Morning Reads


Todays Open Interest Change




Fraudulent jobless claims in Massachusetts have cast a shadow on the nature of economic data gathering and reporting, though there had been no shortage of skepticism beforehand - in terms of statistics published by the federal government. Things have grown increasingly political in recent years, while a drop-off in business participation and declining consumer respondents threaten to dampen the effectiveness of sample sizes. It's a pretty big deal as many decisions are based on the numbers, like policy choices at the Federal Reserve to C-suite strategies that form the foundation of the U.S. economy.

'Data dependent': The phrase is one that's often used at the central bank, though many are quick to flag subsequent forecasts made by Fed - like Powell's infamous "transitory" call from 2021 - that didn't quite pan out. It's not only that many economic reports have to be sourced from survey and industry sources, but numerous figures are calculated based on past assumptions or derivatives of data. Agencies seek to adjust for imbalances by applying different weights to respondents or including third-party information, which some say makes thing better reflect the general population and others say erode trust in institutions.

This can impact key reports like nonfarm-payrolls, consumer confidence and sentiment, as well as retail sales, but we'll examine the popular consumer price index in the age of inflation. CPI uses a "basket of goods" approach that aims to compare the costs of various consumer goods and services, with 80,000 items included in the report. Each month, data collectors from the Bureau of Labor Statistics call, visit, or check the websites of thousands of retail stores, professional offices, and other establishments to assess nationwide price information. Still, several statistical adjustments are made, like accounting for the changes in the quality of goods, substitution, and other weightings.

Grain of salt, or a whole shaker? Earlier this year, the Labor Department put greater importance on the shelter component of CPI, which accounts for more than a third of the overall figure and has been in the spotlight over "owners' equivalent rent." It also lessened its focus on things like used cars, which recently underwent its own methodology refresh. The survey last year incorporated third-party data to ease the burden on respondents, like information from the J.D. Power Information Network that measures changes in vehicle prices, further dividing investors on what should be factored into their decision-making.

Data dependent

How much do you trust the economic data that is published by the federal government?

· Completely trust
· Good portion is accurate
· Half is probably right
· Most of it is flawed
· Don't trust a thing

Take the survey and see the results here

'Major security risk'

Shares of Micron (NASDAQ:MU) are down over 6% in premarket trading after China banned the company's products from its "critical infrastructure supply chain" following a nearly two-month review. While Micron is the biggest memory chipmaker in the U.S., with more than a quarter of its sales going to China, other semiconductor players will also be in focus amid an opening of a new chapter in the war over silicon. Last summer saw the passing of the CHIPS ACT, which allowed the U.S. government to pour billions of dollars into the semiconductor sector to "lead the world in future industries and protect national security." The Biden administration also followed up on the measures with serious export controls to prevent American firms - or any global company that uses their tech - from selling chip designs, software and equipment to Beijing. (12 comments)


A weekend full of drama saw both sides of the aisle continue to point fingers over the debt ceiling, before things took a positive turn on Sunday night as Air Force One returned from the G7 summit in Japan. "It went well," President Biden declared, after speaking with House Speaker Kevin McCarthy, while the latter described the call as "productive." Regarding whether the 14th Amendment would be an effective solution to the crisis, Biden confirmed his belief that "we have the authority" to invoke the article, though a series of legal challenges could still mean the U.S. would default on its debt. Meanwhile, Treasury Secretary Janet Yellen reiterated her warning that a default could take place as early as June 1, and that "hard choices" would need to be made about which "bills will go unpaid" if the debt limit was not raised. (13 comments)

Corporate bankruptcies

Distress in corporate finance is increasing. In the near-zero interest rate environment during the pandemic and through February 2022, corporations could take on more debt or extend existing debt without adding much to their debt burdens. In addition, government support helped keep many U.S. businesses afloat during pandemic lockdowns. That helped keep corporate and personal bankruptcy filings low, but since then, fiscal relief has disappeared. With the Federal Reserve pushing up its policy rate by 500 basis points in 15 months, financing costs have jumped, while month-to-month movement proves choppier. Here are the sectors investors are watching, and the knock-on effects they can have on the economy. (2 comments)

Today's Markets

In Asia, Japan +0.9%. Hong Kong +1.2%. China +0.4%. India +0.4%.
In Europe, at midday, London flat. Paris -0.3%. Frankfurt -0.3%.
Futures at 7:00, Dow -0.1%. S&P -0.1%. Nasdaq -0.2%. Crude +0.2% to $71.84. Gold -0.2% to $1977.80. Bitcoin -0.4% to $26,799.
Ten-year Treasury Yield -1 bps to 3.68%

Today's Economic Calendar

8:30 Fed's Bullard Speech
10:50 Fed's Barkin Speech
11:05 Fed's Daly Speech

Companies reporting earnings today »

What else is happening...

Earnings season: Executives call out rising retail theft hitting profits.

Exxon (XOM) joins the lithium race with drilling rights in Arkansas.

Risk of summer blackouts is rising across most of the U.S.

Large-cap restaurant stocks may be more appetizing than they appear.

American (AAL)-JetBlue (JBLU) alliance blocked on antitrust grounds.

Billions of dollars at stake as FDA shortcut allows half-proven drugs.

Novo Nordisk (NVO) Ozempic sales expected to reach $17B in 2029.

Confusing electric vehicle tax rules may be cutting into demand.

Ford (F) unveils supply chain agreements to bolster EV efforts.

Will ChatGPT prevent a recession or is AI a baby bubble?

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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