Morning Reads


Todays Open Interest Change




Investors are hoping to get a better assessment of the U.S. economy this week amid a flurry of data from the retail sector. Kicking off the festivities was Home Depot (HD), which fell 2% on Tuesday after comparable sales missed estimates and guidance came in light. Shares of Target (TGT) don't appear to be faring any better this morning, with the stock initially dropping 3% premarket as sales barely grew Y/Y, while a soft forecast was issued due to inventory impacts and retail theft.

Spending habits: The macro data may be just as important as individual earnings, and many have an eye out for the figures as well. Data published yesterday showed U.S. April retail sales on their first upswing since January, but the 0.4% monthly expansion was still below the expected figure of 0.7%. In terms of Y/Y numbers, things have been steadily declining since last July, with the latest print coming in at 1.6% (and below the 4.9% inflation rate for the same period). Consumers have also continued to shift away from goods spending like furniture, home appliances and electronics - which was all the rage during the pandemic - into services spending such as restaurants, health and personal care, etc.

The trends will be on the radar of the Federal Reserve, which is closely monitoring services inflation. "Inflation hawks remain fixated on the slower rate of progress for services inflation, which remains elevated primarily due to shelter and transportation costs, but we saw the lowest level of price increase for this basket in nine months from last week’s report," counters SA Investing Group Leader Lawrence Fuller in a new article, A Disaster Of Our Own Making. "Furthermore, significantly lower prices are already in the pipeline, which will result in more improvement."

Coming up: Investors are eyeing more earnings from the consumer sector, with TJX Companies (TJX) reporting Q1 results today and Walmart (WMT) tomorrow. Also keep an eye on smaller players like Bath & Body Works (BBWI), Canada Goose (GOOS), Foot Locker (FL) and Ross Stores (ROST). For a full breakdown of earnings season, check out Seeking Alpha's earnings calendar, which highlights EPS and revenue estimates, as well as analyst revisions and ratings. (19 comments)

Shotgun wedding

UBS (NYSE:UBS) may be voicing some regrets over its rushed deal to acquire Credit Suisse (NYSE:CS) during the height of the banking crisis in March. While many of the disclaimers in a new regulatory filing may be worrisome, UBS shares hardly moved on the developments, seemingly due to some fine print at the bottom of the document. Helping it absorb billions of dollars in losses, the Swiss bank currently expects to record a one-off gain - due to so-called "negative goodwill" of $34.8B - by buying Credit Suisse for a fraction of its longtime rival's book value. Elsewhere, Jamie Dimon said it was "unlikely" JPMorgan (JPM) would acquire another troubled lender after buying First Republic Bank (OTCPK:OTCPK:FRCB) in a government-orchestrated deal earlier this month. (8 comments)

First hearing on AI

OpenAI CEO Sam Altman testified before Congress yesterday, emphasizing the need for regulatory intervention by governments to mitigate the risks of increasingly powerful artificial intelligence models. "As this technology advances, we understand that people are anxious that it could change the way we live," he declared. "We are too, but we believe that we can and must work together to manage the potential downsides, so that we can all enjoy the tremendous upsides." While lawmakers didn't arrive at any specific proposals, several ideas were brought up such as a combination of licensing and testing requirements or other frameworks. During the session on Capitol Hill, AI drama also broke into the open as Microsoft (NASDAQ:MSFT) CEO Satya Nadella replied to an allegation by Elon Musk that the tech giant "has a very strong say, if not directly controls, OpenAI at this point." (1 comment)

Free tax filings

Stocks like H&R Block (NYSE:HRB) and TurboTax owner Intuit (NASDAQ:INTU) are in focus after the Internal Revenue Service announced plans to roll out a limited pilot program for a free tax filing system in 2024. Reports of a government-run portal that would compete with private preparation companies already surfaced a session earlier, though a research note by Bank of America argued that paid filing services would not be materially impacted. The IRS also released a cost and feasibility study, required by the Inflation Reduction Act, about creating a direct filing system. It found that most U.S. taxpayers would want to use a free government-provided tool to digitally prepare and file taxes. (32 comments)

Today's Markets

In Asia, Japan +0.8%. Hong Kong -2.1%. China -0.2%. India -0.6%.
In Europe, at midday, London flat. Paris -0.2%. Frankfurt +0.3%.
Futures at 6:30, Dow +0.3%. S&P +0.3%. Nasdaq +0.2%. Crude +0.1% to $70.90. Gold -0.2% to $1989.40. Bitcoin -0.7% to $26,850.
Ten-year Treasury Yield -3 bps to 3.52%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Housing Starts and Permits
10:30 EIA Petroleum Inventories
1:00 PM Results of $15B, 20-Year Bond Auction

Companies reporting earnings today »

What else is happening...

Biden plans to cut Asia trip short to get back to debt ceiling talks.

FTC files suit to block Amgen (AMGN)-Horizon Therapeutics (HZNPdeal.

Pfizer (PFE) bond offering said to be among the largest on record.

Investors pile into Super Micro Computer (SMCI) on heavy volume.

Report: Manchester United (MANU) shares pop on improved Qatari bid.

Biden vetoes legislation that would block solar tariff pause.

Mountain Valley Pipeline (ETRN) wins key federal permit approval.

AT&T (T) calls managers back in, but shrinks office footprint.

Is it a buy? UPS could have a rocky summer with Teamsters showdown.

Tesla's (TSLA) Musk talks rough economy, advertising and new models.

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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