), are in the spotlight on the news, climbing 2.5% and 1%, respectively, in the premarket session. The Title 42 reversal is expected to result in more migrants entering the U.S. to claim asylum and could result in additional people being detained by Immigration and Customs Enforcement. Others point to the stocks' flagging performance over past years, or political risk and lawsuits, while some even distinguish between the two companies, like analyst Double S Capital in SA article Short CoreCivic Against GEO: Both An Alpha Source And A Natural Hedge.

Go deeper: Going into effect will be tougher deportation consequences under Title 8 immigration law, a parole program with rigorous background checks, as well as higher standards for asylum seekers like forcing them to request protection in third countries on their way to the border. There are also plans to open dozens of regional processing facilities in Latin America, and push people to use the notably backlogged CBP One app for streamlining appointments at ports of entry. "I think that there is no question that this is going to be extremely challenging," said Homeland Security Secretary Alejandro Mayorkas. "I do not want to understate the severity of the challenge that we expect to encounter." (2 comments)

Overnight stock trading

While Robinhood (NASDAQ:HOOD) had called for an "even larger window of available trading hours" over a year ago, the company is finally moving forward with the plans. On an earnings call, CEO Vlad Tenev announced that his firm would be the first U.S. retail brokerage to offer 24/5 trading of a list of 40 well-known stocks and ETFs, and will look to "expand from there." Activity is typically thin during current extended trading hours - which can start as early as 4 AM ET and end at 8 PM - but the move may give a new impetus to Robinhood shares, which have only gone south since the company's IPO in mid-2021. The stock rose 5% in AH trading following results that beat estimates and upbeat guidance, though "after-hours" and "premarket" may soon become terms of the past. (25 comments)

Inflation report

Stocks mostly gained yesterday after April's CPI data, which showed the pace of inflation rising 4.9% Y/Y, a hair under the +5.0% expected, and slightly easing from the March increase of 5.0%. Core inflation also eased slightly, while cooling in the super-core CPI, comprised of core services excluding shelter, may have further encouraged market participants. "It was a decent report, but nothing to write home about. The recent (demand-related) decline in commodity prices helped tremendously," said SA analyst Leo Nelissen. "Although we have passed the peak of inflation and are experiencing disinflation, the momentum of the decline is losing steam. As a result, the Fed has a justification for pausing its hikes, as investors had already predicted due to the ongoing economic weakness." Food prices are still high - will these stocks benefit? (281 comments)

House of Mouse

Walt Disney's (DIS) earnings report mostly came in as expected, but streaming losses showed some quicker moderation than anticipated, sending the stock down 5% in extended trading on Wednesday. The company's direct-to-consumer business took up much of CEO Bob Iger's commentary on the earnings call, which offered what looked like some clarity about Disney's approach to Hulu and related that "we've only just begun to scratch the surface of what we can do with advertising on Disney+." Don't forget Mouse House's fight with Florida Governor Ron DeSantis: "This is about one thing and one thing only, and that's retaliating against us for taking a position about pending legislation," Iger declared. "Does the state want us to invest more, employ more people and pay more taxes, or not?" (44 comments)

Today's Markets

In Asia, Japan flat. Hong Kong -0.1%. China -0.3%. India -0.1%.
In Europe, at midday, London +0.1%. Paris +0.6%. Frankfurt +0.1%.
Futures at 6:30, Dow flat. S&P +0.2%. Nasdaq +0.3%. Crude +0.7% to $73.03. Gold -0.2% to $2033.90. Bitcoin -0.4% to $27,484.
Ten-year Treasury Yield -2 bps to 3.42%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Producer Price Index
10:15 Fed's Waller Speech
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

Town hall: Trump calls for U.S. debt default without spending cuts.

Icahn Enterprises (IEP) under federal investigation, gives lengthy rebuke.

Perrigo (PRGO) OTC birth control pill endorsed by FDA committees.

Roblox (RBLX) pops as investors applaud impressive bookings.

FHFA eliminates 'unworkable' debt-to-income ratio fee hike.

Chevron (CVX) plans to raise Venezuela oil output to speed debt recovery.

Occidental (OXY) would limit capex to enable buybacks if needed.

Report: Microsoft (MSFT) skips raises for employees, cuts bonuses.

Google (GOOGL) puts AI at center of I/O developer conference.

Livent (LTHM) to merge with lithium miner Allkem (OTCPK:OROCF) in $10.6B deal.

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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